'My House. My Dream. It Was All an Illusion.'

By Brigid Schulte
Washington Post Staff Writer
Saturday, March 22, 2008

Looking back, Glenda Ortiz can see she did everything wrong when she bought her house in 2005. In fact, to understand the housing crisis that has swept the country, one need only listen to the tale of the Ortiz family.

She looked at only one house and paid too much for it: $430,000 for a run-down, one-story duplex in Alexandria, triple what the house had sold for the year before, and $5,000 more than the asking price, according to real estate records.

She agreed to a high-interest loan that would cost her more than $3,000 a month, more than 70 percent of the $4,200 that she and her husband brought home monthly.

She signed papers in English that she didn't understand. One said she was married to a man she didn't know.

She placed her financial future in the hands of a woman she barely knew who sold cosmetics and jewelry door to door. She sought no one else's advice.

Her loan application sailed through an originator and was accepted by a mortgage company, both specializing in customers with "less than ideal" credit.

And so, in August 2005, Glenda Ortiz, a cook at a Best Western who lived in a cramped apartment in Arlington County, became a homeowner. By last March, the home was in foreclosure. The loan originator and mortgage company had gone out of business. And Ortiz was headed to court.

"It was all a mistake. One hundred percent," Ortiz said recently in Spanish. "I had such a burning desire to have my own house. I didn't think about anything else."

Ortiz and her husband, an air conditioner installer, are examples of what can happen when a hot real estate market collides with cheap credit, lax lending standards and little oversight. No one is free from blame in this tale.

Theirs is a story that Erick Gutierrez, housing director for the Washington-based Latino Economic Development Corp., said is all too familiar. Gutierrez blames the government for allowing so many subprime loans, such as Ortiz's, which required no proof of income. "You could say: 'You clean houses on weekends? Great!' And then put down that they made $1,000 a week," he said.

But by then, real estate agents would have made their commissions, mortgage brokers would have their closing costs, and the risky loans would have been repackaged and sold to Wall Street. No one cared as long as the housing market continued to boom.

According to the Center for Responsible Lending, 40 percent of loans to Latinos are subprime, and it projects that one out of five of these loans made in 2005 and 2006 will go into foreclosure.

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