On October 12, 2011, my husband and I signed two hours’ worth of paperwork and forked over a $2450 earnest-money deposit on a four-bedroom, four-bath townhome in Chula Vista.

For years, we’d fantasized about escaping the constraints of our 860-square-foot, $1300-a-month condo rental in City Heights. Now, our three-year-old daughter would be able to move out of our closet (yes, our closet) and into her own room, and our cologne-obsessed 13-year-old would have his own lair, two floors down from the other bedrooms. Along with 1850 glorious square feet and extra bathrooms, we’d have canyon views and a two-car garage that led into the house: no more lugging groceries in the rain. And — oh, yeah — mortgage and property tax combined would add up to $1147 (not including HOA fees), $153 less than our rental.

In the parking lot outside the real-estate agent’s office, I sent a text blast to family and friends: “It’s ours. We’re in escrow!”

My husband sighed. “It’s not ours yet, Lizzie. Anything can happen between now and the time we close.”

I dismissed the comment with a wave of my hand. Despite his previously discouraging experiences with sellers (one deal fell apart the day escrow was due to close), my optimism would remain intact. I’d heard about the hassles of purchasing a home through first-time-homebuyer incentive programs, but this place was meant to be ours, and I believed that everything would go swimmingly.

Twenty days later, our listing agent Joe sent us a Notice of Termination.

I panicked, let loose a string of profanities, and went into fight mode.

Our agent later told me that, for a 60-day escrow like ours, 20 days wasn’t too terribly deep into the process. But we’d been at this longer than the length of the escrow, and the future of our down-payment assistance was uncertain. We were relying on it to help with the purchase, and I feared we might not get another chance.

∗ ∗ ∗

In late 2008, during an online search for first-time homebuyer programs in San Diego, my husband (hereafter referred to as “M”) located an organization called Community Housing Works. The “About Us” page on the website boasted: “Our coaching, realty and innovative loan funds have created approximately 100 new homebuyers across the county every year.” The “Lending” page offered “an array of Down-Payment Assistant loans that may help you purchase your first home!”

In order to take advantage of these loan programs, one or both of us would have to participate in an eight-hour, HUD-approved first-time-homebuyer education course. So, early one Saturday morning in January 2009, two weeks after the birth of our daughter, off M went to the Price Charities building on University Avenue.

Elizabeth Salaam and her husband

Photo by Howie Rosen

He came home tired, carrying a stack of program details and checklists for potential borrowers. M felt that unless his work picked up significantly, we would probably not qualify for a loan.

The good news was that when we were ready, there was money out there. Maybe as much as $70,000, if we bought a house in City Heights. If we wanted to look as far from the city center as Chula Vista (we didn’t), the number might go as high as $100,000. And, said M, his participation in the course wouldn’t expire.

At the time, exhausted from mothering a newborn, I let M take the lead. But later I would learn that, along with providing education classes and financial counseling, Community Housing Works offers a Cal-Home loan, funded by the State of California (through bond funds) and intended for first-time homebuyers from “low to moderate income” households. The organization also underwrites and administers down-payment-assistance loans offered by the cities of Carlsbad, Chula Vista, National City, and Santee.

Dee Sodano, vice president of lending at Community Housing Works, estimates that, in 2011, the organization provided loans to approximately 70 people.

“We’re not a big bank,” Sodano says. “I used to work for a big bank, funding $34–$40 million a month. But here we’re way less. If we fund $2 million a month, that’s huge.”

The lending department at Community Housing Works also provides first mortgage loans to qualified homebuyers. Some are Community Reinvestment Act (CRA) loans, which Sodano explains as the “affirmative action” of the housing world. They allow for a competitive interest rate, and, in some cases, no mortgage insurance — even if the home buyer doesn’t have a down payment of 20 percent.

“A lot of banks with lending programs are required by the federal government to do a certain amount of lending in low-to-moderate-income areas, and to minorities,” Sodano says. “You can’t redline anymore — they used to call it redlining. You can’t pick and choose your borrowers. They’ve had to force some of the banks…[via] the Community Reinvestment Act. What some banks choose to do — not all of them — is to roll out programs” specifically designed for these populations.

