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Foreclosure tragedy
A growing number of Kern homes are being sold after mortgage defaults. Meet Mary Dunaway, victim of a questionable lender, living a ...
| Saturday, Feb 3 2007 9:25 PM
Last Updated: Saturday, Feb 3 2007 9:28 PM
With his 82-year-old mother's northeast Bakersfield home auctioned off at a foreclosure sale Wednesday morning, Jim Dunaway is fighting for options as fast as he can.
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Mary Dunaway with her two dogs, Strudel, left, and Chicca. Dunaway is scrambling to hold on to her Tangerine Street home after unknowingly signing off on a loan more than seven years ago.
Mary Dunaway and her son, Jim Dunaway, at her Tangerine Street home. The home was recently sold at auction for $110,000.
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He's not alone.
A spike in mortgage defaults nationally has also brought a surge in foreclosure sales -- a dramatic one, according to numbers from DataQuick Information Systems, a La Jolla firm that tracks the real estate industry.
Kern County's figures are in line with the rest of California's spike.
In the last three months of 2006, for example, Kern counted 153 foreclosure sales, said John Karevoll, a real estate analyst with DataQuick. That's up from 19 in the same period the previous year.
Statewide, foreclosures jumped almost 600 percent, DataQuick figures show.
In raw numbers, that meant nearly 6,080 foreclosures in California during the last quarter of 2006 compared to about 875 during 2005's final quarter.
In Dunaway's case, the situation is especially grating because he believes his mother, Mary Dunaway, unknowingly signed off on a predatory loan more than seven years ago.
Mary Dunaway said stress is eating away at her.
"I'll be 83 years old in May and they want to throw me out in the street," she said during a recent interview at her well-kept home in the 2600 block of Tangerine Street.
Jim Dunaway, a machinist, learned about her plight in October after default notices appeared in his mother's mail seemingly out of the blue.
He has since found a lawyer to help piece together a tangled paperwork trail reaching back to July 1999.
That's when his mother received a second mortgage from the former FirstPlus Bank.
The paper trail
The defunct bank's affiliates left behind a financial and regulatory mess in the wake of its rise and fall as a subprime lender in the last decade. FirstPlus Financial Inc. filed for bankruptcy in Texas in March 1999; FirstPlus Bank's California offices were later sold off and absorbed into other institutions, media accounts at the time show.
The Federal Trade Commission investigated FirstPlus' parent company, FirstPlus Financial Group, Inc. for false advertising and marketing of its debt consolidation loans; FirstPlus settled in 2000, commission releases show.
Some of second mortgages made by FirstPlus Bank and its affiliates were challenged in a 20-state class action lawsuit that settled for $20 million in 2004. California was not part of the suit.
Mary Dunaway's $50,000 loan from FirstPlus carried an interest rate of nearly 13.5 percent. At the time, mortgage interest rates averaged about 7.6 percent, according to lending giant Freddie Mac.
Worse, though, are details her son discovered in the documents:
* An apparent "sleeper" personal loan for $5,000. Jim Dunaway believes the loan document was secretly slipped into the stack of mortgage paperwork his mother signed off on.
* Apparent failure to pay several creditors slated for reimbursement by FirstPlus.
* Apparent loss of more than a year's worth of loan payments. Dunaway said he found more than a dozen canceled checks his mother sent that weren't applied to her debt. The money simply "vanished," he said.
What's more, Dunaway says his mother was pressured into the loan in the first place after being tricked into a home improvement contract by aggressive door-to-door salesmen.
Buried in debt
Mary Dunaway, who spent a career working for the county before she retired from the Human Services Department, said after repeated calls and visits from a contract firm's salesmen in the spring of 1999 she agreed to let them do an estimate.
She said she signed the $15,456 Tex-Cote estimate only to learn several days later it was a contract.
Jim Dunaway said his mother never mentioned the contract or loan at the time because she was determined to live independently after her husband died in 1984.
Mary Dunaway eventually stopped paying the confusing second-mortgage bills altogether.
Her first mortgage remains in good standing, she and her son say.
The delinquent loan bounced quietly around the markets for the next few years.
Then, in October, a default notice -- the first step in a possible foreclosure -- arrived from Global Foreclosure Corp., an Orange County firm. With interest and fees, Dunaway's debt is now valued at more than $92,000, documents show.
Wednesday morning, a group of 20 or so gathered downtown at City Hall steps for what's an almost daily ritual: the 10 a.m. trustee's sale.
On this chilly, foggy day, some clutched cups of warm coffee as auctioneer Mike O'Carroll ran down a list of properties and gave verbal status updates. Some auctions had been canceled, some postponed.
Some went forward.
Dunaway's home was the first sale of the day.
Jose Gutierrez, navigating a laptop and cell phone, picked up Dunaway's house for $110,100.
Gutierrez said he makes his living dealing in foreclosed properties. He hadn't seen Dunaway's house. He said he was sorry to hear of the owner's situation.
Jim Dunaway, who was at work Wednesday morning, has since spent off hours exploring legal options. The family has about $7,000 on hand for a possible courtroom battle.
As of Friday evening, the Dunaways hadn't yet heard from Gutierrez. They aren't sure what will happen next. They wonder if an eviction notice is on the way.
Mary Dunaway fretted over costs on a recent evening before the sale.
"I'm using my burial funds to pay for this," she said.