The loan came due. Her parents couldn't pay. Now a teen with cerebral palsy could lose her home.

Miami Herald - 4/14/2017

April 14--In the backyard of Angelyn Gutierrez's West Kendall home lies the pool where she strengthens the muscles of her slender five-foot-two frame.

In the living room rests a three-wheeled bike she uses to pedal around her neighborhood, soaking in the South Florida sun. Next to the dining room table is a padded frame that lets her stand upright despite the weakness in her legs.

Angelyn, 14, was diagnosed with cerebral palsy when she was 6 months old. She's worked hard in school, becoming an honor roll student, and learned through extensive physical therapy to increase her mobility.

But now the home where she's lived most of her life is at risk. Her family's politically connected lender is foreclosing, meaning Angelyn and her parents could be kicked out. Their debt? A short-term, high-interest "balloon" mortgage -- obtained by a family attorney and approved by a state judge -- that the family says it never had a prayer of paying off.

This home is all Angie knows.

Aida Gutierrez, Angelyn's mother

"This home is all Angie knows," said Aida Gutierrez, Angelyn's mother, who is fighting the foreclosure in court. "This is where she grew up. This is where she gets her therapy. She doesn't want to leave."

Move to Florida

In 2007, a medical malpractice suit won Angelyn what seemed like long-term financial security: A settlement worth nearly $520,000 (after legal fees) from the New Jersey doctor who delivered Angelyn.

Her parents set up a special-needs trust and moved to Florida, where the trust got a mortgage and bought a four-bedroom home overlooking acres of farmland for $248,000. Miami's tropical climate let Angelyn exercise outside year-round and breathe easier than in the wintry Northeast.

Credit was tight at the end of 2008 and Angelyn's parents -- high school graduates who didn't have steady jobs -- had few options if they wanted to buy such a pricey home: The real estate bubble had burst. Their credit was bad and they had never purchased real estate before. Bank coffers were running on empty. But the spacious home had plenty of room for Angelyn's equipment and the neighborhood just south of Miami Executive Airport was crime-free. The pool in the back would allow Angelyn, then 6, to do water therapy at home. The family's attorney told them it was worth the risk.

But the loan the trust received was unusual for a low-income family like Angelyn's. The $148,000, interest-only mortgage came with a 12 percent rate and a short-term maturity date. Its terms required the trust to pay back the entire principal in two years or face default.

$148,000 Value of high-interest, short-term mortgage issued by Benworth Capital Partners

The family was never able to come up with that much cash, although the lender, Miami-based Benworth Capital Partners, modified or extended the mortgage four times. Aida Gutierrez says she and her husband, the co-guardians of their daughter's trust, didn't understand the terms of the loan. They didn't realize they would have to pay back the principal so quickly or that the monthly payments were only to pay off interest, not to build equity in the house. They now owe nearly $238,000, including late charges, interest payments, and attorneys' fees, according to a court record.

Benworth President Bernie Navarro -- a close friend of Sen. Marco Rubio and former Florida finance chairman for his presidential campaign -- says he gave the family many chances to save their home. (Rubio is not an investor in the firm, a spokeswoman for the senator said.)

04PALSY_EVICTION_cpj

Angelyn Gutierrez (center) can't speak, but she has learned to communicate through a computer. Here she laughs in her West Kendall home as her parents Aida, left, and Flavio, right, look on.

CARL JUSTE cjuste@miamiherald.com

"Benworth has bent over backwards to help the Gutierrez family only to be compensated with insults [and] fraud allegations," Navarro wrote in an email. "Despite the numerous extensions given by Benworth, the Gutierrezes stopped paying the loan and have made no attempts to better their credit and/or obtain a refinancing prior to the loan's maturity."

Asked why Benworth felt comfortable giving a high-risk loan to the family, Navarro wrote: "In their joint loan application, Mr. Gutierrez alone reflected a gross monthly income sufficient to afford the monthly payments. ... Are you suggesting that Mr. Gutierrez misrepresented his income on a Federal document?"

The Gutierrez family complained to the Florida Office of Financial Regulation in 2015, the only consumer complaint against Benworth the agency has on file, a state spokeswoman said. Included in the grievance: a copy of the family's mortgage application from 2008. It shows Angelyn's father, Flavio Gutierrez, listed his monthly work income as $4,300, or $51,600 per year. But in a court filing last year, Gutierrez says the family made no money in 2008, at a time when he was undergoing chemotherapy for Hodgkin's lymphoma, according to his medical records. (He's in remission now.)

Navarro, a philanthropist and former president of the Latin Builders Association, did not respond when asked how Benworth verified the family's income. (He did not answer specific questions posed by the Miami Herald but sent a statement available here.)

Benworth has bent over backwards to help the Gutierrez family.

Bernie Navarro

Loans like the one the Gutierrez family took out are like "playing with dynamite," said Kenneth Thomas, a South Florida banking industry analyst and consultant.

"Interest-only is appealing up front because you're not paying down the principal so it's a lower monthly cost," Thomas said. "But then it comes down with a sledge-hammer at the end. The lump-sum payment can be crippling to a lot of people. Banks [and other lenders] have to be careful about making loans that are suitable for customers."

Read Bernie Navarro's full response here.

Special-needs trusts are meant to provide care for a disabled person's lifetime. Money in the trust is not counted against eligibility for needs-based governments programs such as Medicaid. In Angelyn's case, a Miami-Dade probate judge must approve any funds withdrawn from her trust.

Angelyn's parents also used $200,000 from the settlement to purchase an annuity that provides her with a monthly income of more than $1,000.

Now the trust money is almost all gone, apart from the monthly annuity. But Angelyn's need for physical therapy and close supervision remains. Her mother estimates the annual cost of her care, including physical therapy and government support, as at least $100,000. The document that established her trust states she will need "life-long supervision and skilled nursing care."

