'I never would have done this...'

But joy turned to disappointment 15 months later when the single mom was forced to sell because she no longer could afford the mortgage.

Today, Favela says she didn’t fully understand the terms of the high-risk loan that she signed. It is a refrain voiced by a growing number of people who bought homes in 2005 and 2006, when loose lending standards left room for misunderstandings.

“My payment was so bad. I never would have done it if I had known how much the payment really was,” said Favela, a nursing aide.

Two years ago, Favela couldn’t find a small house she could afford as home prices soared to record heights in Sonoma County. She settled on a three-bedroom town home in west Santa Rosa with a pool her 6-year-old son loved.

“I was excited. I was thinking I was going to have a house for a long time,” she recalled. “My kids were so happy because finally we had a house and we won’t live in an apartment anymore.”

Favela managed the $410,000 purchase by financing the entire price, taking out two high-risk loans. The largest loan featured a fixed monthly payment that would become adjustable after two years. Many buyers relied on similar loans to get into homes in Sonoma County and other high-cost areas during the housing boom.

Favela said she was shocked her monthly payment was $2,400 and unaware it would rise to $3,400. At the time, she said, her English wasn’t good enough to fully understand the loan’s terms or her mortgage broker’s explanations.

“A lot of the stuff I don’t understand. Maybe I should have taken somebody to translate for me,” she said.

Her mortgage broker, Jeff Wolfe of J.P. Wolfe & Associates in Santa Rosa, would not discuss her loan for privacy reasons. He said he explains all loan terms fully to his clients and goes to all his escrow signings to make sure borrowers understand what they are agreeing to. If necessary, he uses a Spanish-speaking notary to make sure the borrower understands, he said.

“I’m shocked a person said they didn’t know they had an adjustable-rate note,” Wolfe said. “Anyone can read on the note whether it’s a fixed rate or adjustable. A notary won’t notarize someone who is not understanding. I would not be in business 20 years if I told one person they’re getting one thing when they’re getting another.”

From the beginning, Favela struggled to pay her mortgage on her $45,000 annual income. She worked overtime and tapped her savings to make the monthly loan payment.

“It was really tight. I was using money I had in the bank. I was working a lot of overtime to make the payments,” she said. “Sometimes I didn’t have a day off for a month. It was really, really hard on my family. I saw them sometimes for dinner, sometimes just bedtime and then go to work and they stay with relatives.”

Working extra shifts as a nurses’ aide at Sutter Medical Center in addition to a second job caring for elderly clients wore Favela down.

“I was telling everyone I was so scared. I said maybe I don’t want the house anymore,” she said.

Health problems forced her to stop working for six months. In June 2006, she needed surgery to ease swelling on her brain, a condition she has battled since birth. Two months later, she had her gall bladder removed.

Favela managed to make two mortgage payments while out of work thanks to the generosity of nurses, housekeepers and physicians at Sutter who raised money for her.

Still recovering and unable to work, Favela decided to sell. In January, she sold the town home for $310,000 after her lender agreed to take less than what Favela owed, recognizing the housing market is in a downward spiral.

“We were able to convince the lender that this wasn’t going to get any better,” said real estate agent Belinda Andrews, who helped her sell the home to avoid foreclosure.

Back in an apartment in Larkfield, Favela shares a bedroom with her son, and her daughter faces a longer trip to middle school in Santa Rosa.

Yet she still hopes to own a house again and is saving all she can manage while continuing to work two jobs.

“I really want to buy another house. I want to try again,” she said.