ISLIP, N.Y. -- Photographer Spencer Platt spotted the small white house with boarded-up windows and doors a couple months ago, when he was out here on Long Island covering a foreclosure-prevention event. He snapped a few shots and moved on.
Platt didn't think much of it then, but he had good timing. Those photos hit the newswires on Feb. 9, just as federal and state officials announced a long-awaited $25 billion deal with five large banks to resolve allegations of widespread mortgage and foreclosure fraud.
Since then, one of Platt's photos of the forlorn little house -- a close-up, framed against a bright blue sky -- has been featured with more than a dozen reports on the deal and its aftermath. Within a day, the New York Post used the photo to accompany a column about the deal headlined "The 'Deadbeat' Bailout." A month later, NPR's "Marketplace" published the photo on its website to accompany a story about the filing of the settlement in federal court. USA Today used it a few weeks ago for an analysis of the deal's winners and losers.
Most prominently, it appeared on the front page of The New York Times on March 13 to illustrate a story about an audit of document fraud associated with the practice of "robo-signing."
Some photos get published again and again because they capture a remarkable moment in history: the 1968 assassination of a Viet Cong soldier by Saigon's police chief, for example, or an American president with a bullhorn standing atop the pile of rubble that days earlier had been the World Trade Center.
In other cases, a strong photo rises to prominence because it is simply the most recent, best example of a newsworthy subject. The months since Feb. 9 have kept the housing crisis in the news, and Platt's shot practically screams foreclosure. "It's a sad slice of America there in Islip," he said in an email.
Still, it was taken as a photo for Getty Images, which sells stock and editorial photos. Neither Platt nor the organizations that published it had any idea whether the home truly reflected the effects of the foreclosure crisis that the settlement was supposed to help alleviate.
An investigation by The Huffington Post, which also published the photo (and used a slightly wider-angle version for a separate story), has found that Platt chose well. Property records and long-gone homeowners reveal that the home's history includes predatory lending, wildly overpriced real estate, securitization by the worst actors on Wall Street and a direct connection to the epicenter of the foreclosure crisis in central Florida.
The house also tells the story of this moment in the U.S. housing crisis: It has stood empty for more than two years in a devastated neighborhood. One of its former owners, Marjorie Mejia, now lives crammed into a tiny two-room rental apartment with her three children, wondering what she will do next. The other, Carmen Velez, Mejia's sister, filed for bankruptcy.
"There's been a lot of loss for me and my children," Mejia said. "All my life I've been working for them, trying to give them a good life. And we've lost everything."
ALL IN THE FAMILY
Even on an unseasonably warm spring day, with the tulips and dogwood trees in full bloom, 27 Hamilton Ave. appears cold and forbidding. The sealed windows and front door make it look like more of a coffin than a home. The detached garage is a burned-out shell barely noticeable in Platt's photo, a dark ashy smear jutting off to one side.
There are no yard signs, nothing that would direct a potential buyer to a seller. But here in New York's foreclosure capital, it probably wouldn't matter anyway. There are plenty of other homes sitting empty nearby, and no one wants them, either.
Islip now has the highest foreclosure rate in the state, with the hamlet of Brentwood, where 27 Hamilton Ave. is located, and neighboring Central Islip faring the worst. About 1 in every 365 homes in these communities received a foreclosure notice in March, a rate about five times that of the state as a whole.
Brentwood wasn't always so bleak.
Located on the north side of town, away from the ocean and near the Long Island Expressway, it has always been a little poorer than the rest of Islip. But until 2007, foreclosures were rare and unemployment was relatively low. Entenmann's, the large commercial baker of sugary pastries, provided steady work and good benefits to more than 1,100 people, many of whom lived nearby.
Public records show that the house at 27 Hamilton Ave. did pretty well, too. It changed ownership a few times in the early 1980s, but by 1984 it was in the hands of the Velez family, which would own it for the next 25 years.
The first to hold title, Maria Velez, an Ecuadorian immigrant, sold the house in 1989 to her two daughters. Carmen Velez and Marjorie Mejia borrowed $95,000 to make the purchase.