Rather than seek out borrowers who fit the bill, banks provide these programs to Community Housing Works and other nonprofit organizations that have already established themselves as resources in the community.

To those who criticize the programs, Sodano says, “It’s a loan. It’s not welfare. It’s a helping hand, not a handout.”

She emphasizes that strict minimum and maximum debt-to-income ratio requirements are intended to qualify potential homebuyers and to avoid subsidizing those who don’t actually need the help.

∗ ∗ ∗

In early 2009, those maximum debt-to-income ratios looked like they’d keep our family on the books as renters for another few months. The holidays were a slow time at the shipping company where M worked as a truck driver. He spent more days at home. With a brand-new baby, my income was uncertain. But, as we did every January, we anticipated that M’s hours would pick up soon.

They did not.

“Date night” became Sunday-afternoon walks through North Park, South Park, and Hillcrest, fantasizing about home ownership. It was another year and a half before my husband landed the steady, full-time income that would, along with my freelance writing gigs, deem us loan-worthy at last.

The irony was that, according to online mortgage calculators, the $1300 we paid our landlord — on time, every month — would easily cover a mortgage on a decent-sized house in our neighborhood. So then why, after the real-estate bubble had burst, was it so difficult for even well-qualified buyers to purchase a home? Our current (or near-future) income might not put us at the top of the list, but we felt we were a reasonable risk.

In September 2010, a month after M started his new full-time job, he decided to look into whether we were now in a better position to meet the criteria for a home loan. He again called Community Housing Works. They suggested we sign up for an upcoming group-prequalification workshop, where loan counselors would go over current programs, then sit down one-on-one with participants to determine eligibility.

(The organization has since eliminated the group workshops. Now, after a Saturday at their homebuyer-education class, participants can schedule a one-on-one appointment with a loan counselor.)

The workshop began early on a weekday afternoon. Since M was too new at his job to feel comfortable leaving early, I did the first half alone. The night before, M packed up a manila envelope with W2s, 1099s, bank statements, check stubs, and tax returns for 2007, 2008, and 2009.

“Take notes,” he said. “I’ll be there as soon as I can.”

I made my way up to a large room on the sixth floor of the Price Charities building, three floors up from the Community Housing Works office. Four couples were already seated at three long tables; another couple would come in behind me. Throughout the presentation, I sat bleary-eyed while a bald man with dark eyebrows attempted to explain the available programs by jumping between a PowerPoint presentation and a stack of handouts.

M showed up toward the end, and then, because I had been the second to last to arrive, we waited while the two available loan counselors did their one-on-ones with the four couples ahead of us.

An hour and a half later, the man with the dark eyebrows introduced himself as Tony R. and sat down to look over our paperwork. While we filled out a Uniform Residential Lending Application, he flipped through W2s and taxes. He asked questions, took notes, made calculations, explained the equity shares, silent mortgages, and income criteria for different programs. Then he asked more questions, and made more calculations.

After an hour, he told us we might be in good shape.

With the $30,000 we’d saved for a down payment, if we came in at around 80 percent of the area-median income, we could probably qualify for a mortgage on a $300,000 home.

A Community Housing Works chart showed that, in City Heights, we would be eligible for up to $68,000 in down-payment assistance: $30,000 would come through the City of San Diego Redevelopment Agency — an amount that was forgivable after 15 years — plus $38,000 through Cal-Home. That loan would be made at 3 percent, with payments deferred for 30 years.

Chula Vista offered up to $70,000 on a shared-equity purchase, with a zero-percent-interest, 15-year silent mortgage — meaning that the loan would not be disclosed to the primary lender. This amount was available if we were interested in a foreclosed, bank-owned property (REO); we would receive up to $40,000 for a non-REO property. Here, too, additional funds for a down payment might be available through Cal-Home.

“But,” Tony said to M, “we might have a slight problem, because you haven’t been at your job for very long. Let me get back to you on that.”

