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Tampa family gets their dream home, but loses much, much more

Staff file photo by JIM REED

Mary McCarthy says just before closing on the 1,800 square-foot home, the original lender backed out, saying the home's value had dropped below the loan amount.

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By SHANNON BEHNKEN | The Tampa Tribune

Published: October 20, 2009

LUTZ - Mary McCarthy's struggle to own outright the finished dream home she had built in her front yard stretched six months. Lender after lender turned her down because they didn't think the home was worth the loan.

But then a lender said 'yes.' They breathed a huge sigh of relief. Finally, they were going to move into their house, and that meant their 29-year old daughter could come home and help raise her 13-year-old son. The nightmare was over.

That's when the phone call came. Sixteen hours before the closing, her daughter was dead.

"It was 2 a.m., and a sheriff's officer wanted me to meet him in the driveway," McCarthy said. "He said to bring my husband."

Police say her daughter, Kristy Smith, died while she slept. Her heart stopped.

Later that night, on Sept. 25, the family closed on their home. The closing agent met them at their kitchen table. By 11 p.m., the papers were signed, and the house was legally theirs.

But there was no celebrating. It was a bitter-sweet ending for a family that had become a symbol of poor timing amid the worst mortgage crisis in decades. They had struggled for years to leave their 20-year-old mobile home.

"It just didn't feel important anymore," McCarthy said. "When you lose a child, it just doesn't matter anymore. But we had to close, to be strong. Our family has to go on."

Mary and Michael McCarthy bought their one-acre property when Kristy was young, and they planned to one day build a home there.

"We wanted our children to have a real home, not a mobile home that isn't safe during bad weather," Mary McCarthy said.

But they didn't want to get overextended. They watched during the housing boom as people bought more than they could afford, and they saved their pennies.

McCarthy, an engineer for a local hotel, said her family's income is limited because her husband became disabled years ago following a motorcycle accident.

They hired a local builder and watched with anticipation as the modest ranch home went up. They chose paint colors and had their final walk through in February.

That's when trouble began. Just before closing on the 1,800 square-foot home, the lender backed out, saying the home's value had dropped below the loan amount.

Since the builder had not been paid, the McCarthys were not allowed in the home, even though it was on their property. They applied to numerous lenders but were turned down.

They couldn't borrow enough to pay the builder and pay off their previous loan for the mobile home.

When the McCarthys hired Tampa-based AllState Homes as their builder, their home was estimated to be worth about $266,000 when completed.

Wells Fargo agreed to fund the loan in early 2008. An interim lender agreed to fund the construction loan. They were to borrow $233,000 - enough to pay for the builder and pay off the $55,000 mortgage on her family's mobile home. That amount included the property.

When AllState finished the home, the McCarthy's lender, Wells Fargo, refused to give them a mortgage because they said the property's value had fallen. Consequently, the construction lender canceled its loan and would not pay the builder for its work.

After six months of unsuccessful attempts to obtain financing, both the McCarthys and the builder were out of options. The builder sued the construction lender, and the McCarthys continued to maintain the home, driving past it everyday to get to their mobile home.

The family, which includes the McCarthy's grandson, Drew, and their teenage son, Dylan, hoped to move in one day.

Kristy was working toward a better life, and hoped to build a closer relationship with her son, whom she had when she was 16. The McCarthy's have had custody of him since he was a baby.

In Mary McCarthy's mind, the house would provide a better environment for the family to get closer.

"We wanted an open floor plan, big kitchen and family room," she said. "Room to spend time together."

While the house was in limbo, the family mowed the lawn and took care of the landscaping. Periodically, they would open the front door and feel the rush of the air conditioning they were paying for so mold wouldn't grow inside.

Following an article on the family's plight in the Tampa Tribune in August, real estate professionals, lenders and friends reached out with suggestions. Finally, a New York-based lender, Topdot, said 'yes.'

"They were aware of our personal situation," McCarthy said. "I think that made a difference. They had a heart."

Dan Larson, sales manager for AllState Homes, said he had never seen a loan situation like the McCarthy's.

"It has been an absolutely stressful time for the family," Larson said.

The McCarthys are now settling into their new home and applying for permanent custody of Drew. Their 17-year-old son is a senior in high school and already taking college courses. He wants to be a reconstructive surgeon.

A photo of Kristy sits beside her urn in the dining room.

"I don't know what the future holds," Mary McCarthy said. "But we're fighters."

Reporter Shannon Behnken can be reached at (813) 259-7804.

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