BOYNTON BEACH — The mold blooming in unit L-107 at Venetian Terrace is a sickening black wallpaper of flowery-looking growths.
Like thousands of homes throughout Palm Beach County, it is in foreclosure, abandoned and caught in a labyrinthine legal system that has left it to putrefy with a leaky air conditioner that leaves dark puddles in the carpet and warping drywall.
Attorneys say L-107 is a prime example of everything that has gone wrong in real estate: a no-money-down loan on a condo now worth a fraction of its 2007 purchase price, a mortgage that went bad almost immediately, a borrower who walked away, a lost note, unclear ownership rights, and robo-signed documents handled by a foreclosure mill.
Another key factor: a court system so overwhelmed that even though a final judgment in favor of the bank was entered in August — more than two years after the uncontested foreclosure was filed — an auction sale isn’t scheduled until April 21.
But unlike the neighbor of a single-family home that can sit vacant with minor bother, June McCallion lives next door to L-107 and says she is ill from the musty odors invading her home.
“I’ve been living next door to hell,” said McCallion, 64, who suffers from a degenerative neurological disorder called Charcot-Marie-Tooth disease and now has respiratory problems exacerbated by the mold. “I would please just like someone to fix this.”
No one is taking responsibility for the decaying condo at Venetian Terrace, and the recent stops and starts in foreclosures as banks review and resubmit flawed court paperwork may allow L-107 to fester indefinitely.
“This is not an isolated story. I hear it all the time,” said attorney Gary Poliakoff, a principal with Fort Lauderdale-based Becker & Poliakoff and a specialist in property law. “What’s happening out there is horrendous and no one is acting rationally from top to bottom.”
Boynton Beach requires lenders to register foreclosures and do basic maintenance on the properties. More than 1,000 homes are on the city’s list, but L-107 isn’t one of them.
Chase Home Finance, which filed for foreclosure on the unit in April 2008, has been accruing a $250-a-day fine from the city since Sept. 30, when it skipped a code enforcement hearing and failed to clean up the unit.
Although Chase has changed the locks and put the electricity in its name, the homeowner is legally responsible for the condo, spokeswoman Daisy Cabrera said. Asked why Chase doesn’t use a property preservation company to care for the condo, as it does for other abandoned foreclosures, Cabrera declined to comment.
Palm Beach County records show Aparecida Barreto, 47, bought the condo in August 2007 for $160,000 but stopped paying the mortgage three months later. It is not known whether she lived there.
Broward County records show Barreto also bought a Deerfield Beach condo in August 2007 for $195,000 with a no-money-down loan through Countrywide Home Loans. That property went into foreclosure in October 2008 with $194,302 still owed on the principal balance.
McCallion began complaining about L-107 more than a year ago, when insects started to invade her home. Today, a thin black layer of thousands of dead bugs covers the kitchen countertops and floors of the abandoned unit.
But the mold, McCallion said, is the worst part. Her clothes stink from it, and she said she has packed several boxes of books and belongings that have to be thrown out because of their musty odor.
Until recently, she was sleeping on her living room sofa because her bedroom, directly adjacent to L-107, had become uninhabitable. A cleaning of her air ducts, which cost hundreds of dollars, allowed her to sleep in her bed again, but she’s not sure how long that will last.
“My only alternative right now is to go into a nursing home,” she said. “I feel like everyone’s deceiving me, and I’m getting sicker and sicker.”
The Palm Beach County Property Appraiser’s Office now values L-107 at $36,000. It’s overseen by an association, but neither the Venetian Terrace property manager nor its association representative responded to calls from The Palm Beach Post.
Skip Lewis, senior code compliance officer for Boynton Beach, said there is evidence someone attempted to remove the mold.
On Oct. 26, he reinspected L-107 and found small sections of drywall cut out. But the air conditioner, which was shut off because of the leak, had been turned back on, possibly by someone thinking it would clear the mold.
“It looks like someone started doing something and it was just too big of a job,” Lewis said.
Part of the conundrum began with L-107’s mortgage. The loan was granted by Texas-based Woodlands Family Mortgage Inc., but Chase filed the foreclosure represented by the Florida Default Law Group, one of four large firms under investigation by the Attorney General’s Office.
In court records, Chase claims to be the holder of the mortgage note. Attached to the original foreclosure filing is a copy of the note, but there’s no endorsement to Chase. Also, Chase claimed the original note was lost and asks for it to be re-established by the court.
In subsequent documents, an endorsed original note shows up, but one endorsement is left blank while the other is endorsed to Chase.
Foreclosure defense attorney Tom Ice, of Royal Palm Beach-based Ice Legal, reviewed the foreclosure documents on L-107 and said that the blank endorsement suggests the note was sold into a trust that is not identified in the case.
The foreclosure also contains two affidavits swearing to the amounts owed on the mortgage, both signed by so-called “robo-signers.” One of the signers, Beth Cottrell, has acknowledged in depositions that she didn’t read or verify foreclosure documents even though she swore to having personal knowledge of the cases.
Chase froze its foreclosures in late September over robo-signer concerns.
Besides the questionable documents, Ice speculated that Chase just doesn’t want the property and has been able to delay the case for what will be three years if the sale occurs in April.
“When it comes to foreclosures, nothing adds up. It’s all backward,” Ice said.
Meanwhile, McCallion suffers.
• John P. Lapotaire, CIEC
• Certified Indoor Environmental Consultant
• Microshield Environmental Services, LLC