Last Updated: March 20, 2008: 9:12 AM EDT
She thought the $1,478 monthly payment quoted by her mortgage broker included taxes and insurance. In fact, Cruz says she asked the broker repeatedly if those costs were included and was reassured they were.
"We just took his word for it, and unfortunately that's not what it was," Cruz said.
Soon, she began receiving tax bills from her town of East Windsor, Connecticut. She couldn't afford to pay them.
"I feel I was taken advantage of," Cruz said.
Cruz contacted her lender right away - the beginning of a two-year effort to renegotiate her mortgage. She called and wrote letters, and although the mortgage company told her they were willing to work with her, they wouldn't rework the loan or forgive any arrears.
She says the current loan servicer -- America's Servicing Company (ASC), sent her incomplete paperwork, and even seems to have lost one of her checks.
"When I try to call....I feel I'm getting the runaround first of all, and then we keep going back to the beginning every time."
Cruz, who sought help from the Connecticut Fair Housing Center, tried for months to resolve the problem. All the while she continued to make the monthly payments at rate that she had agreed to in 2005, $1,478. The problem: That payment didn't cover her taxes or her insurance.
After filing mountains of paperwork, she thought she had a deal: a catch-up payment of $3,000 was supposed to save her house. She sent a bank check via registered mail to her servicer. According to Cruz, ASC said the check wasn't for the right amount and they would return it to her.
Cruz said she never got the check back. Instead, she was served with a foreclosure notice. On March 13, Cruz learned that the check had been cashed, but it was not clear who signed for it.
Her experience, say housing advocates, is typical of many who struggle to get the loan servicers to renegotiate loans that are no longer affordable.
"The problem is, the servicer doesn't have the power to renegotiate a loan," said Erin Kemple, the Connecticut Fair Housing Center's Executive Director. "Because they don't actually own the loan [they can't] make changes to the payment plan."
Most mortgages, including the one held by Cruz and her husband, aren't owned by a single bank. Instead, they are packaged and sold to investors on the secondary market, which means that loan servicers are actually beholden to investors, not borrowers.
"All they are doing is managing this loan for a group of investors, so there's no way that the investors can be asked, 'Can we rest this loan?'" said Kemple.
Borrowers like Cruz may be offered a temporary repayment plan, which keeps foreclosure at bay, but tacks the owed money onto to the back of the loan.
"The payments in this kind of workout are unaffordable to the homeowner," said Diane Cipollone of the National Fair Housing Alliance. "And sometimes homeowners sign it anyway. They don't know what to do. They know that if they don't agree their home will go right into foreclosure. But soon they default on the repayment plan, and that's counterproductive."