Special Issues » Casa: Home & Garden

The American (bad) Dream

How we got in the foreclosure messand how we can get out

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Several times a month, someone from the county clerk's office stands outside the first-floor elevator of the Durham County Courthouse and sells people's dreams. Foreclosure sales happen in every county in the United States; they are public, and for the people being foreclosed on, humiliating, which is why they rarely, if ever, attend.

On a recent rainy morning in Durham, a county worker deluged passersby in legalese, plat numbers, surveyor boundaries and addresses on Indigo Trail, T.W. Alexander Drive and Ashe Street.

"Bidding starts at $180,000. I'll take bids in increments of $200," the man announced. There were only two people lingering nearby, and no one took the bait. The lender had to eat the house. "Sold to Deutsche Bank, trustee for Wells Fargo."

Foreclosures nationwide have hit an historic high. Federal and state governments are searching for policy styptics to stop the bleeding. Nonetheless, we must acknowledge that greed got us here. While there are many reputable real estate agents and mortgage brokers, the predatory lenders are the problem. They often hunt their low-income targets in apartment complexes and churches. Once snared, the borrowers are steered into pricey loans. The lenders and brokers, who make their money either from commissions or from selling the loans to investors, know these customers can't repay the debt. And the servicing companies charged with collecting the debt pile on unnecessary, exorbitant surcharges, then profit from fees associated with foreclosure.

In this package, you'll read about the crisis, embodied in the troubling story of Wilma and Terry Vaughn, who were victimized by the largely unregulated mortgage servicing industry. To avoid predatory lenders, brokers and servicers, you need to understand how they operate and what the fine print means.

Meanwhile, state lawmakers are passing bills requiring more accountability from portions of the lending industry. And finally, it's not a happy prospect, but Douglas Vuncannon recounts how he lived for three years in his Ford Econoline van. He owned the van. At least the bank couldn't foreclose on it.

Anatomy of a foreclosure
Besides the borrower, there are four entities involved in loan-making: lenders, brokers, investors and servicing companies. By Lisa Sorg

Buyer beware
Several terms signal you could be entering a bad deal. By Lisa Sorg

Crawling out of the foreclosure hole
States have been excluded from regulating real-estate transactions that historically had been under their watch, N.C. Attorney General Roy Cooper says. By Bob Geary

North Carolina foreclosure numbers
Download charts showing N.C. foreclosures in 1998-2007, including details for Wake, Durham, Orange and Chatham counties (PDF, 54 KB). Source: N.C. Justice Center

Stung by a middleman
"They make it sound like all these people [in foreclosure] are in over their heads," Wilma Vaughn says, "but they're in over their heads because these companies put them in over their heads." By Mosi Secret

Vanlife
Between 1996 and 1999, I spent over a thousand nights bedded down in my van. By Douglas Vuncannon

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