By Maibe Gonzalez Fuentes, FI2W contributor
NEW YORK — Four years ago Jorge Guerrero, a 46-year-old Ecuadorian immigrant, realized his dream of buying a house.
“They (real estate brokers) served everything on a silver tray for me,” Guerrero recalled in a phone interview in Spanish. “They told me that because my wife and I had a good income I didn’t even have to use my savings to buy a house, I could get a loan for the full price, rent the upper floor and the basement to pay the mortgage, and refinance to lower the interest rate.”
It seemed too good an opportunity to pass up. He bought a house in Jamaica, Queens for $580,000. But things did not go quite as planned. The upstairs tenants failed to pay their rent for months, and Guerrero lost $10,000 in defaulted rents and legal fees.
“And then the whole economy went down and everything changed,” he said.
His wife, an accountant, was laid off from work in September of 2007; Guerrero suffered an accident at his workplace in July that will prevent him from working for at least six months. Today, after four years of making mortgage payments without a single interruption, he still owes $595,000 — $15,000 more than he spent on the house in 2005, while the actual value of the property has plunged to $500,000.
Guerrero’s options, which he explained with the precision of someone who has spent a lot of time researching, are foreclosure, bankruptcy or loan modification. While the latter is his preference, it is not an easy path. (more…)