December 10, 2007
BY KARA SPAK
Theresa Adamovitz had one thing to do before putting up her Christmas tree this year: File for bankruptcy.
On Dec. 4, the day before her home was to be auctioned off by the Cook County sheriff, she declared bankruptcy in a last-ditch effort to stay in the house for the holidays.
Her modest house on the Southwest Side has been on the market since June. She owes more than $100,000 on the home, which is now in foreclosure.
“The scariest feeling is not even knowing if we are going to have Christmas here,” she said, wearing a wool coat in her house because she has no heat after not being able to pay the gas bill. “If I lost the house, I would have nothing.”
29,000 foreclosures here in ’06
Adamovitz, 43, is one of millions of Americans caught in the mortgage foreclosure crisis that’s looming over families at all income levels, threatening their credit, homes and dreams of a stable future.
In the Chicago area in the next two years, 20,000 to 30,000 people are expected to lose their homes. In 2006 alone, there were nearly 29,000 foreclosures, the most in the last eight years, according to the Woodstock Institute.
Those are conservative estimates, said Michael van Zalingen, director of home ownership services at Neighborhood Housing Services of Chicago. He said foreclosure counseling requests at his agency are up 238 percent this year from 2006.
“What we’re seeing now is the tip of the iceberg in terms of the bad lending that’s out there,” van Zalingen said. “These bad loans are up and down the income ladder.”
Adamovitz wants to pay her two mortgages and buy Christmas gifts for her children but can’t afford to, even though she earns $2,600 monthly as a manager at Sam’s Club.
She didn’t put up the Christmas tree earlier because she didn’t want her 6-year-old granddaughter Gabby to think Santa was coming to their house. With the bankruptcy, she, her three children and Gabby can stay a little longer, but she knows she has to leave.
“I wouldn’t wish this on my worst enemy,” she said. “I try to go to work and pretend home doesn’t exist, but it’s the moment you get in the car and boom, it hits you.”
Her luck turns bad
The modest home in the 6100 block of South Loomis was a dream come true for Adamovitz and her then-husband when they bought it in 1997.
A year and a half ago, enticed by a second mortgage for home improvement, she built an addition. Her ex-husband co-signed on the loan, which was subprime.
The term describes adjustable-rate loans starting at 2 percent to 3 percent over the prime interest rate with prepayment penalties. Nearly 2 million Americans are thought to hold these mortgages, with rates that will increase in the next two years.
Adamovitz was optimistic she could make timely payments on both mortgages and figured she would refinance in two years. Then her bad luck started.
She totaled a car she still owed money on. Her job switched to hourly pay, costing her $500 in monthly income. Her son got mugged, needed surgery and lost his job. Her ex-husband didn’t make his payments on the loan. The adjustable rate mortgage kicked in, jacking up the monthly payment to $1,853 from $1,175.
Things quickly got worse. For six weeks, every penny of her paycheck went to mortgage payments. Embarrassed but desperate, she borrowed money from her parents, who are in their 70s, to pay for food.
She and her children shower at her parents’ house because they have no hot water. They wear coats inside and use space heaters.
“You could have stabbed me and it would have hurt less,” she said of watching the “For Sale” sign go up in her front yard.