The sewer authority attached a foreclosure sign to the chain-link fence outside Destiny Roldan’s white, two-story house in Fair Haven Heights. In block letters, it announced an upcoming auction to sell the $150,100 home to recoup her unpaid bills — which totaled just $3,436.
The scheduled foreclosure sale was part of the sewer utility’s latest wave of threatened property grabs, in an attempt to recoup debts that are worth a fraction of the homes’ value.
To collect on its delinquent accounts, the sewer agency, the quasi-public Greater New Haven Water Pollution Control Authority (WPCA), has gone on a tear against New Haven homeowners, filing 158 foreclosure cases during the past 12 months. The debts prompting these actions run as little as $2,200. (In the last six months, the agency filed another 52 cases in Hamden, 48 in East Haven and one in Woodbridge.)
The cases have been clustered in New Haven’s Hill, West River, Newhallville and Fair Haven neighborhoods.
Most cases are settled out of court, including a near-sale last month, aborted just two days before the scheduled auction.
But the foreclosure proceedings — a far more aggressive strategy than comparable agencies use in collecting debts — interrupt struggling families’ lives, throwing another stress on top of attempted recoveries from unemployment, debilitating illness, addiction or damaging fires. And the suits plunge them further into debt, racking up thousands more in billable hours for third-party law firms in the suburbs, court costs and fees to the sheriff, state marshal and an appraiser.
Defending the tactic, WPCA’s top officials said the threat of a foreclosure is sometimes the only way to get a check from homeowners who’ve ignored the agency’s letters for years — even a decade, as some cases dating to June 2006 prove. (On the other hand, some started for debts as recent as April 2015.) Without the suits, they argued, dutiful ratepayers are on the hook for their neighbors’ bills.
Fair housing advocates dispute the notion that a foreclosure is the only option for bringing in missing revenue.
“It’s kind of like the nuclear option for a relatively smallish debt,” said Shelley White, litigation director for New Haven Legal Assistance Association. For instance, other creditors usually file liens on properties for debts of comparable size, looking to recoup the money when properties get sold.
“I hate to see it being done by an essentially public utility,” White said. “To see people lose their houses over this just seems not terribly fair.”
Someone’s profiting, White added: “It’s a great moneymaker for whoever is filing these cases.”
“For a Bill?”
Roldan, 46, a lifelong New Havener, has lived at 78 Lancraft St. in the Heights for nearly two decades. There she let her two boys, now ages 11 and 15, run free in the massive backyard and cooked up meals for her 80-year-old mom in the tiled kitchen.
When the economy took a downturn in 2009, Roldan was confronted with a contentious divorce and her mother’s diagnosis with Parkinson’s disease, as well as the loss of her job as an on-call nurse at a Stamford hospital.
Amidst the crises, she had to deal with three separate attempts by lenders to foreclose on her home. She made backup plans to move her mom into a nursing home and take her kids to a shelter. But eventually Roldan scrounged together enough money, between her occasional work and her mom’s Social Security checks, to fend off the banks and get her mortgage back in good standing.
Which is why, after all she’s been through, a foreclosure for a relatively minor utility bill hurts so bad, said Roldan (who, like other targets of WPCA suits, declined to be photographed for this article). “The [sewer] bill was there; I just couldn’t get to it. I had so much other stuff. The major thing that I needed to fix was the mortgage: My mind was set on saving the home. But then all of a sudden, I get the surprise, after I get myself out of foreclosure a year ago, that now you’re throwing me back into foreclosure.
“For a bill?” she asked, incredulous. “C’mon, how much stress can a family really take? This drives you up a creek. I can see how people go postal.”
When the law firm Shapiro & Epstein, PC, initiated a foreclosure case against her on Nov. 10, 2016, Roldan owed WPCA a total of $3,435.67. The firm sent a summons to her house alerting her to a court date a month away.
“I talked to the attorney and I was like, ‘Listen, give me a month or so, let me try to figure things out,’” Roldan recalled. “Just so much was happening in that month, that the whole month rolled over. Boom, boom boom. Next thing I know, it’s a foreclosure.”
The court granted a default judgement against her in February based on a failure to appear.
On May 8, 2017, Judge Anthony Avallone OK’d a foreclosure auction. He noted that her original debt had ballooned, with interest and more missed payments, to $4,490.37. Plus Roldan was now on the hook for an additional $1,750 for attorney fees (for the firm’s nine hours of work on her case), $300 for an appraisal fee and $225 for a title search.
A sale of her home was scheduled for Saturday, July 29, at noon.
