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East Hartford Woman, Facing Foreclosure, Battles To Keep Her House

KENNETH R. GOSSELIN

February 17, 2009

She has been given another reprieve from foreclosure, but as time passes it's becoming clearer to Lisa Murzin-Pelcz that she's losing the fight to stay in her house.

More than a year has now passed since Lisa Murzin-Pelcz was served with foreclosure papers on her East Hartford house. And it's been even longer since she's made a mortgage payment.

She's been rejected for state and federal mortgage aid. She's been in bankruptcy court. She's tried to rework her mortgage with the bank.

At every turn, Murzin-Pelcz is told that she simply can't afford the house on her $27,000-a-year salary as a teacher's aide, and that her chances of qualifying for the latest state and federal programs are slim.

"I have no confidence that the government is going to help you," Hartford Superior Court Judge Robert Satter told Murzin-Pelcz earlier this month, as he granted her yet another month of reprieve from foreclosure — her last, he said from the bench.

Still, she fights — dragging out what appears to be the almost inevitable loss of her Winding Lane cape.

"When I moved here, I said I was never moving again. I had moved so many times," said Murzin-Pelcz, 46. "I said, 'They'd have to take me out in a pine box.'"

The drawn-out struggle by Murzin-Pelcz in many ways mirrors the national picture, in which more than 1 million homeowners are mired in some stage of foreclosure. For many people like her, unable to negotiate new terms or qualify for assistance, actually being forced from their homes can take months or even years.

That's especially true in Connecticut, where laws require months of due-process hearings in the courts before a distressed borrower may be removed.

In Phoenix on Wednesday, President Barack Obama plans to outline his plan to spend at least $50 billion to keep as many homeowners in their houses as possible.

For Murzin-Pelcz, the numbers are daunting. She estimates that she now owes $162,000 — including about $45,000 in missed payments and penalties on a mortgage with an 11.75 percent interest rate. The bank has appraised her house at about $100,000, and even that value might be too high.

Bankers in Connecticut say they can wait only so long without being paid by a borrower.

"No one wants to foreclose and carry it on the books," said Gerald Noonan, president of the Connecticut Bankers Association. "But I think two years is a long time to stay in a house without paying anything."

He added: "At some point, the cycle of credit has to go on."

Maryland-based Eastern Savings Bank, which holds the mortgage, did not return telephone calls seeking comment.

Murzin-Pelcz is clinging to some long shots. She hopes to qualify for expanded state foreclosure prevention programs, but those changes could come too late for her, if they happen at all.

Barring that, she says she will file for bankruptcy. She filed once already in 2008, without a lawyer, but she let the case lapse. Bankruptcy laws do not allow judges to alter the terms of mortgages, and Murzin-Pelcz is clinging to the hope that Congress will give judges that power.

Without a lower mortgage rate, she'd still be facing a monthly payment of $2,200, which she couldn't afford even with help from her two grown daughters and child-support payments from her former husband.

Homeownership has been a struggle for Murzin-Pelcz ever since she got her first mortgage in 1996, at a rate of 7.5 percent. The real trouble started when she needed to tap into the home's equity to help pay for a divorce in 2005 after a short, ill-fated marriage. With battered credit, she agreed to refinance into a subprime loan at 11.75 percent.

Murzin-Pelcz quickly fell behind in payments because she had a new baby at home, preventing her from working a second job. And one of her two daughters turned 18, cutting off Social Security benefits that she had been receiving. Her father had died years earlier.

Murzin-Pelcz had planned to refinance in a year, but the housing slump put an end to that idea.

In Superior Court earlier this month, a lawyer for Eastern Savings argued that Murzin-Pelcz hadn't made a mortgage payment in nearly two years — and that it was time to move forward with the foreclosure.

Murzin-Pelcz, representing herself, insisted that she might qualify for new state foreclosure prevention programs.

"It would be a darn shame," she said, if she lost the house when there were programs in place to help her. As she spoke, she held the hand of her 4-year-old son, Elijah, who had a bark of a cough and was headed to the doctor right after court.

The judge listened, but was skeptical.

"I think you've had since April of 2008 — about 10 months — to do something about this," Satter said.

In an interview after the hearing, Satter said that he typically leans toward giving borrowers more time to work out a solution.

"It's such a tragic situation," Satter said. "A lot of these people are depending on state aid, and it's not forthcoming."

But Satter said that the borrower is just one side of the equation. Banks have the right to collect on debts if a borrower can't pay, he said.

"My job is to be fair to both sides," Satter said.

Although she's not ready to face it, Murzin-Pelcz said she does have a backup plan.

"My final option is to let the house go, and move into my sister's and pay her rent," Murzin-Pelcz said. "But this is my house, and I want to stay."