Editor's note: The names of the husband and wife whose house is in foreclosure have been withheld out of concern that their bankruptcy will endanger their job security.
The pink house near the end of a quiet Lithonia cul-de-sac doesn't stand out among the other tidy ranches in the middle-class neighborhood. But to the 10 people who call it home – as well as the stream of neighborhood kids who stop by for a warm meal or a bit of conversation – the house is an invaluable source of solace.
The woman who owns it, a youthful West Africa native who works for a high-end travel agency, bought it nearly a decade ago for $99,000. At first, she lived in the house with her mother and her three children. She soon married, and her husband moved in, followed by her mother-in-law. Last month, her 23-year-old daughter gave birth to her first grandchild. Two other relatives are crashing there until they can get on their feet.
The homeowner at the hub of this small community has stabilized the lives of those around her. Yet her situation is as precarious as theirs. For five years, she's fought off foreclosure and struggled through a bankruptcy with the hope of saving the home she loves.
Despite the crammed quarters, the mood inside the house is orderly and harmonious. On a recent Saturday afternoon, smoked turkey legs simmered on the stove, the start of an African stew to be prepared the following day. Twinkling Christmas lights cast a warm glow over the living room. The mantel was hung with white lace, and a blooming white poinsettia sat at the center of the hearth.
"It's peaceful here," says the woman's husband, a boisterous truck driver who's quick to talk politics and insists that the children's friends call him "Dad."
"It's a refuge."
When asked what the family would do if the house, which is in the midst of a lengthy foreclosure, were taken from them, he says he and his wife wouldn't panic.
"We'd go somewhere else and keep on pushing," he says. "No matter what goes on with this physical house, things will work out one way or the other. But I'm preparing for the other."
The family in the pink house is among the thousands in metro Atlanta who've stumbled upon hard times and landed in foreclosure. Like so many others, the Lithonia couple sought the protection of the federal bankruptcy statute. Under Chapter 13, the couple hoped to pay down the past due amount and, after they were caught up, continue making their monthly payment.
But it wasn't as simple as that.
Their attorney, Howard Rothbloom, is a bankruptcy expert who's willing to devote time and resources to those who seldom have resources of their own. Rothbloom says this case – and dozens of others he's handled in metro Atlanta – are indicative of a nationwide trend: Lenders are aggressively targeting homeowners who've fallen behind on their payments. Rothbloom and others claim that lenders are tacking on unsubstantiated, possibly illegal fees that total thousands of dollars, making it difficult for borrowers to keep their house even after they pay off the past due amount. Lenders also have been less than willing to negotiate a better rate for borrowers in foreclosure. And often, lenders inflate a borrower's payoff amount – making it impossible to sell or refinance the home.
"I've been doing this work a long time, over 20 years," Rothbloom says. "And it just drives me crazy. It's getting more and more difficult to save a house. Maybe you can stall the foreclosure, but everything is stacked against you. The system's broken."
A law review study published last month looked at 1,700 recent Chapter 13 bankruptcies and found that, "Far from serving as a significant check against mistake or misbehavior, the bankruptcy system routinely processes mortgage claims that cannot be validated and are not, in fact, lawful."
The study states that mortgage companies often "lack the required documentation necessary to establish a valid debt" and that "the legal system does not substantiate the amounts that lenders assert that consumers owe."
"These problems can cripple a family's efforts to save its home," according to the study, published in Texas Law Review. "[M]ortgagees' behavior significantly threatens bankruptcy's purpose of helping families save their homes."
On Dec. 7, President-elect Obama put it more succinctly. At a press conference in Chicago, he told the crowd, "We have not seen the kind of aggressive steps in the housing market to stem foreclosures that I would like to see."
Rothbloom thinks homeowners in Georgia – which has among the least consumer-friendly lending laws in the country – have been particularly hard hit. For starters, the state allows "non-judicial" foreclosures, meaning a judge doesn't have to verify how much the mortgage company claims a homeowner owes.