After the Storm

Twelve-year-old Juan Hernandez curled up in his bedroom closet as a tornado slammed into his family’s small, frame house in the Linwood neighborhood just west of downtown Fort Worth. His mom, dad, and two brothers only made it as far as the hallway, where they huddled together as the house shook, electric lines snapped, and tiles flew off of the roof. Barely a month had passed since they’d sunk their entire life’s savings, $2,000, into a down payment on the house. Now it seemed the house wouldn’t last the night. “I thought, ‘This is it. It’s going to get us,'” Juan remembers. “I thought we were gonna die.”

A few doors away, the Ruiz family gathered close in the living room, as the funnel cloud picked up the roof over their heads and plunked it back down again, slightly off kilter. Antonio Ruiz pushed against the front door to keep it from blowing open. Another neighbor, Joe Garza, was driving home from work on Interstate 30 and arrived in downtown Fort Worth just minutes after the tornado hit. He rushed home, only to find the roof caved in, a support beam snapped in two, the furniture water-logged, and his wife and four children missing. He later located them at a church where several residents had taken shelter. “I was afraid they all were dead,” he said.

The frightful memories of that evening, March 28, when the tornado dropped from the clouds and ripped through Fort Worth, have been hard to dispel for these Linwood residents. The horror of almost having their homes destroyed around them, however, was only the beginning of the nightmare. What has been more demoralizing for them and dozens of their neighbors, they say, is living for months with plastic-covered roofs, boarded-up windows, and hole-pocked walls, while the feds, the state, the insurance companies, and the landlords who hold the deeds to their homes duel over who is responsible for repairing them.

The twister came out of the west, touching down at Lake Worth and River Oaks before smashing into the city’s cultural district, downtown office buildings, and the neighborhoods in between. Another twister, born of the first, headed east to Arlington, where several homes were damaged or destroyed. Five people were killed by the storm. The ravaged areas were declared a federal disaster zone and the Federal Emergency Management Agency (FEMA) and the Small Business Administration arrived to process claims. In the days after, city leadership and the downtown business establishment did their best to project an image of a city rallying itself in the face of adversity. Yet from the outset, city authorities seemed more concerned with the damage to downtown–thousands of glass windows were shattered in banks and office buildings–than with the adjacent neighborhoods, like Linwood, whose residents were chiefly low income and minority. “My major concern is the damage done to the business community,” Mayor Kenneth Barr declared. Intent on putting a happy face on the mess and making sure visitors continued to bring their money into downtown nightspots, restaurants, and theaters, downtown real estate owners and City Hall launched a public relations campaign, complete with witty slogans: “When life hands you a tornado, play twister”; “No guts, no glory”; and “You can’t judge a town by its plywood.”

Back in Linwood, however, things didn’t seem so amusing. The neighborhood, which was built in the early years of World War II to house employees of the nearby bomber plant (now Lockheed), has been in decline for at least 30 years. The houses are small and covered with cheap siding. Air-conditioning units occupy the windows of those lucky enough to have them. Yet before the tornado–which severely damaged at least 70 houses in Linwood–this was a slice of the American dream for dozens of Hispanic families, many of whom were first-time homeowners. Or so they thought. In fact, most families in Linwood occupy their houses under what are known as contracts-for-deed, a sort of rent-to-own arrangement for purchasing a house. As events following the tornado have made painfully clear, they do not own their homes, nor do they enjoy many of the protections taken for granted by homeowners or renters.

Under a contract-for-deed, the “buyer” agrees to pay a certain amount to the “seller” each month. There is little law to cover the specifics of such an arrangement. Qualifying is as easy as the seller wants it to be. The seller can include any stipulations he or she cares to impose. Theoretically, in 20 or 30 years the landlord who “sold” the house–if everything goes right and he or she is honest–turns over to the tenant the deed to the property. Unlike a normal deed, the title remains in the seller’s name until the buyer has paid the full purchase price. In the meantime, the buyer accrues no equity. Since they aren’t the owners of record, the Linwood tenants discovered after the tornado that they didn’t qualify for government loans to repair their homes. In some cases, insurance coverage they thought they’d paid for along with their house payments didn’t exist. Months later, as life began to return to normal for downtown office workers, Linwood residents still found themselves struggling to keep their families dry under roofs covered with plastic.