“I understand it’s got to get paid. I’m not denying there’s a bill,” Roldan admitted. “Fine, put a lien on it. If the house gets sold, trust me, you can take a good look and see the house is worth the money.
“But the point is why put a family out? This Christmas, it’ll be 19 years. Why would you do that? Why don’t you ask for the circumstances of what’s going on, rather than selling the house and leaving [us] homeless? When did this start that they can sell your house for $4,000 [in debt]? A house! That you owned, paid your sweat and money into to pay for a roof over your head.”
A Unique Utility
Aggressive foreclosure suits are not a new tactic for WPCA. In 2008, as the housing market imploded, the agency came under scrutiny for adding to homeowners’ burdens. In 2012, the Independent reported that the utility was filing another rash of cases, 150 just in the first half of that year.
Unlike other utilities, the WPCA doesn’t shut off a sewer connection because a customer isn’t paying. While it technically has the legal authority to cut service, the discontinuation could create a public health hazard, WPCA Executive Director Sidney Holbrook said. But without that threat, he added, WPCA’s collection rate lags at 89 percent — leaving an estimated $4.5 million hole in their $42 million budget each year.
To compensate for that disadvantage, the sewer authority’s managers argue that WPCA must take more extreme measures than other local utilities.
United Illuminating, Southern Connecticut Gas and Connecticut Natural Gas, all owned by AVANGRID, “do not initiate foreclosure proceedings against customers to recover delinquent payments, nor have they done so historically,” said spokesperson Edward Crowder. When the gas and electric companies are unable to resolve payment issues, they may contract with a collector.
Likewise, foreclosing on a property is a “last resort” for the South Central Connecticut Regional Water Authority, said communications manager Kate Powell. “It is far better for all parties involved to reach an amicable agreement.” The water company has initiated only three foreclosures in the New Haven area in recent years, for bills ranging from $4,894 to $75,557.
WPCA’s higher-ups stressed that they always prefer setting up a payment plan over dragging a homeowner to court. They outlined a process that, they argue, allows plenty of time for a customer to reach out to make those arrangements.
Only after the balance exceeds $1,000 — roughly two and a half years without payments for the average customer — is the account forwarded to a collections attorney.
The sewer authority makes many attempts to get in touch with delinquent customers, they said. Gabriel Varca, WPCA’s director of finance and administration, shared one typical example of all the communication sent to a Hamden homeowner who fell behind in August 2010. Over the next seven years, WPCA sent at least 58 pieces of mail to the person’s home: 28 quarterly bills, a 30-day late notice, a 60-day late notice, a collection notice, 12 intent-to-lien notices, 12 liens filed, a tax warrant, a final warning and a summons. Additionally, the collection agency and the foreclosure attorney each sent several more demand letters he didn’t track.
Why Don’t They Call?
But clearly, with so many cases reaching the courtroom, there appears to be a communication breakdown.
From the WPCA headquarters on East Street, the company’s managers claimed they’re willing to make a payment arrangement with practically any homeowner and wonder why customers don’t take a simple step: just pick up the phone and call.
Over in the Hill, debtors buried in an avalanche of bills offered a different perspective, saying they don’t always know how to dig their way out and don’t expect to find a forgiving ear from the companies they owe.
Notably, of the 58 pieces of mail sent to the Hamden homeowner over the seven-year period, only one letter mentioned repayment plans — practically as an aside. “If payment in full, or a reasonable payment arrangement, is not made by January 6, 2017, the account will be referred to an Attorney to commence Foreclosure action,” the one sentence reads.
Clearer language could help, argued Loraine Martinez, a staff attorney working on foreclosure prevention at the Connecticut Fair Housing Center. “One good solution would be reaching out to these homeowners when they’re about to approach that [debt] threshold and proposing a repayment plan, instead of homeowners having to reach out to the city or their attorney to negotiate on their own, which can be really intimidating.”
To Tanisha Mathis, a 43-year-old who has lived at 99 Cedar St. for 17 years, sewer bills proved incomprehensible. She’s been trying to dispute the charges on her sewer bill for years. WPCA said she owed $4,885 in missed payments, dating back to April 2012. Mathis planned to dig through her receipts — she always paid at the store — to see if that sounded right.
That is, until the Independent informed her that her WPCA bill had already been settled. Unbeknownst to Mathis, her bank seems to have narrowly averted a foreclosure sale by fronting $8,391.15 on May 31, one week after Judge Avallone approved an auction of her $105,000 home.
Hearing the news, Mathis leaned over her porch railing, as if she were about to hurl. Smoke trailed from the extra-long cigarette she held in one hand, while her two nieces traced circles on the front sidewalk on a tricycle and scooter.
