Well, most of the time.
As a foreclosure crisis puts thousands of New Haven families at risk of losing their homes, hundreds are showing up in the courtroom of Judge Anthony DeMayo.
That has put the 84-year-old judge, who’s now a trial referee in New Haven’s State Superior Court, in one of the most uncomfortable positions of his 17-year career.
Over that time, DeMayo has made a mark as the underdog’s judge. For instance, he forced New Haven to do more for the homeless when he ruled that people have a right to shelter under the state constitution. He confronted NewAlliance Bank leaders — and helped steer more money from trusts to legal aid. He blasted the Water Pollution Control Authority for aggressive collection tactics.
But as hard-luck stories pile into housing court, DeMayo has found himself in a pickle. Even when struggling families are up against faceless, greedy lenders seeking to foreclose on them based on sometimes predatory loans. Even as the judge sees the hand of special interest-swayed politicians behind the families’ misery.
The law allows him only so much leeway in deciding foreclosure cases, DeMayo said in an interview this week. And he has to keep the interests of creditors in mind.
Still, he from time to time finds a solution, as he relates in the following conversation about how an underdog’s judge navigates the current crisis, about the crisis’s roots, and about the limits of reform prescriptions.
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Tell me about a decision you made that broke your heart.
I had a woman who came before me. It looked like a cut and dry default. She didn’t show up. It was a judgement of strict foreclosure. There was nothing to do there. She was in the tank for over $90,000. I’m relying on the paperwork in front of me, which I will assume was filed in good faith.
Within weeks her sister comes in and tells me the tale that, well, the sister who was foreclosed on has health and mental problems and didn’t understand what was going on. She called the bank and somebody said, “That mortgage has been paid that you wrote me about.” And she just let it slide.
So I query the sister some more: “Wait a minute. Let’s go back.” It seems what happened was a year or more before it came before me, the sister refinanced, paid off the mortgage, and had a new mortgage. The people who bought that mortgage [from the original lender] did not know that the $90,000 refinancing — or they didn’t bother to check; how they could miss it is a mystery to me — they never bothered sending releases through to her or her lawyer. That’s frequently the problem. People don’t know they’re supposed to look for mortgage releases and put them on the land records.
If I had known the status of that payment, there never would have been a judgment of strict foreclosure. She actually had $90,00 of equity in the property to pay off the mortgage that was now being foreclosed. Where I was caught by the short hairs, is the fact that there’s a statute that says once the law day has passed you can’t reopen the judgment.
But I got her property back. [Laughs.]
How did you do that?
It was a little bit unusual. I think I took the position that there was a mutual mistake and possibly fraud. So I enjoined the foreclosing party from conveying title until the facts were disclosed. This brought about a moment of truth and they reconveyed it to her. You want to know something? That took me weeks. Weeks. Even though I felt I had a certain clout, I still was treading on thin ice. I had an out-of-state entity. I had no more control over them than I had over you. But sometimes you have to , let’s say you bend the equities a little bit.
Any other case that broke your heart?
There were several where I couldn’t do anything for people. They come in. They’re under water. They can’t refinance. They don’t have equity. They’ve lost their jobs. They’re going to be evicted. The only thing I can do is give them a little time to move. It’s horrible …
How bad is the crisis at the moment?
A typical foreclosure morning [in court] has got 120 cases, 125 cases … This is the biggest blow to minority homeownership we will ever experience. It reminds me of the Depression. And I grew up during the Depression.
Especially amongst the minority groups in the inner city. They’re losing whatever equity they had if they had any. I don’t know how they’re going to get started again.
Did this happen because subprime [loans were] pushed on them?
Not entirely.
Why was it?
A big problem was the variable rate mortgage. Rising taxes. Cost of living.
Why specifically [do you see a bigger impact on] minorities? Some studies have suggested they get higher interest rates than comparable white borrowers…
I can’t honestly say that I have seen that. I think what happens is that people who seem to be eager salvage their properties, who may even have a chance to do it, seem to be people who hit bottom because they had a medical crisis. They were relying on two incomes, and one was lost. A certain number will be as a result of domestic splits. Loss of a job by the one person who’s carrying the load
The toughest ones are when you have a single parent, usually a mother, trying to keep from losing the house.
The best a judge can do is give them as much time as he feels he can do within the constraints of the law. And still you have to pay attention to the other side. They do have rights too.
What some of them need is guidance. They need direction to refinancing, to sources of refinancing.
We’ve noticed in covering foreclosures that sometimes a buyer will get a good deal on a house, but then the judge overturns it. The argument is that the house is worth more than the person paid. Are your hands tied in those situations, or do you have leeway?
We have some leeway. If we honestly see that it looks like a steal — unfortunately in the market we’re in now, it’s tougher and tougher to turn down a sale. Appraisers will tell us the market is plunging.
We’ve seen cases where they say if [the auction price is] less than 70 percent [of the appraised value], the judge will turn it down.
I don’t like a rigid formula. I like to hear from all the parties.
Why not let people get steals and fix up the houses?
If it’s the homeowner who’s getting the deal, that’s fine. If it’s foreclosure by sale, and it goes cheap, the original borrower comes out with nothing. So the reason for the foreclosure by sale is to get as much money out of the property as possible, pay off the mortgage so there’s no deficiency, take care of liens that are next in line. Then if ithere’s anything left, it goes into the borrower.
If the borrower goes into the sale with $20,000 of equity, and you let them sell it for $15,000 less than the appraised value… that’s $15,000 that isn’t made available to the original borrower.