I’d hoped for a, “Yes, you’re prequalified!” so we could get on with finding an agent and shopping for a house. M was just happy we hadn’t received an automatic “No.”

“We might as well get out there and see what we can find in our price range,” he said.

∗ ∗ ∗

The evening after our first meeting with Tony, we browsed the internet for houses for sale in City Heights and Chula Vista. The more we looked, the better Chula Vista looked: we’d be farther from the city’s center but have more space. M made a list of homes to check out, and that weekend, we drove to Chula Vista to shop.

“Listen,” he said, “we need to stick to a plan. If we start looking at houses in the $400s and $500s, we’ll want them. We have to be realistic.”

I agreed. I loved fantasizing about the big, refurbished Craftsman homes in South Park, but local foreclosure numbers brought me down to earth.

According to DataQuick, 13.9 out of every 1000 homes in San Diego were foreclosed on in 2010. (This figure is based on Trustee’s Deeds recorded for houses and condos at the county recorder’s office.) In Chula Vista, the number was almost twice that, 26.2 out of 1000 homes. In 2011, those numbers would be 11.9 for San Diego and 20.6 for Chula Vista. Lower, yes, but only slightly, and still very scary.

So of course the first thing we did was follow flags and signs to an open house in a neighborhood off of Olympic Parkway. The house was 3500 square feet and out of our price range. I wandered through rooms, opening closet doors, turning on lights, and contemplating paint colors, while M chatted with the agent hosting the open house about Chula Vista real estate.

The rest of that weekend, and the next, we peered in the windows of homes with lock boxes on the doors. We took the occasional tour of an open house. M didn’t like talking to the agents, whose first question was almost always, “Have you been prequalified?”

Every day we didn’t hear back from Tony from Community Housing Works, M’s enthusiasm diminished.

Two weeks after the workshop, M sent Tony an email. Tony responded that he’d get back to him by the end of the following week. This exchange was repeated a few weeks later, and again the following month. It went on for nine months. Tony kept the fire alive by periodically asking us to resubmit our 2007 taxes, our most recent pay stubs, and bank statements. He promised M repeatedly that we were days away from an answer.

I suggested we show up at Community Housing Works and make Tony talk to us. M thought that Tony might be stalling us because M hadn’t yet completed a full year at his new job. He said might as well wait.

“The guy should’ve said so if that was the case,” I groused.

Meanwhile, we kept our eyes on a handful of Chula Vista properties. One foreclosure that had been listed at $312,000 at the beginning of June was down to $279,900 by late July. Two others had sold, and one was pending. Watching the action online made me panic that the good houses were slipping away; whenever I heard talk of falling prices, I became anxious that they’d go back up before we had a chance to buy.

In August, when M’s first year at work was up, M emailed Tony, promising me that if he didn’t hear back before the end of the week, he’d let me march down to the Community Housing Works office and insist that someone else look over our file.

Two days later, Tony responded by email. Again, he asked that we resubmit the entire packet, including the application that listed our work and residence histories for the past ten years. He needed W2s and tax returns for the past two years, and a list of bank accounts, credit cards, and assets.

We sent everything in.

On August 30, Tony wrote: “Our underwriter has been swamped. We hired a new processor to help with load. You should have your approval this week.”

Then, twice a week for the next month, Tony called and emailed with requests for additional signatures and paperwork — some of which we swore we’d given him twice before.

Finally, in mid-September, Tony informed us we’d been preapproved for a mortgage of up to $315,000.

∗ ∗ ∗

The last weekend of September, our agent of choice, Joe Gover (whom we’d met at that first, dreamy, 3500-square-foot open house 11 months prior) took us house shopping in Chula Vista. Out of the eight properties viewed, we found three we liked, including one foreclosure we’d been watching for months, down now from $312,000 to $259,000. The following weekend, we brought along a family friend and seasoned real-estate investor to look over our choices.