No official record is kept of how many houses in Texas are sold by contract-for-deed each year. Most regulations in the state property code regarding the arrangement were adopted by the Legislature in 1995, to protect “buyers” in the poverty-stricken Rio Grande Valley, where the contracts are common. Those provisions, which apply only to properties in the Valley, require that the contracts be in Spanish and English, disclose the amount of interest paid, include survey and title information, and be registered at the county clerk’s office. “The protections for the buyer in the property code are minor,” said attorney David Flores, who is part of a Tarrant County Bar Association group that volunteered to help Linwood residents. “The people who buy houses this way couldn’t do it the conventional way. They have bad credit, or their income is too low,” Flores said. “For some people, it’s a pretty good way to buy a house. But, like everything else, how good it is depends on the people who are involved.”

Horror stories abound. Take property taxes, for example. Tarrant County tax officials estimate that more than 100 families a year find themselves caught in a squeeze between the “sellers” and the county, when tax time comes around. Because taxes are the responsibility of the deed holder, “buyers” may not know that taxes haven’t been paid until it’s too late. If the taxes aren’t paid, the county will seize the house and the buyer can lose every penny they have paid, the officials said. Then there is the “late payment” trap. In general, under a contract-for-deed the time a buyer has to make up a late payment depends on the percentage of the sales price that’s been paid. If the buyer has paid 10 percent or less, he has 15 days after written notice of intent to terminate the contract (meaning the house will be repossessed) to make the payment; 10 to 20 percent, 30 days notice; more than 20 percent, 60 days notice. Because the buyer accrues no equity under a contract-for-deed, he can lose all the money paid on the house in the event of a late-payment repossession. After the storm, many Linwood residents on limited budgets found themselves making two payments–one for their contract-for-deed (to avoid losing the house and their investment), and one for the apartment or rent house they were forced to take because the damages to their own residences were so extensive. “One family had already paid $15,000 on their home,” said Gloria Reeves, of Emergency Assistance of Tarrant County, a disaster recovery group. “They had to make the payment [even though] the house has been destroyed. The landlord was refusing to fix it, but if they leave, he can repossess it, fix it up a little, and sell it for another $40,000. And they are out all of the money they put in,” she said. “These people are scared and some of these landlords have no problem coming out there and making them more afraid.”

Most homes bought under contract-for-deed are in depressed areas. It’s not uncommon for the landlord/owners to sell a home, evict the buyers for violating some stipulation in the contract, and resell it over and over, said Fort Worth realtor Jim Engstrom. “Most of the time… we’re not allowed to write a contract for deed,” he said. “That’s because there’s just not a lot of protection. The individual selling the property can pretty much do whatever they want to do. …For individuals who may have a credit problem and don’t have a lot of money, it can be a disaster.” Even if the buyer pays off the home, there’s no guarantee he or she will get the deed, said attorney Richard Haskell, another of the bar volunteers. “If you’re an unscrupulous landlord, you can continue to sell the same property 100 times over and the city would never notice. I’ve seen it go that way. One family I talked to had been paying for 14 years [when they were evicted]. They had two payments to go.” In the aftermath of the tornado, lawmakers, spearheaded by Fort Worth State Senator Mike Moncrief, are pledging to sponsor legislation to tighten regulations on contracts-for-deed.

Linwood houses are evidently good investment property. According to tax records, most Linwood property owners own more than one house in the neighborhood. The two landlords who have been the most recalcitrant about helping “buyers” get their homes repaired, according to volunteers interviewed for this story, are Chester Riggs (and his wife Peggy Anderson Riggs), and an outfit known as HGU Investments. HGU is owned by James Roan and his wife, Tracy. HGU owns more than 80 low-value properties ($20,000 to $40,000) in Fort Worth, including 18 in Linwood. On its website, HGU announces that it sells houses to those who couldn’t get them through traditional means. The site advertises 12.5 percent interest, 20-year notes, and $2,000 down payments. There’s an Internet special of $100 off. The Roans live in a $597,000, 7,733-square-foot home in the Mira Vista gated community in southwest Fort Worth. The home has five bedrooms and six baths (and, presumably, electricity and a roof. Roan returned a call from the Observer, but said only that HGU was “working on” paying for repairs to damaged Linwood homes. He did not call back as promised and did not return subsequent phone calls.

