Camino a Casa - A Family Success Story

In 2005 the Mendez family moved into a new home to accommodate their growing six member household. Being unfamiliar with the housing market, however, they entered into a predatory loan agreement that eventually caused deep financial and personal stress to the family. The terms of the loan agreement initially offered the Mendez’s an interest rate of 7% and an affordable monthly payment. It was later revealed, however, that the loan had only a two-year fixed rate after which the interest rate would increase every six months at the lenders discretion. Furthermore, the monthly payments were “interest only” leaving the Mendez’s in a cycle of unending payments with a constant principal debt. In May 2008, just after their interest rate rose to 8%, Luis Mendez’s job cut his hours and Cindy Mendez took maternity leave. As their household income decreased and they struggled to make monthly payments, the family sought help from their loan officer to refinance the loan. But negotiations were declined as the value of their house had decreased over the years, leaving the Mendez’s feeling helpless and discouraged.

 

In July 2008 the Mendez family met with Hacienda's Homeownerhsip specialist for a free counseling session; together they created a budget based on teh Mendez's lowered income and negotiated a loan modification agreement with their lender to avoid foreclosure. The interest rate was lowered to 6% and allowed them to put part of their monthly payments toward paying-off the principal amount.  The Mendez’s now enjoy a fair loan agreement and are able to afford their own home!