This was a family home. Mejia lived there for nearly 20 years, as did her four children and various relatives. The family also converted the garage into an illegal sublet. Public records show that more than 40 people claimed 27 Hamilton Ave. as a residence from 1989 to 2009.
The borrowing that would lead to foreclosure began in 2003, when the sisters took out a home equity loan of $100,000 from Fleet Financial, later acquired by Bank of America.
Had they stopped there, the sisters might own the house today. But on Dec. 7, 2006, they refinanced for $213,000 with a mortgage from People's Choice Home Loan, an Irvine, Calif.-based subprime lender.
Velez, who had moved to Florida more than a decade before, said she doesn't want to talk about the house or her financial situation with a reporter.
Mejia said her memory for financial details -- especially painful ones -- isn't very good. "I don't remember everything," she said during one of several recent interviews. "I prefer to block things out and keep living."
Interviews and public documents make this much clear, at least: It was a loan that Mejia and her sister could not afford on a house that was absurdly overvalued.
AN ALL-IN PROPOSITION
Like millions of other borrowers in the mid-2000s, the sisters bought into the false narrative that home prices would continue to soar.
The plan, it seems, was for Mejia to use the money from the refinancing to pay off the earlier home equity loan, pay off other debt, and move into a house in St. Cloud, Fla., which she bought around the same time for $255,000. She would quickly sell off the Islip house, at a profit, which would help make the $2,300 monthly mortgage payment on the Florida home.
This was an all-in proposition. In addition to the mortgage on 27 Hamilton Ave., she also sold off property in her native Ecuador to raise money for the move, she said.
She had no other way to land that house. She is disabled from a fall, she said, and hasn't worked since she lost her job at the Entenmann's plant in 2007. She has had three surgeries on her back and might need another.
It was an incredibly risky plan. The new mortgage on the Islip house was an adjustable rate loan. The starting interest was 8.25 percent, and it could swing up to as much as 14.25 percent. The initial monthly payment was around $2,200, Mejia said.
She was betting that she could sell the Islip house for more than $213,000 within a few months. Otherwise, she wouldn't be able to carry the combined monthly payments of about $5,500.
It's not clear how much of this plan was spurred by an appraisal in her mortgage application that greatly overstated the home's value.
This an old house, likely built in the 1940s. It sits on the working-class side of a Long Island town, out of commuting range for most people from New York City. It faces the back fence of a strip mall's parking lot. Yet the securitization documents show that the loan amount in 2006 was just 60 percent of its appraised value. That means someone, somewhere, determined the little two-bedroom house on one-sixth of an acre was worth $355,000.
According to the mortgage website Zillow, the home is now worth $137,900. But the $355,000 valuation didn't even make sense in early 2007, when real estate prices were peaking. Mejia said she did indeed find a buyer, who agreed to pay $240,000 -- $115,000 less than the appraised value included in the securitization papers.
Nancy Manfredonia, the executive director at a nonprofit housing group in the neighboring hamlet of Central Islip, isn't familiar with the Brentwood home but said she's not surprised by those numbers. She said predatory lenders targeted her community in the run-up to the financial crash.
"There was widespread collusion between realtors, mortgage companies and appraisers," Manfredonia said. "[These homes] were never worth that money even in the best of times. It was just crazy. Some borrowers were aware of what they were doing, but many more were just scammed."
Other lenders, such as Countrywide, now part of Bank of America, have paid substantial fines to settle allegations that they targeted minority communities for high-priced predatory loans.
Borrowers have filed a handful of lawsuits against People's Choice, but it folded in the spring of 2007, just three months after making the loan to the two sisters. Like hundreds of other subprime lenders, there's nothing left to sue.
Despite its riskiness, the plan seemed to go well at first. Though Mejia couldn't afford both loan payments, everything had been settled: the sale of the Islip house would pay off the mortgage with a little left over. But the buyer didn't show up for the closing a few months after the refinancing -- this was in early 2007, just as the air was beginning to rapidly hiss out of the housing balloon.
Reached by phone at a two-room apartment in Kissimmee, Fla., that she now shares with three children, Mejia said taking out the People's Choice loan was the worst decision of her life.
"I lost everything," Mejia said, including the house she had just purchased in St. Cloud. "I made a big mistake."