On Tuesday, October 4, we put in an offer of $245,000 on a four-bedroom, four-bath foreclosed townhome in Eastlake, which had been on the market for 127 days. We asked for a 60-day escrow, 17 days for the inspection, 17 days for the appraisal. We asked to keep our loan contingency open as long as possible, because of the type of loan we were applying for. We also asked that the sellers pay 3.5 percent of the purchase price toward closing costs. The sellers countered at $256,00, agreed to pay the 3.5 percent for closing costs, and gave us 10 and 15 days for the inspection and appraisal, respectively, until November 21 for the loan, and a closing date of December 2. Joe thought we could get them to go a bit lower than $256,000 but we chose to play it safe and accepted.

Wednesday, October 5, we met in Joe’s office to sign the contract. Hours later, he called to inform us that we had an appointment with the inspector at 2:30 p.m. on Friday.

As per our family friend’s informal assessment, the inspector (a man named Dragan) found nothing terribly wrong with the place. Repair of the nonfunctioning garbage disposal and garage-door motor were the only requests we made of the seller.

Friday night at 10:00 p.m., the inspector emailed his report. The following day, we signed, scanned, and emailed the request for repairs back to Joe, who forwarded them to the listing agent.

On Monday, I sent Joe a text. “Ok. What next?”

He responded, “We need to follow up with Tony and make sure he gets that appraisal ordered.”

“On it,” I wrote back.

After leaving two or three messages on Tony’s phone over the next couple of days, I called the receptionist, told her I’d been trying to reach him, and hadn’t heard back. Any chance she knew when he’d be in?

A second or two after she put me on hold, Tony picked up.

I apologized for bothering him, then confessed to being slightly panicked about the appraisal. Tony said not to worry about it, that his lender often didn’t order it until 30–45 days into the process.

“But our contract says we have to have it done within 17 days,” I said.

“Yeah, it shouldn’t be a problem to get an extension,” he said.

Having never been through this process before, I knew only what Joe or Tony told me. And the thing about Tony was that, while he seemed nice enough, he was hard to read. Was he spacey and disorganized? Busy but competent? Was our application at the bottom of his list of concerns?

When I asked about the appraisal, his nonchalant demeanor gave me the impression that I was getting worked up over nothing. So I calmed down, thanked him, hung up, and reported back to Joe, who exclaimed: “Thirty to 45 days before they even order it!”

That was day nine.

Meanwhile, I was hearing talk about the potentially imminent death of redevelopment. On October 19, the California Supreme Court announced that it would hear arguments in the case of California Redevelopment Association v. Matosantos in November. According to Dee Sodano at Community Housing Works, the City Heights program was on hold due to this litigation. Rumors had also been swirling around the potential dismantling of the Chula Vista Redevelopment Corporation. There was no telling how long any of this down-payment assistance would remain available.

Then Joe informed me that of the four or five times he’d worked with people trying to buy a home through first-time-homebuyer programs, he had yet to see one successfully close.

I feared that if we didn’t get this appraisal done now, we might miss our chance to buy a house forever. M and Joe seemed anxious as well. They supported the idea of me going in for a face-to-face with Tony, so I could push the appraisal issue one more time and get a reading on the reason for the holdup.

On day 13, I took a bag of cookies and a card to the Community Housing Works office. Thank you! the card said. We’re so excited to be in escrow. And we were. Truly. But the cookies were also my Trojan horse.

I told the receptionist I was there to see Tony. I crossed my fingers that he was in. When he emerged from the back offices he was visibly annoyed, but as I handed him the cookies and the card, he softened. He gestured toward a round table in the reception area, and we sat down for a chat.

He explained that our particular lender, Northern Trust, did things differently than more traditional lenders. One major difference is that they don’t order the appraisal until 30–45 days into escrow.

Dee Sodano would later confirm this to be true. “The normal way is that you get qualified, your case goes into a processing queue. And, bam, they order the appraisal. So it’s out within maybe 10–17 days, before your loan is approved. It doesn’t work that way with CRA lenders. They won’t order the appraisal until you’re approved. It drives the real-estate community crazy, but there’s no help for that.”