Chester Riggs was less reticent. The 76-year-old Riggs has owned and sold (and resold) homes in Linwood for more than 30 years. At the time of the tornado, Riggs and his wife owned 18 of the Linwood houses, all valued between $20,000 and $25,000. They live in a $165,000 house in east Fort Worth. Some of Riggs’ tenant/buyers say Riggs told them the insurance they had paid for had “depreciated,” and that they would have to pay for repairs out of their own pockets. Others say Riggs never passed on the insurance checks he received for damage to their houses. In an interview, Riggs blamed the “buyers” for repair problems and denies that he kept anyone’s insurance settlement. One of the requirements of his contracts, Riggs said, is that buyers paint their houses and put on new roofs. Some of them have begged off and others have just refused to do the work, and he can’t get insurance on the houses because they don’t have adequate roofs, he said. “I’m pretty damn angry about all of this,” Riggs said. “I give these Mexican American people a chance to own homes when they would never have a chance to own otherwise. I charge them no interest on the notes. And then they don’t do what they’re supposed to do and I get blamed,” he said. “This crap has been caused by a bunch of disgruntled people who didn’t live up to their part of the bargain and expect me to bail them out.” Riggs said he had “no idea” how many houses he has sold by contract-for-deed. Asked how many owners have actually paid off their houses and become the legal owners, Riggs said he did not know.

Today, almost eight months after the deadly storm, most of the houses have new roofs. Some windows have been replaced and some homes have new wiring, replacing the old substandard lines that were ripped away by the tornado. But that’s no tribute to the landlords, according to Gloria Reeves of Emergency Assistance. “Everybody has a roof and the repairs are getting done. Almost all of it has been done, though, by volunteers,” she said, adding that many of the volunteers and funding came from out-of-state. Yet there is still much to do, and some volunteer groups have been reluctant to take on the remaining work for fear the landlords will repossess the improved houses, Reeves said. “Nobody wants to make improvements for the landlord who didn’t insure them in the first place.” Others still don’t meet city codes, and the city’s response in some cases has been to slap a code violation on the landlord, said Dawn Tawater of Tarrant County Recovery, a FEMA-funded agency. “That gives the landlord another excuse to kick people out. If he has to improve it [to meet codes], he might as well sell it for more money.”

The repairs that have been made were slow in coming, she said. “Work is still going on; the people are still struggling. It seems like everyone else is moving past, but Linwood is still just kind of stagnating.” Prodded by the bar association, the Texas Attorney General’s Office, and attention from the news media, some landlords have finally filed insurance claims to pay for repairs, said attorney Steve Maxwell, Bar Association president. “Many of these people did have insurance provided as contractually agreed. It was just a matter of getting the claims process going. There was insurance, but there was nobody helping them make claims,” he said. “In many cases, they didn’t even know who their insurance carrier was because the landlords had taken care of that.” Volunteer attorneys have also helped some buyers change their contracts-for-deed into more conventional owner-financed mortgages. The Hernandez family finally secured a home repair loan from the SBA, and moved back into their newly renovated house last month. At least one insurance claim that had been paid but never turned over to the “buyer” was delivered after the Attorney General’s office looked into the case.

Volunteers say they are still negotiating with HGU and Chester Riggs, but so far neither has paid for any of the donated work or supplies. “This situation sure has clarified for me–and for a lot of people–a lot of things I never thought about that could happen in a contract-for-deed situation,” Maxwell said. “There were a lot of little side deals, for instance, that were made that were never in writing. If anything good came out of the tornado [it] is that it brought to the attention of the city and elected officials, this contract-for-deed issue. It’s a pretty risky deal and I think it’s been made pretty clear that something, some kind of regulation, needs to be added.”

P.A. Humphrey is a writer living in Ft. Worth.