“I feel so stressed. I feel so helpless. I worked so hard to get to where I am,” Mathis said, her voice wavering and tears falling from the corners of her eyes. “It’s just a lot. Especially when I know I made payments, and then I see thousands of dollars tacked on to what I know I don’t owe. I just ask them to give me a chance to get all that stuff [the paper receipts] together.”
But for Mathis, it’s already too late to settle. She can’t undo the attorney fees and court costs that have already been set. Meanwhile, the rest of her life has fallen apart. Her credit score, once high, is now so low she can’t open a bank account, she said. Her nursing license lapsed after she attempted to open a daycare center for neighborhood low-income children (including her nieces, who’d been largely abandoned while their mother fell into crack addiction). Money from the state never came through, and she’s now unemployed. Mathis can’t afford car insurance anymore, meaning she either risks driving illegally to find work or needs a family member to transport her. A house fire finally drained the last of her savings. Mathis knows she needs the seven family members who live with her to pay more rent, but she admitted they likely don’t have it either.
“I was on Section 8 [subsidized rental housing] once. Most people would never give up Section 8, because it’s just so easy to pay them that little third or whatever and don’t have to worry about a house. But I worked very hard to have my own. I never wanted to live off the state’s money, when there’s somebody else who could use that,” Mathis said. She doesn’t know how to get out from the piling debts, racing against interest rates, she said. “I pray a lot. I ask Him to open up doors, just help me financially. I just tell God sometimes I’m so depressed I don’t want to wake up in the morning. I don’t want to wake up anymore thinking about bills, go to bed thinking about bills. I’m just so tired.”
Court filings and interviews with homeowners in the Hill show that many, like Mathis, aren’t deliberately stiffing the sewer company. Facing hard times, they simply don’t have the money.
Many had lost their jobs. An unemployed tow truck driver and father of three on Putnam Avenue had to ask his family in Puerto Rico to send him $5,000 as the settlement’s down payment. Down in City Point, on Hallock Avenue, a laid-off van driver who owns rental property thought he’d worked out a payment plan with WPCA months ago, only to find out from the Independent that the utility sued him.
Others faced steep medical bills or lost hours caring for a family member. A few doors down, on Hallock Avenue, a mother of two sick children on a high-deductible insurance plan didn’t realize the overdue sewer bill wasn’t covered by her bankruptcy filing in 2012.
And sometimes, emergencies set a person back. On Rosette Avenue, in Hill Central, lawyers tracked down a couple in Atlanta, where they moved after a cigarette butt tossed into their third-floor gutter ignited their property and left it inhabitable.
WPCA’s managers replied that they wish they’d known what these homeowners had been through.
“If there’s no contact, we don’t hear that story,” Varca said. “The last thing we want is to add to somebody’s burden. That’s why we’ve never taken possession of somebody’s home. We’re the big, bad wolf who never blows the house down. We are so responsive, we have guys fish keys out of the sewer at 2 a.m. because somebody coming out of the bar dropped them.”
However, the WPCA has filed suits that led to home sales, including one at 379 Ferry Street in June, when the home of dentist Fabricano Falcon was sold for $90,000 to a Bridgeport buyer because of a $1969.77 debt. So, while someone else eventually buys the property and has his name on the deed, WPCA made it happen. Even when there’s no sale, the process of filing the suits plunges people with precarious finances into deeper debt.
Varca and Holbrook passed their business cards across a boardroom table to the Independent. “Tell them to call us,” Varca said.
That’s easier said than done, added Roldan. “A lot of people get so scared when you’re going through foreclosure, you’re even afraid of opening up your mail. You’re in so much depression and so much anxiety that, when you receive something from the court, you run straight to the bathroom. You get sick,” she explained. “The fear is so much, it’s so overwhelming.”
By Other Means
In the next 12 months, according to this fiscal year’s budget, WPCA needs to shake loose $1.4 million in delinquent interest and lien fees to break even on their expenses. That means it’ll need to collect those funds steadily from the several hundred customers who voluntarily set up payment plans. If that’s not enough, it will need to get money from some of the 3,419 accounts that have been forwarded to collection agencies (which, collectively, owe $4.6 million) or the 150 open cases with collection attorneys.
Several fair housing advocates suggested there are better ways than foreclosures to call in the IOUs.
“In my experience, there are countless ways to legitimately collect a debt. There’s a lot of things they can do without threatening to take people’s homes away and charging exorbitant legal fees in the process,” argued Water Wagoner, a bankruptcy lawyer who has handled thousands of debt cases in New Haven. “Foreclosures are generally reserved for delinquent mortgages, and that’s what they’re properly there for. Compared to home values, which are $100,000 and up typically, [WPCA] can literally take a home away for a penny on the dollar of the house value.”
