A family's struggle against great debt Ill health, credit cards, a house-load of woes.

Posted: February 18, 2008

Anthony and Lisa Grande's house stands out in their Levittown neighborhood.

"It's the big house," Lisa said when giving directions.

The Grandes borrowed more than $100,000 - much of it on credit cards - to double its size four years ago because they wanted enough room for their five children and did not want to move.

But now, the Grandes are fighting to stay there, having repeatedly fallen behind on their mortgage payments, which climbed from $1,841 to $2,487.

They offer a powerful example of how lax mortgage underwriting, excess credit-card debt, and catastrophic health problems can add up to financial disaster for an American family.

The Grande household was among an estimated 1.5 million in the United States that entered foreclosure last year, pushing the national foreclosure rate to 2.7 percent from an average of 1.7 percent between 2001 and 2005.

The deflating housing bubble and the subsequent credit crunch made it impossible for many troubled borrowers, such as the Grandes, to refinance and has stalled economic growth.

To escape a severe downturn, the Federal Reserve has sharply lowered interest rates, and Congress has promised more than $100 billion in tax rebates to spur consumer spending.

The Grandes' problems, however, go far beyond the reach of a federal stimulus package.

When they refinanced in January 2004 from a $113,906 fixed-rate mortgage into a $220,500 adjustable-rate mortgage to pay off credit-card and other debt, they were told - like millions of others - that they could refinance before the interest rate jumped.

Then Anthony's health fell apart, his plans to start a business foundered, and another refinancing did not come through.

"It seems like a black cloud pulled over and stayed there," Anthony said during an interview last month, two days before he went into the hospital for the seventh operation in the last four years on his diabetes-stricken body.

"To be quite honest, we were probably foolish also," Lisa said.

Lisa recalled a carpenter on their roof during construction stamping a broom and saying so many people went bankrupt expanding their homes. "I knew it then. It's like he cursed us."

For the Grandes, the thought of losing the house they bought in 1999 for $114,000 is especially painful because they put their hearts and souls into transforming it with the addition of a full second story and a spacious, high-ceilinged living room.

"We drew it. This is what we wanted. You want to do everything you can to save it," Anthony said during an interview in a breakfast room that replaced part of the garage.

Two weeks after the Jan. 15 surgery on his left leg, Anthony was back in the hospital because the leg got infected.

Around the same time, they were due to sign a contract from their lender, Option One Mortgage Corp., detailing plans to bring them up to date at a fixed rate of 6 percent, and an earnest payment of $14,000. But it went unsigned because the Grandes disputed the lender's inclusion of $7,452.76 of escrow in their arrears. The Grandes' attorney, Stephen G. Doherty, was trying to get a detailed breakdown of what they owe.

"I'm not going to sign it just because our backs are up against the wall. That's how we always get in trouble," Anthony said.

Under that proposal, the monthly payment would be $1,951.04, taking up 38 percent of the couple's monthly gross income.

Lisa, 45, said it's been incredibly hard dealing with Option One. "You could never talk to the same person, and then whoever you had next tried to get more out of you," Lisa said. She recalled how one service representative told her: "I don't want to hear your hard luck story. I want a check."

Christine Sullivan, spokeswoman for Option One, a subsidiary of H&R Block Corp., said the company's records show that it followed the proper foreclosure filing procedure for Pennsylvania. "We have worked closely with the Grandes since 2005, including offering them several workout plans," Sullivan said.

Option One has stopped taking loan applications, and its office in Trevose - where Anthony called to refinance - closed last summer, putting 70 out of work.

It is hard for the Grandes to grasp how they got to their current state from where they were in early 2003.

That's when Anthony lost his job as the general manager of a used-car dealership because the business closed. He figured it was a good chance to expand the house because he wanted "a place for the kids to come home to." A former deli and flower shop owner, he planned to open a new dealership with partners.

The Grandes, who have been together for 22 years and married for four, showed visitors a photo album that illustrates the construction project from start to finish.

Anthony wired each room for cable and telephone. Lisa painted. Her brother, who until recently lived there with his son, put on the roof.

To pay for the additions, the Grandes used a $40,000 bank loan and credit cards.

In January 2004, they did what millions of Americans did during the housing boom to cope with ballooning credit-card debt: they refinanced, though they didn't get enough to pay off their credit cards.

The new loan - with no income verification, according to Anthony - increased their monthly payment from $950 to $1,841. The introductory interest rate was 7.75 percent for two years.

Anthony's plans for a partnership did not work, so he decided to open his own lot on Route 13 in Levittown and sank in $65,000.

It took so long to get his operating license that he fell behind on rent before he could open. "Then when we got open, I couldn't even walk," said Anthony, whose diabetes has caused circulatory problems.

Last fall, Anthony was granted disability benefits. His monthly benefit is $1,147, less than he used to earn in a week. "I was always a go-getter," Anthony said. "I just feel so whooped."

Anthony was not the only family member with health problems. Lisa's daughter, now 22, had surgery for an aneurysm in 2005.

Last year, after bleeding for 70 straight days from uterine cysts, Lisa had a hysterectomy and was out of work from April until September.

By that time, the Grandes were deep in trouble.

Despite the refinancing in January 2004, the Grandes still had $118,628 of debt on 24 credit cards, according to a bankruptcy filing in October 2005.

"We probably lost track," Lisa said of the number of credit-card checks they used. "They just kept sending us checks."

Legal fees and drug-rehabilitation expenses mounted for Anthony's son from a previous marriage, reaching $84,000, Anthony said.

In January 2006, the interest rate jumped to more than 10 percent and the payment to $2,220. Six months later, it was up to $2,487, and with Anthony's health problems keeping him out of work, they fell behind.

Pennsylvania's Homeowners Emergency Mortgage Assistance Program helped them get caught up in August 2006. But after spending too much for Christmas in 2006, they fell behind again early last year.

Option One offered a workout plan: if they made one payment of $5,800 and six monthly payments of $3,100, they would be caught up.

Lisa said she worked six days a week - three 12-hour days at her regular job and three as an agency nurse - to earn that money.

The Grandes' records show a payment of $5,800 on March 30 and payment of $3,100 on April 20. Then, in May, the foreclosure notice came. That's when the Grandes called attorney Doherty, who has been helping them negotiate with Option One.

The whole affair has shattered Anthony's sense of himself. "I was always hustling. I always worked. Now I can't do anything. I feel like a jerk," he said.

Contact staff writer Harold Brubaker at 215-854-4651 or hbrubaker@phillynews.com.

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