That day, at the round table with Tony, when I expressed concern that our contract specifically said we’d have to release our appraisal contingency in 15 days, and that I feared our listing agent would not accept an extension, he perked up and said something to the tune of, “You know what I can do? I’ll just let the lender know you’re getting pressure from the seller and ask if there’s any way they can push the appraisal through a little sooner.”

When I later proudly told M and Joe what I had accomplished, they responded, “We’ll see.”

Two days later, on Thursday, October 27, Tony sent the following email: “The lender was working on getting your appraisal ordered today. They should be contacting the listing agent for permission to enter the property very soon.”

Monday would be day 17. On Friday, the appraiser attempted to contact the listing agent so that he could get into the property over the weekend. The listing agent did not return his calls. On Monday, when the appraiser caught up with the listing agent to ask for an access code, he was told they would not give out the code and that he’d have to get in touch with the buyer’s agent. Joe, unaware that the appraiser was having such a hard time with the listing agent, then arranged for the appraiser to meet him at the house on Wednesday.

That same Monday, Joe received an email from a Ms. C. Zavala, an agent with Millenia Real Estate Services, the agency contracted by Fannie Mae to sell the home we were trying to buy.

The email read: “Please have the buyer sign and return the attached NTP #1. We will also need a copy of the appraisal and contingency removal for the home inspection.”

The NTP — Notice to Perform — meant we’d have to release the appraisal contingency within 48 hours or the listing agent would cancel our contract. The Notice to Perform, however, had not been signed by anyone at Fannie Mae. So Joe responded to the email with one of his own, thus beginning the following string.

Joe: “Could I get a NTP signed by the seller?”

C. Zavala: “I need the buyer to sign and return the one that was sent to you.”

Joe: “The buyers need an executed NTP by the seller before they sign.”

C. Zavala: “The seller will not be signing the contract. If your buyer is refusing, that’s fine. We will inform the seller. Please expect a Notice of Termination to go out tomorrow. The buyer is already out of contract, and the seller has the right to cancel.”

Joe: “The buyers do not want to cancel. They are willing to release their appraisal contingency and inspection contingency. They just wanted to see the NTP signed by the sellers beforehand.”

C. Zavala: “The contract states the buyer had 15 days from acceptance to obtain an appraisal, which we discussed yesterday. The buyer is already out of contract, and the buyer is refusing to sign the NTP. The seller has the right to cancel and can. I explained the urgency of the appraisal and timelines to you yesterday while on the phone. I also explained in detail the importance of the appraisal being ordered to your lender in the very beginning of this transaction.”

Joe: “The buyers are not refusing to sign the NTP. The buyers intend to sign the NTP and release their appraisal and inspection contingency within the 48 hours the NTP gives us. The buyers want to continue with the escrow.”

On Wednesday, November 4, the same day the appraisal was done, but before we received the report, we signed and sent in the Notice to Perform. It was nerve-wracking to release the appraisal contingency without knowing for sure what number the appraiser would come up with. If it came in under value, we’d either be stuck with the bill for the difference (because our lender wouldn’t approve us for a loan beyond the value of the house), or we’d have to give up our $2450 earnest-money deposit. But, based on what we’d learned at the inspection, and based on the $251,000 sale of another property (without a view) in the complex, I believed it would all turn out fine, especially since we’d sent in the document a few hours shy of the 48-hour deadline.

My relief was premature.

On Friday, C. Zavala sent the following email to Joe:

“Hi Joseph,

Please have the buyer sign and return the attached Notice of Termination. The buyer has not complied with the contract. I have not recieved [sic] the loan approval or appraisal.

Thanks.”

∗ ∗ ∗

My later attempt to contact C. Zavala, to understand the perspective of listing agents in the sale of these bank-owned homes, met with no response. I was able, however, to gain some insight from Joe, whose agency has looked into the issue.

“It sounds like every bank’s going to be different,” he said. “Some will want to be there for the entire process. Others will want the listing agent to handle all the forms and things that have to do with contingencies and approvals.”