For starters, WPCA can get wage attachments or garnish bank accounts, Wagoner said. Similarly, WPCA could apply for receiverships over investment properties so that the sewer authority would collect all monthly rent checks to start paying down its bill on tenant-occupied buildings, suggested Martinez, the Connecticut Fair Housing Center attorney.
Or, they could simply wait until the house is sold. “This kind of debt is very safe,” Wagoner said. “You cannot eliminate this debt in bankruptcy, because it’s a secured debt on the home.” And best for the WPCA, each month, it earns 1.5 percent interest, or 18 percent annualized — a rate that beats what most credit card companies charge.
That’s because of a quirk in state law, passed in the 1980s, when interest rates soared. The rate for WPCA and other municipal debt “mirrored ‘prime’ for years, until prime went down. The 18 percent never went down, and towns fight like hell to keep it,” recounted Jeff Gentes, Connecticut Fair Housing Center’s managing attorney. (A State Senate bill aiming to reduce the interest rate to 6 percent per year hasn’t moved out of the Banking Committee since its introduction in February.)
Wagoner called that a “phenomenal return” by today’s standards, when U.S. Treasury bonds or mortgages might net just 4 percent interest. “Where can you get a better deal?” he asked. “They don’t have to foreclose. Wait until it’s sold or inherited. They can get a windfall at the end of the day. It’s the best investment you could find. They’re making a ton of money just by waiting.”
At the very least, attorneys from the Connecticut Fair Housing Center argued, homeowners with utility bills should be able to participate in foreclosure mediation in court — a program that’s currently available only for mortgage debt. And they should be provided with information about the terms of a proposed repayment plan and the threat of attorney’s fees right when their account is being passed on to a debt collector, as a State Senate bill that died in the Judiciary Committee last year would have guaranteed.
When asked to comment on the rip of foreclosures, two of New Haven’s representatives on WPCA’s nine-member board of directors declined to comment. Al Paolillo, a state rep and alder who does triple duty as WPCA board’s vice chairman, referred inquiries to the sewer company’s staff, and Clay Williams, the city’s small business development officer, told the Independent to show up at a board meeting.
Stopping a Sale
When the Independent talked with Roldan in her kitchen on Monday night, she was trying desperately to halt the auction of her home.
Her mortgage holder said it was willing to take the money out of escrow to pay off the debt, in Roldan’s telling. But for the last several weeks, that lump sum had been sitting with a third-party processing firm, CoreLogic. Despite near-daily phone calls, she hasn’t been able to figure out why.
In the meantime, a new law firm, Berdon Young & Margolis, which is executing the foreclosure, started racking up charges of its own. That meant Roldan had to ask for a new transfer from CoreLogic with more in attorney fees — potentially slowing down a process that’s already been delayed.
When she spotted the foreclosure sign Margolis’s team put up last week, Roldan ripped it from her fence, risking a penalty from the court. “It’s embarrassing, it’s belittling for people to put signs up in your house,” Roldan said. “They have no idea what I’ve been through.” After just a few hours of the sign being up, neighbors started asking her about her finances. Potential buyers have knocked on her door asking for tours or have snapped pictures from their car.
Roldan assured her eldest son — the only family member she’s told — that she will work things out.
Roldan and the Independent spoke with her alder, Ernie Santiago, on Wednesday night. The sale was called off less than 24 hours later.
No payment had gone through, Roldan said, but she was told the law firm would settle her bill out of court. She said she still wants to know whether that means she’s liable for thousands in interest and fees.
Roldan said she also wants to know why it took intervention from an elected official and the threat of bad publicity to save her home, and what that means for other families without the wherewithal to push back against WPCA.
“I’m happy that I caught it on time, but how many people has this happened to? This doesn’t relieve me, OK? I can’t turn my back. Now, I feel obligated to do something, because just like me, there’s other families. And people are confused, they don’t understand,” she said Thursday night as a “massive headache” throbbed from unloading the week’s stress. “I need to shed some light on this because they’re stealing people’s homes and causing unnecessary grief, period.”
If her case is fully resolved, Roldan said she plans to walk the neighborhood and counsel others in her situation. Unemployed as she is, Roldan said she’ll hand over her résumé right away if WPCA wanted to hire an outreach coordinator.
“I never received a [knock] at the door,” she said, rapping her knuckles against the kitchen table. “‘Hey, can we help you? We have services. Are you in some type of hardship? What’s going on?’ I never got that from anybody. I never got that from absolutely anybody. All I got,” she said, “is foreclosure papers.”