STEVE INSKEEP, host:
In the foreclosure crisis, Massachusetts is not the worst hit state. But lenders there still filed more than 22,000 foreclosure petitions this year, half of those properties have been seized.
Reporter Anthony Brooks has the story of one Boston couple who lost their home, and what happened next.
ANTHONY BROOKS: In one sense, this story has played out millions of times across the U.S. What's striking about this case is what happened after the family lost their home.
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BROOKS: Pierre Solon and Katty Familia own the Little Wonders Daycare Center in Boston. It's naptime, and a dozen kids are sleeping on cots underneath brightly colored blankets. Solon is from Haiti, and Familia, from the Dominican Republic, and while running their business for the past two years, they've been fighting to get their home back.
Four years ago, they bought a green clapboard house in Boston's Hyde Park neighborhood. Katty Familia, a small woman whose eyes flash with determination, says they both took on extra work to pay for it.
Ms. KATTY FAMILIA (Co-owner, Little Wonders Daycare Center): We a lot of sacrifice. Sometimes we don't even have food. And he got two jobs; I got two jobs. I lost one; he lost one, and right there we started, you know, going down, and I said to him, we need to do something.
BROOKS: The couple paid $584,000 for the house, and borrowed the entire amount. After they fell behind, the loan servicer, Wells Fargo, foreclosed on the property. The couple moved out a year ago, and last month the bank auctioned off their home.
Nadine Cohen is an attorney with Greater Boston Legal Services who's been trying to help them.
Ms. NADINE COHEN (Attorney, Greater Boston Legal Services): They just learned that the bank sold the property to an investor for $115,000.
BROOKS: That's a fraction of the original price.
Ms. COHEN: I think the bank could have offered them a modification of their loan for twice that amount, but the bank would not do that. They would rather see the homeowner be displaced from their home with their children, and then sell it to an investor for $115,000.
BROOKS: Two weeks later, that investor flipped the property, selling it to another investor for $270,000.
Ms. COHEN: The broker made money, the investor made money, the servicer makes money, and the homeowners lose out.
Ms. FAMILIA: For me, it's not fair. It's, like, we working hard.
BROOKS: Again, Katty Familia.
Ms. FAMILIA: They sell the house for $115. This is ridiculous. I think the banks, they play with the people like we are a little toy.
BROOKS: Assigning blame in this story is not straightforward. The couple took on more debt than they could afford. Attorney Nadine Cohen says they were encouraged by a sub-prime mortgage lender called Fremont Investment and Loan.
Ms. COHEN: They were given two mortgages, and those mortgage payments were almost $5,000 a month more than their income.
BROOKS: Fremont Investment and Loan was later sued by Massachusetts' Attorney General for deceptive loan practices. The company went bankrupt and shut down. By then, its loans had been sold off to investors, and Wells Fargo has been servicing some of those loans.
Michael de Vito, a Wells Fargo vice president in the mortgage division, wouldn't comment about this case. He would say that less than two percent of Wells Fargo customers have gone into foreclosure, and the bank does all it can to help borrowers keep their homes.
Mr. MICHAEL DE VITO (Executive Vice President, Wells Fargo): Wells Fargo has been successful helping over half a million customers reach an affordable payment through a loan modification program. It's always preferable from Wells Fargo's point of view to keep the customer in the customer in the home.
BROOKS: Another Wells Fargo official said the couple had fallen more than $150,000 behind in their payments and the couple doesn't dispute that. The bank offered to lower their monthly payments, but that would have increased their mortgage to more than $600,000, so the couple didn't go ahead with the modification.
Paul Collier, another attorney who represents homeowners, says Wells Fargo could have worked out a deal benefiting both the bank and the family.
Mr. PAUL COLLIER (Attorney): And what the bank got out of it was taking the home of a family who could afford a fair-market price for that home in order to punish them for having been victims of a predatory mortgage.
BROOKS: As stories like these continue to unfold, Boston Mayor Tom Menino has proposed a measure that would require lenders to participate in mediation with homeowners before they foreclose on them. If state lawmakers approve, some homeowners might benefit, but attorney Nadine Cohen says it's too late for Pierre Solon and Katty Familia to get their home back.
Ms. COHEN: I don't think that's going to be possible in this case.
Ms. FAMILIA: I worked 20 years in this country for this.
BROOKS: Again, Katty Familia.
Ms. FAMILIA: I prefer to go back in my country. At least your house can you say is yours.
BROOKS: For now, they're renting a small apartment. Familia says their dream of home-ownership is no longer possible.
For NPR News, I'm Anthony Brooks, in Boston.