In most cases, doesn’t the borrower owe so much, that it’s Deutsche Bank that’s getting more money?
Yes. But don’t forget that the borrower is also around for the remaining obligations on that property. The foreclosure doesn’t wipe out your debt.
When our reporters show up at foreclosure auctions, they notice that often the banks bid high to hold onto the properties — even though they’re often from out of town and saddled with loser mortgages and homes they need to get rid of. Why do they do that [and then sell the properties for less later]?
I don’t know. I can’t answer you. The whole banking business — I don’t call it “banking” anymore. We managed to take the legislative steps to eliminate banks as the responsible party. Most of these are investment shills. Deutsche Bank is a bank in name only. This whole industry should be completely revamped, restudied and regulated. Thanks to people like [Connecticut U.S. Sen.] Joe Lieberman [who has championed deregulation], they are not. Joe says, “These are good responsible people. They can govern themselves.” We can see how well they’ve done themselves This is an industry that should be regulated to the hilt.
We should also call on the banks in Connecticut to stop advertising, “Come site beside me, we’ll lend you all the money and take care of you.” They take care of you for 15 minutes.
Could a judge give priority to buyers who are going to be homeonewers themselves, even if they got a steal?
No, I don’t see any way to do that.
Don’t we want to stabilize neighborhoods rather than have a new round of speculation?
This would require a change in the whole process.
What kind of change would you like to see?
The first thing you’ve got to eliminate is a situation where there’s no regulation. They can do as they please [now].
You’re talking about all the fees charged to borrowers; lenders not checking people’s financial backgrounds; predatory loan terms…?
There are all kinds of hidden fees thrown in. I’m sure nobody ever sat down and said to [borrowers], “In three years, this is going to go up to x [variable-rate loans with ballooning interest rates].” No one said, “You don’t have enough money in here, so I’m going to inflate this and change that.”
I wouldn’t doubt for one minute that there were borrowers out there who were [knowing] parties to this. But what do you expect from the guy who can only do this by doing it this way?
Not to do it.
The temptation is too great. You can’t expect consumers to keep the bankers honest. Any more than you expect bank robbers to obey rules when they go in the bank. Sometimes they’re desperate. Sometimes it’s, “Oh my god, a chance to have my own house. I’ll have security,” they think.
And sometimes they’re con artists. That’s why we need the industry to be regulated.
Spending money to educate borrowers [one of government’s main initiatives so far in the crisis] is throwing good money after bad. I don’t think that program at this time will accomplish anything. You need regulation. It’s too late. We already have a supply of victims. Who’s borrowing money now?
So what do now to fix it? Doesn’t it kind of fall to you as a judge?
I’m left in the present framework to do the best I can.
Previous Independent coverage of New Haven’s foreclosure crisis:
• A House For Precious?
• Reluctant Bidder Snags F. Haven Bargain
‚Ä¢ Well, There’s Always Powerball
• Neighbors Retrieve Home From Bank
• Somebody Has Plans For Bassett Street
• Foreclosed, the Khennavongs Leave the Santanas
• Foreclosure Steal May Be Too Good
• 2nd Foreclosure in 3 Months Dims Bright St.
‚Ä¢ After Foreclosure, W’ville Owner Still Hopes To Sell
‚Ä¢ He’s Not Buying, Yet
• Quiet Foreclosure on Porter Street
• 3 Minutes Too Late
• Historic Gambardella Property Foreclosed
•2 Homes Lost, 1 Gained
‚Ä¢ “Everybody’s Got To Eat”
• More Foreclosures, More Signs
‚Ä¢ Foreclosure Sale Benefits Archie Moore’s
• Rescue Squad Swings Into Action
• A Bidder Shows Up
‚Ä¢ Bank Beats Tanya’s Bid
• Westville Auction Draws A Crowd
• DeStefano: Foreclosure Plan Ready
• Can They Help?
‚Ä¢ “We Should Over-Regulate These Bastards”
• Rosa Hears of Rescues
• WPCA Grilled on Foreclosures
‚Ä¢ WPCA’s Targets Struggle To Dig Out
• Sue The Subprimers?
• WPCA Hearing Delayed
‚Ä¢ Megna’s “Blood Boils” at WPCA Tactics
• Goldfield Wants WPCA Answers
• 2 Days, 8 Foreclosure Suits
• WPCA Goes On Foreclosure Binge
• A Guru Weighs In
• WPCA Targets Church
• Subprime Mess Targeted
‚Ä¢ Renters Caught In Foreclosure King’s Fall
‚Ä¢ She’s One Of 1,150 In The Foreclosure Mill
‚Ä¢ Foreclosures Threaten Perrotti’s Empire
‚Ä¢“I’m Not Going To Lay Down And Let Them Take My House”
‚Ä¢ Struggling Couple Sues Over “Scam”
The following links are to various materials and brochures designed to help homeowners avoid foreclosure.
How to prepare a complaint to the Department of Banking; Department of Banking Online Assistance Form; Connecticut Department of Banking, Avoiding Foreclosure; FDIC Consumer News; Statewide Legal Services of Connecticut, Inc; Connecticut Bar Association Lawyer Referral Service.
For lawyer referral services in New Haven, call 562-5750 or visit this website. For the Department of Social Services (DSS) Eviction Foreclosure Prevention Program (EFPP), call 211 to see which community-based organization in the state serves your town.
Click here for information on foreclosure prevention efforts from Empower New Haven.