Tony Tonight

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Florida man caught up in foreclosure chaos

Posted: October 22nd, 2010 -- 10:33 AM ET

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CNN Wire Staff

(CNN) - Tony Louzado is facing foreclosure.

He's not alone - in central Florida, where Louzado lives and works, one in every 56 homes is in foreclosure.

That simple number, from foreclosure data firm RealtyTrac, doesn't tell the whole story, especially in Louzado's case. Two different law firms are pushing the foreclosure - on the same mortgage.

"I see now that there's two people that are coming after me, that maybe [the bank] hired in this way," he said. "I don't know all the specifics, but there's two people that are coming after me on the same loan number," said Louzado.

Across the country, millions of Americans have lost their homes to foreclosures since the recession began in December 2007, according to RealtyTrac. Increasingly, however, more of those stories are becoming horror tales about a system in chaos with banks pushing people toward foreclosure, sometimes, allegedly, based on error-filled or even fraudulent and illegal documents.

Several of the nation's financial giants, including Bank of America, Allied Financial, JPMorgan Chase and GMAC, have halted foreclosures, although Bank of America and GMAC announced they are resuming the process. While the Obama administration opposes a moratorium on foreclosures so the process can be examined, the federal Fraud Enforcement Task Force has launched a criminal investigation to determine if the banks and their lawyers have done anything illegal.

Louzado's case may or may not have been handled properly, but his story is typical.

"I bought the house 6 years ago. It was something I was happy with. It was $1,500 a month," said the physical therapist and part-time fireman-paramedic. "I'm a prideful man. I take pride in paying all my bills."

But then, there were a series of tragic turns.

His young son needed heart surgery - three open heart surgeries as well as other surgeries to drain fluid. Louzado's health insurance is good, he said, but not good enough to cover $1,800 per month in prescriptions and co-payments and deductibles. He took a loan from his retirement account. The low interest rate on his mortgage - supposedly fixed for the first five years and variable after that - nevertheless rose every year, including a $600 jump in Year 4. The bank had no real answers, he said, and wasn't very helpful.

Meanwhile, the bills piled up, and he started to fall behind. Louzado took a 5 percent pay cut at the fire department, necessitated by the struggling economy. But still, he thought he could work his way out until he began calling his bank and realizing, he said, no one wanted to listen.

"They said, 'You are a hard-working American, thank you for paying us. When you stop paying, now we can start working with you,'" Louzado said. "Basically, do something wrong, then we're going to work with you. Go through your savings, go through everything, now you have nothing."

"With my situation it's a little more difficult because of my son's surgeries and the medical bills which I now have to take care of, which I want to take care of."

His son's medical bills take priority, Louzado says. But that's not easy with a big bank seeking to repossess his modest, three-bedroom townhome in Miami - and two law firms to deal with.

"In my opinion these are hired guns. Banks want these non-performing loans off their bottom line. And what do they do? They go out and hire a foreclosure mill who's trying to push it through as fast as possible," said Louzado's attorney, Jose Funica.

Programming note: Learn more about Louzado's situation Friday night on AC360° beginning at 10 pm ET.