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Losing Your Dream Home
By JOSH BARBANEL
 ARGARET
WRAGG, a retired school aide, found the home of her dreams on Martense
Court, a quiet cul-de-sac just a block from a teeming stretch of
Flatbush Avenue in Brooklyn. It was a classic brick attached house, two
stories tall and 18 feet wide, with a front porch with an iron railing,
a backyard and even a few surviving original details, like dark wood,
patches of decorative plaster work and stained glass.
She bought the house even though she hadn't originally set out to be an
owner. She had lived in the same apartment for 25 years on Church
Avenue, a few blocks away, and when her landlord told her she would
have to move out because he was selling the building, she wanted to
rent again. But looking at the classified ads, her eyes drifted to an
advertisement offering "the home of your dreams," and she began her
journey to home ownership.
Now, two years later, she says that dream has turned into something
else — endless stress, heartache and sleepless nights — as she
experiences the dark side of the real estate boom in America.
Her life savings have been depleted, she now says in a lawsuit, by a
house she could never afford, appraised at far more than it was worth,
with two mortgages she should never have qualified for, with carrying
costs more than double her income. She worries about whether to pay the
utility bill or pay for necessities. She has a stack of packing cartons
in case she has to move out.
She blames the mortgage company, the appraiser, the lawyer who
represented her, and United Homes L.L.C., of Briarwood, Queens, the
company that owned the home, placed the ad, and arranged almost
everything about the closing. "I trusted them, because I had never done
this before and I didn't know any better," she said bitterly, as she
sat in an overstuffed chair in her living room.
In a federal lawsuit, Ms. Wragg says she was the victim of fraud and
racial discrimination in a classic case of what's known as housing
"flipping." Her opponents say that she was treated fairly and is
blaming them for her mistakes, including taking a mortgage she could
not afford. It is, in short, a case study in what many housing experts
say is an increase in complaints of housing fraud, abusive and
predatory lending practices, phony appraisals and even outright thefts
of deeds, as home prices have soared and interest rates have fallen.
Although it has not been determined whether there was fraud or other
wrongdoing in her case, higher home prices make any house fraud more
lucrative, because there is more money involved, and the booming market
provides homeowners with more equity that can be stripped away through
predatory lending schemes, often in poor and minority neighborhoods
where homeowners and first-time purchasers may be too trusting and
uninformed.
Last month, the F.B.I. said that the number of complaints about
mortgage fraud it received had more than doubled in the last few years.
In the 2001 fiscal year, it received 5,623 complaints, compared with
12,134 in the first nine months of the current fiscal year.
In New York, State Attorney General Eliot Spitzer is investigating
allegations of abusive practices by appraisers used to justify higher
prices, including allegations that a pattern of fraudulent appraisals
is driving housing prices higher in some neighborhoods, including
Jamaica, Queens, and parts of Bedford-Stuyvesant, Brooklyn.
Real estate professionals who have been accused of unethical or
fraudulent practices say that they are being punished for providing
services in minority communities where they are expanding housing
opportunities.
"We live in a funny world when you try to create programs to help poor
people to own their own homes, and you get something like this," said
William J. Unroch, a lawyer defending the Olympia Mortgage Corporation
in a pending federal lawsuit charging the company with fraud and
discrimination in connection with the sale of a home in
Bedford-Stuyvesant.
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