In our situation, he said he couldn’t say for sure what was happening on C. Zavala’s end, or what her relationship was with Fannie Mae, but he did note that while the contract itself had been signed by the seller, the “Notice to Perform, and the Notice of Termination — neither of those forms were signed by the asset manager.”

On the record, Joe would not speculate about anything that transpired, but I was led to believe that C. Zavala had taken it upon herself to play tough guy with us. Maybe it was personal. Maybe she didn’t like the tone of Joe’s emails. Or it could have been that her experience with the bank told her that, unless she played hardball, they’d take their foreclosures elsewhere.

“One reason a bank will want to keep on a strict deadline with contingencies,” Joe said, “is if they’ve been in escrows in the past where buyers dragged their feet and ended up not qualifying for a loan. In that case, the bank might have lost those 30 days. And with this lending environment, it is pretty difficult for buyers to qualify for a loan.”

One reason some listing agents might not accept extensions for contingency removal, and so on, Joe said, would be if they had multiple offers on a single property. Between the time an offer is made and the contract is signed, it might be as long as a week. In that time, the property is still listed and back-up offers can be made.

“If they had an offer as good or better than the one they were in escrow on, then they’re not going to work with you,” Joe said. “They’ll almost be more than happy to have you cancel escrow.”

∗ ∗ ∗

When C. Zavala sent our Notice of Termination, Joe seemed to believe it was a bullying tactic. Her reasons for canceling, as stated in the email, were that we had not provided a copy of the appraisal or the loan approval.

Nowhere in the contract did it state that we had to provide her with a copy of the appraisal. And, again according to the contract, we still had until November 21 to remove our loan contingency.

Joe suggested that we not sign the notice. If we did, C. Zavala could pass it on to the bank as if we had been its originators. In that case, the whole thing would be over, whether there was legal reason for her to send the notice or not. Joe was confident that she did not have legal reason to cancel our contract.

The same day Joe told me about the Notice of Termination, I called Community Housing Works in a panic. When Tony didn’t answer his phone, I dialed again and asked to speak to anyone else could talk to me about our case. I was put through to Tony’s boss, Dee Sodano, who assured me that all would be fine. She knew someone at Fannie Mae, she said, and if need be, she’d alert them to what was happening and ask them to have a chat with the listing agent.

Next, as advised by Joe, M and I sent an email to the escrow company letting them know that we were in full compliance with the terms of our contract, and that we intended to proceed as agreed.

Meanwhile, Joe had a conversation with his broker, who sent a serious-sounding email to C. Zavala that began with, “I am contacting you concerning your statement that ‘the buyer has not complied with the contract.’ Actually, the buyer HAS COMPLIED with the contract.” The note ended with, “Please confirm that you have received this email. At this point, the buyers are proceeding forward with full intent to close the escrow.”

Later, Sodano would inform me that she, too, had contacted C. Zavala.

“I made a phone call,” she said, “I was, like, ‘Look, it’s going to happen. They’re approved.’ I said, ‘Deep breath. It’s going to happen.’”

And it did.

C. Zavala never directly responded to the barrage of calls and emails made on our behalf, so we’ll never know what made her change her tune. She never brought up the Notice of Termination again, and her response to a subsequent email Tony sent (cc’d to us, Joe, and the escrow team) regarding loan documents on November 23 read: “Thanks for the update. Have a great Thanksgiving!”

On December 1, a woman from the escrow company came to our house bearing loads of paperwork just as we were finishing dinner. After an hour, she shook our hands and congratulated us.

A week later, the same day the seller received all three wire transfers from our lenders, ($175,000 from Northern Trust, at 3.75 percent; $38,000 from Cal-Home, deferred for 30 years at 3 percent; and $32,000 from the City of Chula Vista, forgiven after 15 years), Joe came by with our keys and a $100 gift certificate for a restaurant in our new neighborhood.

Our monthly payment is $1441 — including HOA fees.

∗ ∗ ∗

Author’s note: During the writing of this article, Dee Sodano informed me that both the Cal-Home funds and the funds from the City of Chula Visa have been put on hold until further notice. She also mentioned that Tony Reynoso no longer works for Community Housing Works.