Secure Jobs, Secure Communities

Debra Nicholas is an ACORN leader who works as a security officer downtown and has lived in Mattapan for about a year. She had been renting an apartment in Dorchester for over 10 years when a newspaper advertisement for a first-time homebuyer class got her excited about the possibility of buying a house. Soon after attending the ½ day workshop, Debra received a letter in the mail declaring that she and her husband were pre-approved for a home loan of $425,000. Although suspecting it might have been a joke or a mistake, they decided to call one of the real estate brokers listed in the letter. This broker assured them the pre-approval amount was accurate and offered to help them purchase a home of their own. Debra and her husband agreed – and that is when their nightmare began. Debra became interested in a house for sale in Mattapan but discovered that the asking price was $52,000 higher than their pre-approved figure. She told her broker she could not afford the house but he told her not to worry, falsified her income statement, and obtained a new approval letter for the higher amount from the mortgage company. When Debra repeatedly voiced doubts over her ability to make payments on a $477,000 loan and concerns that the process was moving too fast for her comfort, the broker pushed her to seal the deal.

Within two weeks of closing on her first home, Debra’s basement flooded, She was informed that the second floor insulation needed to be replaced, and an electrician found unsafe and illegal conditions, including crossed wires and an outdoor lighting system powered by an extension cord. None of these issues were flagged during the home inspection. Debra also discovered that her broker had not informed her that her mortgage payments did not include taxes and insurance; that he had charged her an extra 1% of the loan amount for counseling fees over and above his $15,000 commission; and that the original appraisal was a forgery that overvalued the house by more than $75,000. Her monthly mortgage payment was roughly three times what her rent had been. Her loan has been sold twice in the last year. The house is now in foreclosure. According to the Massachusetts Division of Banks, Debra and her husband should not have been approved for a loan of more than $300,000. Because the house was never properly appraised, Debra has been told that her loan may be invalid – even though she has been making regular payments for the last year.