NAPLES — In the early morning darkness, Nathaniel Keith hitched his pontoon boat to his white Ford F150 pick-up, got in the truck’s cab and drove out of River Park, leaving his home of 47 years behind.
His small, white house at 507 13th Street North in Naples will be sold in a foreclosure sale on Thursday. By then, Keith, 75, will be living in Fort White, a small town about 30 miles northwest of Gainesville, with his 97-year-old mother.
Like millions of homeowners across the country, Keith got a big loan from a sub-prime lender with an adjustable-interest rate and high payments. Six months later, another company promised him a reverse mortgage to pay back the home equity loan in exchange for his house. The reverse mortgage company told him to stop making payments on the home equity loan.
Keith went back and forth with the reverse mortgage company for months, but nothing materialized — so he defaulted on the home equity loan. He knows he made a mistake when he trusted the reverse mortgage company and stopped making payments, but that doesn’t make it easier. He’s losing his home and his life in Naples.
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Keith sits in his empty living room in a worn, brown recliner, legs propped up to ease the pain of diabetes. Two friends sit in folding metal chairs on either side of him and the front door is open to the street. Outside, kids play, cars pass and neighbors talk.
“It don’t feel too good to say goodbye,” says George Hills, 76, who stopped by after work because he saw Keith’s truck in the driveway. He lives one street over in River Park. “I’m used to him being around every day.”
“Mmm hmm,” Keith says, lengthening the syllables. “Goin’ fishin’.”
“Yup, we’re going to miss our fishin’ partner,” says Peter Brenson, who has known Keith since 1964 and used to live nearby. “When George told me that Nathaniel was moving I was shocked, so I raced over here today and found this empty house.”
Their gravelly voices echo in the empty room, where the green-paneled walls are blank and worn spots on the wooden floorboards are the only sign that the space was recently filled. You can see where a circular pedestal table used to sit in the kitchen and a couch in the living room.
Keith packed his stuff with help from friends in the weeks before Christmas, driving truckloads to his mom’s home in Fort White.
He’s lived in Naples since 1955, working as an auto tech for Collier County Motors, now Tamiami Ford, for about 18 years and for the City of Naples for nearly 20 years. At night, he worked security at the hospital. He and his first wife bought the home in River Park in 1962 for $9,300 and raised two daughters there.
He’s given up trying to save the house. The stress was taking its toll on his body.
“I’ve been worrying quite a bit,” he says. “It’s sort of releasing a load off me now, like I was freeing myself up. I’m doing something I don’t really want to do, but I just gotta do it.”
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It’s a tangled web of loans, companies and possible fraud, and Keith is caught in the middle.
In late 2006, a lender called Keith and asked him if he needed money, he says. He said yes. Back then, the phone rang often with offers for loans, Keith and his neighbors in River Park say. Equity on the small, waterfront homes built in the 1960s soared.
Keith signed for the $231,000 home equity loan on Jan. 25, 2007. The lender was NovaStar Mortage, a company that specialized in “residential nonconforming mortgage loans.” That means the company loaned money to people whose credit or income didn’t meet standard loan requirements and then packaged the loans and cut them into pieces to sell. It also purchased similar loans and pieces of loans from other companies.
Keith’s credit was bad after a divorce, and his interest rate started at 9.9 percent and was set to reset every six months. It would never be lower than 9.99 percent or higher than 16.99.
“I knew (the interest rate) was going to go high, but I didn’t know how high,” Keith says. “I had to do what I had to do, it was hard times.”
The payments were $2,025.40 a month, Keith says, pulling the number from memory because he has already taken all of his papers to Fort White. His monthly income is $2,276.70, from social security and a pension. Keith used $160,000 of the home equity loan to satisfy a previous home equity loan, and the rest, for living expenses.
After paying on the loan for about six months, Keith decided to get out from under it — and his house — with a reverse mortgage, where the bank pays you in increments to buy your house, and then takes possession of it when you die. He spoke to a Tampa-based reverse mortgage company on the phone and they told him they would fulfill his home equity loan and take possession of the house after his death, but that his granddaughter would have a year to come up with the market value if she wanted to buy it.
That company told him to stop making payments on the home equity loan with NovaStar, Keith says, and listed his house for sale. A real estate company based on the east coast listed his house on the MLS in 2007 for $439,900, touting it’s Gulf of Mexico access. If the company had sold the house for that price and paid off his home equity loan as it said, it would have made about $200,000.
“There were a lot of problems with that reverse mortgage company,” Keith says. “I fought with them and they just didn’t get it done.”
In the end, the company left him in the lurch, with his home equity loan from NovaStar in default.
Today, NovaStar teeters on the edge of bankruptcy, reporting losses of $17.6 million, or $2.29 a share, in 2009’s third quarter. It’s been held up as an example of the kind of sub-prime lender that started the credit crisis in the first place.
On Keith’s loan documents, NovaStar is listed as a Virginia corporation with its address in Richfield, Ohio. The company’s headquarters are based in Kansas City, Mo. The phone number of the company’s office in Richfield has been disconnected.
Since he signed for the loan in 2007, banks, companies and offices in New York, Ohio, Missouri, Texas, Virginia and Germany had their hands on the loan.
After Keith stopped making payments, the home equity loan servicer called Keith and asked him if he wanted a loan modification. He said yes. They negotiated his payments down but when he started paying, his checks were applied to his past-due balance, Keith says. He couldn’t make up the difference.
Messages left on NovaStar’s investment inquiries phone weren’t returned, and multiple attempts during the past two weeks to get comment from the loan servicer, Saxon, were unsuccessful.
Keith’s home equity loan may be an example of predatory lending, given that the company solicited him over the phone, the interest rate was high and adjustable and his payments were nearly all of his documented income, says Maria Barbosa, an attorney with Legal Aid Service of Collier County. Barbosa is working on 55 foreclosure defense cases, and has a waiting list of potential clients.
“Especially during the housing boom, there were a lot of mortgage lenders out there just waiting to get more customers and they would call on the telephone and offer the borrowers all kinds of money to pay off debt and made it sound very rosy,” she said. “They accessed all the equity in their houses and got into these loans that ... had very expensive monthly payments.”
Foreclosure filings in Collier County for 2009 hit 8,203, compared to 7,872 for 2008. Lee county’s numbers are even higher, with 21,310 foreclosure filings in 2009 and 27,854 in 2008.
Today, fraudulent companies promising foreclosure help are even more common, Barbosa said. They often appeal to people who are on the brink of foreclosure, charging large fees up front and then disappearing or failing to provide help.
Many mortgage fraud companies use telemarketing or mailers to find victims, says Ryan Wiggins, spokeswoman with the Florida Attorney General’s office. Complaints about mortgage fraud were the number one issue investigated by the economic crimes division in 2008, with 31 cases opened in 2008 and 97 cases opened in 2009.
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The sun sets over a canal off the Gordon River behind Keith’s house. He sits in his recliner under the carport with two neighbors, Joe Williams, 72, and Shieann Drake, 58. It’s Keith’s last night in Naples, and he’s been sitting outside his home for hours, saying his goodbyes.
“I feel bad, real bad,” he says, his voice cracking on that last word. He takes off his wire-rim glasses, raises his hand to his brow and covers his eyes. Tears slip out. Williams urges him not to cry, telling him that he’ll be alright, that God will work it all out.
“I’m doing something that I don’t want to do,” Keith says. “I don’t want to leave.”