You don’t have to be upside down on your mortgage to lose your house.

The Bernstein family is packing up and preparing to move out of their Sylmar house Friday after 25 years. The mortgage was practically paid off.

“What I owed on the loan was $37,000," said Raymond Bernstein, who bought the house with his wife Diane. "I have so much equity I would be an idiot to lose the house.“

Bernstein insists a series of accidental missed payments led to foreclosure.

“My bank got bought out and my automatic payments got shut off without my knowing, then the mortgage owner then sends a notice I am behind. “

Bernstein says he worked out a repayment plan with Citibank. The bank confirms Bernstein made the first payment of $4,000 in January.

But what happened to the second payment is in dispute and the subject of a lawsuit.

Citibank says the Bernsteins missed the second payment.

Bernstein says he mailed it, “they then claimed not to get a payment and they foreclosed and sold it at auction.”

The 2,000 square-foot, 3-bedroom, 3-bath house was sold at auction in March for $255,000.

Since the Bernsteins owed just $37,000, who gets the $218,000 in profit, the equity that the Bernsteins had built up after paying into the mortgage over the last 25 years?

“The lender, not the family gets the money in a foreclosure, “ says Lori Gay, president of Neighborhood Housing Services, a nonprofit group that represents homeowners for free who are on the verge of losing their homes.

“It’s awful … when you lose your life’s savings and your equity," Gay said. "Awful. In foreclosure, no one wins.”

This would be a tough situation for any family, but Raymond and Diane Bernstein have an autistic son who needs a lot of care.

Jeremy is 11 and says he is sad about moving. “It’s been the worst, scariest thing that’s happened to me, “ says his mother Diane.



The Bernsteins have filed two lawsuits claiming illegal foreclosure. But Raymond, who sells insurance for living, can’t afford a lawyer and has chosen to do it himself. He admits it’s not going well.

Citibank would not comment on the Bernstein’s case but sent this general statement about how they deal with foreclosures:

"We work very hard to keep borrowers out of foreclosure and in their homes. We often offer borrowers who are seriously behind on their mortgage a repayment plan. If they fail to make the payments, however, the plan is cancelled.

"We attempt to contact the borrowers by mail and telephone to advise them of the plan's status. If the account becomes delinquent due to missed repayment plan payments, we are normally unable to offer another solution. We regret we were not able to offer further options to these homeowners."

The Bernstein’s case reminds us that in this economy, even if you are just a few years away from owing your home free and clear ---you could still lose it, if you miss enough payments.

If you are having trouble, or you are upside down, Neighborhood Housing Services offers free services.