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Job Market Plummets As Adjustable Rate Rises

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By SHANNON BEHNKEN | The Tampa Tribune

Published: June 27, 2008

PLANT CITY - As soon as they walked in the door, they knew they were home.

The three-bedroom, 1,484-square-foot ranch house needed some work, but it had a big family room and a large back yard – just the kind of home they wanted for their children.

Most important: Javier and Esmeralda Arroyo qualified for a loan on the $166,900 home.

After being turned down for loans five times in a year, they were ecstatic to move out of the cramped two-bedroom apartment. They kept the news from their children until closing day so they wouldn't be disappointed yet again.

When the home was officially theirs, they set up their children's mattresses in each of their rooms and then took them there for a visit. They have two girls, ages 14 and 10, and two boys, 9 and 2.

"When they saw the mattresses, they knew," Esmeralda said. "They ran all through the house screaming, 'This is our house!' It was perfect."

About a year later, the excitement started to fizzle.

The Arroyos couldn't have known how bad their timing was when they signed mortgage documents in July 2006 for the home on Warnell Street in Plant City.

That month was the absolute height of the local housing market. In August, prices in the Tampa Bay area started falling, and they haven't stopped. Homes in the neighborhood now sell for tens of thousands less than the Arroyos paid.

The couple are examples of buyers who purchased an adjustable rate mortgage and now face losing their homes because of poor timing, ill-informed decisions and unfortunate circumstances.

They've struggled, sometimes going without eating, to pay their mortgage for the past seven months.

In early 2007, Javier, who worked for his brother's construction business, watched as work disappeared. It got worse each month, and money got tighter until September, when he took a job as a maintenance worker at the Catholic church they attend. His pay went from about $1,000 a week at the peak of the construction boom to $10 an hour. But it includes health insurance, something the family cannot do without.

"I'm grateful, but it's hard because I'm the man of the household, and I want to provide better for my family," Javier said recently. As he struggled to vocalize the family's story, he paused to fight back tears.

Later that month, the family faced another blow. Their youngest son, Cristian, 2, was diagnosed with Langerhans' cell histiocytosis, a rare disease that's treated with chemotherapy.

The family prayed for direction. Esmeralda had to quit her job as a bookkeeper at a car dealership to care for Cristian.

They knew they would have trouble making the mortgage payments, but "this little boy's life is so much more important than any house," Esmeralda said.

The boy's disease is in remission, and his chemotherapy stopped in March. But by that time the car business had tanked. Esmeralda was back at work for only one month before she was laid off.
And if all of that weren't enough, the couple were notified in December that the interest rate on their mortgage will adjust in September. The Arroyos, who speak primarily Spanish, say they didn't understand they were signing up for an adjustable-rate mortgage.

"I guess that's why we qualified," Javier said, shaking his head.

Both Esmeralda and Javier grew up poor. They were proud to become homeowners and give the kids a middle-class life. For Javier especially, asking for help was like admitting failure.

Around Christmas, though, they broke down and told family and friends at church. The church provides food such as beans and rice.

"The kids sit down to eat, and you just know they're thinking, 'Beans, again?' " she said.

Donations poured in. It has been enough to make mortgage payments since December.
It's bittersweet, though, because the help is making it tougher to modify their loan.

"The lady said, 'You're paying your mortgage on time every month. We see no reason to help you right now,' " Esmeralda said. "Now we feel really helpless."

Meanwhile, the ordeal has taken a toll.

"Sometimes we feel like we can do no more," Javier said. "We need a miracle, or we just can't make it."

Then two weeks ago, a speck of a miracle presented itself: Esmeralda's old boss called. He gave her a week's pay and offered to let her come back to work, even though it will likely be temporary.

"It's not a solution," she said. "But it could give us a few more mortgage payments."

And it could keep the kids in their big yard for a little longer.

Reporter Shannon Behnken can be reached at (813) 259-7804 or sbehnken@tampatrib.com.

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