On September 25, 2010, Monica and Ricardo Zapata should have been out celebrating their tenth wedding anniversary, or enjoying a candlelight dinner inside their five-bedroom home 30 minutes inland from West Palm Beach, Fla.
Instead, the couple packed and left their dream house behind. After two failed attempts at a mortgage modification and what the Zapatas describe as a suspiciously timed foreclosure sale, the bank managing their loan ordered the couple and their two children out. That day, the Zapatas lost more than $100,000 in mortgage payments. In the months that led up to the foreclosure and those that followed, they also racked up thousands of dollars in stress-related medical bills and family loans. Ally Financial, whose predecessor, GMAC, handled the Zapatas' mortgage, declined to comment on the details of the Zapatas' claims.
Now, under the terms of a government settlement with Ally and four other companies that allegedly mismanaged millions of loans and introduced fraud to the foreclosure process, nearly 2 million homeowners are slated to receive a negotiated measure of justice. About 1 million homeowners who owe their banks more than their homes are worth will be eligible for a principle balance or interest rate reduction, making it less likely that these people will default. Another 775,000 borrowers who lost their homes between 2008 and 2011 will be eligible for a one-time payment of up to $2,000.
Borrowers will not release any claims in exchange for a payment. And $3.5 billion will go to state and federal governments to be used to repay public funds lost as a result of mortgage servicer misconduct and to fund housing counselors, legal aid and other similar public programs determined by the state attorneys general.
It remains unclear how effective these additional remedies will be. And some say that the payout is restitution that falls far short of a foreclosure's real costs.
"I try to be a grateful person, really I do," said Monica Zapata. "But it's almost a slap in the face when you consider everything we've been through."
Zapata's faith, family and prescription for the anti-anxiety drug Xanax have sustained her though nearly four years of housing hell.
In 2006, Ricardo Zapata's four-year old electronic component business was thriving, selling millions of small parts essential to taxi meters used throughout Latin America.
The Zapatas bought a 3,800 square foot house on Newhaven Point Lane in Wellington, Fla., for $500,000. They paid $250,000 more the previous owner had in 2004. Florida was in the middle of an unmistakable real estate boom.
In late 2007, Ricardo Zapata's business began to slow. By 2008, both Zapata and his clients were having a hard time getting the credit they needed to trade across international borders. Zapata laid off all 12 of his employees, then officially closed the business but continued selling what was left of the company's inventory.
Worried that the family's $15,000 emergency savings fund would not last, Monica Zapata contacted GMAC, the bank that managed her mortgage and payments. GMAC assured Zapata that the bank would consider changing the terms of her mortgage.
"I remember that application was like 40 pages," said Zapata. "I think I spent $15, just putting it in the mail."
Months passed. Monica Zapata developed a routine. She called GMAC every few weeks. Each time, staffers assured her someone was carefully considering her application. In April 2010 –- nine months after she first applied -- the bank sent a letter. GMAC planned to foreclose on her home.
Ricardo Zapata, 59, was stoic, Monica Zapata said. She was a wreck. In the months before the foreclosure notice, Zapata developed gastrointestinal problems and ulcers aggravated by stress, problems she had never experienced before. Two days after the foreclosure notice arrived, Zapata experienced the first in a series of what emergency room doctors explained were panic attacks. Zapata, who has health insurance through her travel agency job, owes about $3,600 in medical bills.
About a week after the foreclosure notice showed up, Monica Zapata saw a story on a local Spanish-language television station about a Saturday event at the Miami convention center. A national nonprofit profit planned to bring together borrowers and banks to work out mortgage modifications. The Zapatas pulled into the convention center parking lot at 8:30 a.m.
"There were already more than 100,000 people there," said Monica Zapata. "There were people who had slept there. It was just this horrible scene straight out of the Great Depression."
After working closely with the Zapatas, the nonprofit sent a new mortgage modification application to GMAC two weeks before a deadline set by the bank, Zapata said. GMAC confirmed that the 40- to 50-page application had been received, Zapata said.
"When [the nonprofit] called GMAC a few weeks later, they said they never got the paperwork," said Zapata. "GMAC said, 'It's not on time so we can't help them.' Case closed."
The bank scheduled a May court hearing, one part of Florida's foreclosure process.
"I was in a state where my daughter said, 'Mommy why are you acting like this?' I was really just so embarrassed," Zapata said.
When the couple went to court, Zapata noticed a woman with a Gucci handbag waiting to talk to the judge about her foreclosure case. When it was their turn, the judge assured the Zapatas that under Florida law, they had a right to talk with GMAC in a formal mediation session.
"We were thrilled. We were thinking, finally someone is going to sit down with us and listen," Monica Zapata said. "Then the letters started."
The first letter arrived a few weeks later, rescheduling the mediation session from June to July. A second pushed the session from July to Aug. 3. Then, a third letter arrived. It claimed the Zapatas would have to cover the $400-an-hour cost of the sit-down. Florida law requires the bank to pay for mediation. But the Zapatas didn't know that.
"I called and said, Listen, we don't have $400," Zapata said. "We can't pay. They said, 'Well, then you can't mediate.'"
On August 3, the bank sold the Newhaven Point Lane house in a foreclosure sale. The Zapatas received a letter a few days later stating that the family had 30 days to vacate.
"GMAC Mortgage strives to find a sustainable and affordable alternative to foreclosure whenever possible and keep borrowers in their homes," Susan Fitzpatrick, an Ally Financial spokeswoman, told The Huffington Post in an email. "In this particular case, the process GMAC Mortgage followed was in full compliance with the Florida guidelines for mediation programs."
The bank declined to respond to the Zapatas' specific allegations.
When the Zapatas found a landlord with a rental unit in a townhouse just a short distance away from the Newhaven Point Lane house, which would prevent their children from having to change schools, the landlord wanted a $6,600 deposit. Family members on both sides of the Zapata clan had to chip in.
Settled into a new life -- one with a low credit score in the 500s that makes buying a car or even connecting utilities a more expensive proposition, in a neighborhood populated mostly by senior citizens instead of middle-class families with kids -- Monica Zapata's anxiety is under control. Ricardo Zapata has a new job managing a Cuban restaurant. The family has a lot less money and little hope of owning a home again in the next decade. Those aren't the things that sometimes leave Zapata fighting back tears.
At least once a week, her 9-year-old son, Sebastian, asks when they can go back to their old house on Newhaven Point Lane.
"He doesn't understand foreclosure," Zapata said. "He thinks a bank just stole our house. And I really don't know what to tell him."