There's also a question about how much money went into the trust in the first place. After expenses were taken out and the annuity purchased, court records show the trust was supposed to be seeded with $318,000. But only $217,000 was deposited, according to a copy of the check in a court docket.

Aida Gutierrez blamed any discrepancies on Antonio Soto, the lawyer who handled the home purchase and managed the guardianship funds as a trustee. She said Soto also filled out the mortgage application and entered incorrect information without the family's knowledge. Soto died in 2009 shortly after the deal closed.

A court-appointed monitor is investigating the matter.

$40,000 a year

In 2014, Benworth finally decided to foreclose. The case has dragged on in court, but the family could lose the home after a September trial.

Navarro said Benworth is willing to take less than it is owed and pointed out that the leftover money from the sale of the house -- valued as high as $340,000 -- would go to the trust. "It is our hope that the Guardianship Court work with Benworth in reaching a settlement that would allow for sufficient equity to be derived from the property and paid to the Guardianship so as to assure proper care for the minor for a number of years to come," he said.

Meanwhile, a probate judge is considering removing Aida and Flavio as co-guardians of the home. Just $5,000 remains in the trust's account, the family told the court last year.

If the lender takes the home, the family will have little money to afford a new residence in Miami's ultra-competitive real estate market, Aida Gutierrez says. Attorney fees have eaten up their savings.

rubio navarro

U.S. Sen. Marco Rubio swears in his friend and fundraiser Bernie Navarro, president of Benworth Capital Partners, as president of the Latin Builders Association in 2011

Latin Builders Association Courtesy

Flavio says he makes about $40,000 per year as a short-haul truck driver. Aida stays home to handle her daughter's care. The median rent in Kendall is nearly $2,100, roughly $25,000 per year, according to real estate website Zillow.

The family paid $1,233 in monthly mortgage payments after a 2009 modification, although it was often late and missed a few payments altogether. When Benworth foreclosed, the family stopped paying, according to Aida Gutierrez. Navarro disputes that and says the payments stopped earlier, after the fourth and final loan modification.

The family's other child, Javier, 27, an aviation mechanic, helps out financially when he can.

The lump-sum payment can be crippling to a lot of people.

Kenneth Thomas, banking analyst

Judge Celeste Muir has overseen Angelyn's trust since the family moved to Florida. She signed off on the home purchase. Attorneys who have appeared in her court said Muir is known as a zealous protector of guardianship funds.

"It is hard to determine what facts were presented to the judge in the parties' petition to purchase a home since there is no hearing transcript," Eunice Sigler, a spokeswoman for the 11th Judicial Circuit of Florida, said in a statement. "Judges rule ... in the best interests of the disabled child."

In November, Judge Muir appointed attorney Peter Cohen as a guardian ad litem to represent Angelyn's interests. She also ordered Aida Gutierrez to find a job.

Cohen is negotiating with the mortgage company but said the family may well lose the house, given the state of its finances.

"I do not think the interests of the child and the parents are identical, at least with respect to the property interests of the child," Cohen told the Herald in an email.

gutierrez home

Miami-based lender Benworth Capital Partners is foreclosing on the Gutierrez family home, shown here, in West Kendall.

Nicholas Nehamas nnehamas@miamiherald.com

The family's new attorney, Paul Scanziani, who is representing them against Benworth, did not return repeated requests for comment.

Angelyn's parents have gone public asking for help before. In 2011, the family appeared in a Miami Herald Wishbook column seeking to raise charitable donations for a van to transport Angelyn. The next year, a team of Miami police officers ventured on a three-day bike ride from Miami to Orlando to raise money for the vehicle.

A bright girl

Angelyn excels at school. She made the honor roll at G. Holmes Braddock Senior High and runs track at the Special Olympics. She listens to Justin Bieber and One Direction. Her favorite color is pink.

She can't speak, but she's learned to use a computer to talk for her, controlling it with touches of her right knee. She eats through a G-tube, a feeding device inserted into her abdomen. She can swim from one side of the family pool to the other without stopping, a feat accomplished after years of physical therapy.

But when she overhears her parents talking about losing the home, she starts to cry, her mother says. She kicks out her legs in frustration and fear.

justin bieber

Angelyn Gutierrez, seated, is pictured at a concert with pop star Justin Bieber, one of her favorite singers.

Aida Gutierrez Courtesy

She and her family seem like unlikely customers of Benworth, a hard money lender that deals in the world of unconventional mortgages.

The firm offers loans "that are not usually available at commercial banks, mortgage companies and other traditional lenders," its website states. "Loan approval decisions rely less on credit scores and more on the value of the property in relation to the loan amount. This makes it possible for borrowers with isolated credit incidents, short-sales or certain bankruptcy conditions to qualify for a loan. Since a Benworth private loan requires low documentation, the alternative is attractive to foreign nationals who seek to acquire property in South Florida."

Back in 2008, the Gutierrez family hired Miami attorney Soto to handle the home purchase and manage the trust. Soto used $117,000 from the trust as a down payment, spending nearly $19,000 in fees and closing costs, court records show. (In a 2016 report, a monitor for the court noted the unusually high closing costs.) Soto also secured the short-term mortgage from Benworth, according to the family.

Angelyn's parents immediately struggled to keep up with the payments.

After the family missed a deadline in 2009, Benworth agreed to lower its interest rate to 10 percent. Then, when the loan came due in 2011 and the family had to pay back all $148,000, Benworth agreed to extend the payoff for another year. In 2012 and 2013, the firm again agreed to push back the loan's maturity, all the while allowing interest and late fees to build up, before foreclosing in 2014.

Nicholas Nehamas: 305-376-3745, @NickNehamas