Ever since their four children were young, Lauro Navarro and his wife, Yolanda, dreamed of building a house for their family and grandchildren. In 2000 they bought a three-acre plot of land in Royal Oaks, near Aromas, and in 2007 they finished building their house. Now they are one of 299 families in Santa Cruz County who have lost their home to foreclosures this year.
The loan the couple took out in 2005 from First Horizon Home Loans became impossible to pay when the economy took a dive and Lauro lost his construction job. It’s a story all too common in South County.
“Many of the Watsonville loans were the ‘pick a payment’ type—people were lured to take the loans on the basis that they could choose whether they wanted to make partial interest payments, full interest payments or pay the interest plus a portion of the principal. But they really only could afford a portion of the interest,” says Phyllis Shifton Katz, an attorney for California Rural Legal Assistance. The Navarro’s loan was one such “pick a payment” loan, and like thousands of other American families, they became casualties of a high-risk game played at a much higher level.
The Navarros hinged their last hopes on a loan modification application that would either extend their payment time or lower the interest. But according to the Navarros, CitiFinancial refused to even talk to them about it. Katz says that highlights a huge problem with the Obama administration’s loan modification program: banks still have too much power.
“They [loan modifications] are all very well-intentioned programs, but all the power remains with the banks as to whether or not they want to do it,” says Katz.
The housing crisis has hit Watsonville incredibly hard, in part because of a skyrocketing unemployment rate that has reached 30 percent by some estimates, but demographics also weigh in to the equation.
“Watsonville has a huge population of first-generation Latinos,” says Ramon Fuentes, a real estate broker for Fuentes and Associates. “We have a huge agricultural industry and they make up the labor force. Many of them didn’t even finish elementary school in Mexico. They were the easy prey. If we did a nationwide study we would see that there have been more fraudulent loans given in minority and lower educated communities.
“The sad part,” he adds, “is they bought these houses to live in, not to invest in.”
In a rally on Thursday outside a Wells Fargo bank, Mayor Daniel Dodge and members of SEIU and the community spoke about the crisis. Many blamed the banks.
“It was directly linked to the banks and the over-extension of credit. The banks as a whole owe our community millions of dollars. They need to be held accountable for the state of economy,” says Erik Larsen, an SEIU organizer who helped stage the rally.
For the past three years, the Navarros have been learning more about the housing crisis—a complex web of over-extended credit and loans sold and resold from entity to entity.
“It gives you shame to talk about it, that’s why no one talks of it, even among families,” says Lauro, who now meets every Thursday at La Casa Cultural in Pajaro to talk with other community members facing similar hardships.
“Everything we have saved the bank took,” says Lauro Navarro, who began working in the strawberry fields at the age of 14 before finding work in construction. “Don’t spend what you don’t have, be careful of what they offer. For all of the fruit of your labor you will end up in the street if you are not careful.”
The couple is also involved in the Communities Organized for Relational Power in Action, or COPA. COPA leader Mark Linder says the group is looking into principal reduction programs. Those would do more than the current loan modification programs, which only lower the interest rate or extend the time frame of payments.
“One LA is an organization in LA working with a redevelopment agency and has just secured $5 million for a principal reduction program,” says Linder. “Fifteen percent would come from the taxpayer and 85 percent would come from the endorser, or the banks. We are watching them very closely. If we feel they have a successful experience, we would like to see if we can do something similar in Watsonville.”
The Central Coast Foreclosure Collaborative is working to educate the communities of their options in the foreclosure process, and has held panel presentations all over the Central Coast. The next one is in May and will be televised from the Community Room of the Watsonville Civic Plaza.
“I feel that I was living in a fantasy that turned into a nightmare, and now I am waking up,” says Yolanda. “There is nothing I can do, but for other families, there is.”
