SAN JUAN, Puerto Rico – Elvis Guzman opened the letter, saw it was in English and took it to his lawyer for translation.
The 59-year-old who sells recycled metal for a living figured it was another letter from the bank warning his family that they were behind on their mortgage payments. But the news from the attorney shocked him.
"He told me I was losing my home. When he told me that, I burst into tears," Guzman recalled. "You have no idea the depression I'm going through. I am going to fight tooth and nail for this house."
An average of 14 families lose homes every day to foreclosure in Puerto Rico, more than double the rate a decade ago as the island faces a real-estate crash worse than the one that sparked the Great Recession on the U.S. mainland. Families across Puerto Rico are moving in with relatives, becoming homeless or simply fleeing to the U.S. mainland with destroyed credit records as the island's government struggles to restructure a portion of its $73 billion public debt and help the economy emerge from a decade-long recession.
"It's the crisis no one is talking about," said Ricardo Ramos, a professor at the Legal Assistance Clinic of the University of Puerto Rico. "This has so, so many consequences."
In this U.S. territory of 3.4 million people, local courts oversaw foreclosures on nearly 33,000 homes from 2009 to 2016, according to government statistics. A record 5,424 homes were foreclosed last year, up 130 percent from nearly a decade ago, when the government first began tracking those numbers.
However, the actual number of foreclosures is much higher because the statistics do not include an estimated 20,000 loans in default or close to default that local banks have sold to companies outside Puerto Rico since 2009, Ramos said. Those cases are largely handled in federal court and no one compiles statistics.
Looking ahead, more than 17,000 homes are now in the process of foreclosure in local courts, including the one Guzman bought more than a decade ago in a working class suburb in the capital of San Juan that he shares with his wife, who works as a maid, and two young daughters.
He was paying $1,114 a month on their home when the prices for copper, iron and other metals dropped. His business shrank and he filed for bankruptcy. He then fell behind on his mortgage payments and recently got denied a payment plan despite insisting he can afford to pay $700 a month.
"My attorney told me, 'You have to prepare yourself for a Plan B,'" Guzman said. "I'm not doing that ... I don't know what's going to happen, but I'm not leaving my house."
Nonprofit organizations struggling with dwindling budgets amid the island's economic slump say the jump in foreclosures has led to a surge of Puerto Ricans seeking help amid a deep economic crisis.
"The great majority are professionals," said Leslie Ortiz, spokeswoman for the Salvation Army in Puerto Rico. "It's people who have studied, who have worked and have lost everything and don't know where to go to find help because they've never needed it."
Of the 35 people recently staying at the Salvation Army's shelter for men in Puerto Rico, nearly half were there because they lost their homes and have no substance abuse or other issues, she said.
The group also is providing financial help to people like Sandra Maldonado, a 40-year-old divorced mother of two boys who is in danger of losing her home.
Maldonado and her ex-husband bought the three-bedroom home for $70,000 with the help of federal and local incentives more than a decade ago. She is now behind on her mortgage because she recently had to choose whether to pay for her son's medical care and make a house payment. She has borrowed money from family and friends on occasion as letters from the bank accumulate.
"You get scared because you think, 'My God, I have two children and I'm going to be left without a roof over my head,'" she said.
The number of people in Puerto Rico who have become homeless because of job loss or eviction has increased in recent years, with a total of more than 4,400 homeless people reported last year, a nearly 10 percent increase from 2009, according to U.S. Housing and Urban Development. More than half the homeless people interviewed for a 2015 Puerto Rico government survey held every two years said they were homeless for the first time.
"The foreclosure problem that Puerto Rico has experienced over the past few years is actually worse than what we saw during the height of the foreclosure crisis nationwide," said Daren Blomquist, senior vice president with Attom Data solutions, a U.S. housing data provider.
The problem in Puerto Rico also has been more persistent, with foreclosure rates above the 1 percent benchmark level for nearly seven years. In comparison, hard-hit U.S. states like Nevada were above that level for only five years, Blomquist said.
And unlike the U.S. mainland, where the housing crisis was set off by the collapse of a price bubble, experts say the high level of foreclosures in Puerto Rico comes mostly from the island's long economic slump, which has produced an unemployment rate of 12 percent.
"The difference with Puerto Rico is that it's not just risky bad loans that are driving foreclosures. It's the underlying weak economy," Blomquist said. "That's a harder problem to solve than it is to solve bad loans."
About 60 percent of foreclosed homes in Puerto Rico have been abandoned, said Silvio Lopez, president of Puerto Rico's Mortgage Bankers Association. By comparison, only 30 percent of foreclosed homes were abandoned in the U.S., mostly in areas hardest hit by the recession.
To stay afloat, banks in Puerto Rico have sold more than 70 percent of their mortgage portfolio on the secondary market, said Zoime Alvarez Rubio, executive vice president of Puerto Rico's Association of Banks.
"Banks cannot carry this risk. ... It's too much to bear," she said in explaining why troubled loans are sold off. "The economic impact and risk is monumental."
Blomquist said that is an extremely high number, adding that banks on the U.S. mainland discovered that strategy late in the housing crisis.
As of last year, Puerto Rico's six commercial banks still had more than 3,800 repossessed homes on their books worth $338 million, Alvarez said. To avoid even more foreclosures, local banks since 2009 have implemented more than 176,000 alternatives to foreclosure worth $19 billion, including restructurings and refinancing.
Alvarez and other banking officials say the number of foreclosures is decreasing because the record number reported last year reflected what happened in previous years. Government statistics show the mortgage delinquency rate has dropped to nearly 13 percent from a high of nearly 18 percent in September 2012. For comparison, that rate is roughly 5 percent on the U.S. mainland.
"It's still an absolute crisis," said Ramos, the professor at the University of Puerto Rico. "This island is falling apart."
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