"Donna Ferrato may be the most notorious foreclosure defendant in the state. She owns a $3.1 million Tribeca loft and has made one mortgage payment since 2008. Yet she continues to live mortgage-free." — The lawyers who are trying to foreclose on her
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"This is personal for them. … I'm in this very ritzy ZIP code, and they know that there's value here. I bought this house for $650,000. It's worth $3 million now. I don't want to sell it. … I just want to be able to live here." — Donna Ferrato
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Out of the foreclosure crisis that began in 2008, a powerful morality tale emerged. Or rather, two different stories about right and wrong took hold, each with its own villain.
In one version of the story, big banks preyed on unsophisticated Americans, inflating an enormous asset bubble. When it popped, the banks got a massive bailout from the federal government, while homeowners were left behind.
"We all know there are hundreds of thousands of people who have lost their homes through nothing but outright theft,"
In the mirror-image version of that narrative, the bad guys were homeowners who either walked away from their underwater mortgages or got assistance from the government.
"How many of you people want to pay for your neighbor's mortgage that has an extra bathroom and can't pay their bills?" CNBC's Rick Santelli asked during a 2009 broadcast from a jeering Chicago trading floor. Santelli's
The mortgage crisis fed a populist mistrust of authority on both the political left and right. And that legacy still casts a long shadow over American life. But it's tempting to assume that all of the actual crisis-era foreclosure cases have been resolved. Remarkably, though, for at least one homeowner, it's still not over.
Donna Ferrato, an acclaimed New York City-based photographer, moved in the mid-1990s to Tribeca, where she transformed the third floor of an abandoned old building into a one-of-a-kind home. Since then, she's been using her Leica camera to document change in her once-gritty downtown neighborhood. And there's been a lot of change. Today, Taylor Swift owns a townhouse around the corner, and it's been home to other celebrities including Meryl Streep, Ryan Reynolds, Jake Gyllenhaal and Meg Ryan.
During the early 2000s, Ferrato was having trouble keeping up with her mortgage payments. As a freelancer, her income was irregular. As her mortgage changed hands, and as she learned about taxpayer-funded bailouts at the height of the financial crisis, she lost trust in the banks. So she stopped paying.
Since then, Ferrato has fought against the securitization trust that holds her mortgage. She estimates that her legal bills have totaled nearly $250,000. One might say she's tried every trick in the book to hold onto her home. Or, more sympathetically, that she's exhausted every legal avenue available.
It's been seven years since the current foreclosure case against Ferrato was initiated. That case followed four previous foreclosure efforts, none of which resulted in Ferrato losing ownership of the property. For now, at least, Ferrato is still living in her condominium, along with her daughter and grandson.
To say there's bad blood between the litigants would be an understatement.
In a recent court filing, lawyers for the securitization trust accused Ferrato of "chicanery" and "brazen" legal tactics. Their characterization of her as "notorious" drew a rebuke from Ferrato's lawyer, who wrote that the other side was making "ad hominem attacks" and seeking to "sling mud."
During a recent interview, Ferrato made clear that the fight is personal for her as well.
Referring to the claim that she may be the state's most notorious foreclosure defendant, she said disdainfully: "Like I'm Billy the Kid or something — just because I don't give up."
"They're monsters, they're blood-suckers," she added.
Ferrato's financial troubles started when the print magazine industry, where she'd made a living as a freelance photographer, was starting to flounder. For a time, she rented out her condo in an effort to keep up with her mortgage payments. But that lease ended in a messy dispute, and she moved back in.
In early 2007, Ferrato took out a $900,000 mortgage. Twenty-one months later, she got a loan modification that left her with a $960,000 principal balance. Looking back, she's baffled over how she ever qualified for the loan. Mortgage lending standards in the pre-crisis era were, of course, notoriously lax.
"As a freelancer, sometimes I make no money," Ferrato said. "This is what they know."
Ferrato's mortgage ended up in a securitization called Option One Mortgage Loan Trust 2007-5. Later on, that same trust was one of 68 securitizations — either sponsored or underwritten by the Royal Bank of Scotland — that was the subject of litigation filed by the agency that regulates Fannie Mae and Freddie Mac.
The Federal Housing Finance Agency alleged that the securities were sold to Fannie and Freddie on the basis of materially false or misleading statements or omissions.
In connection with the lawsuit, 1,000 loans from Option One Mortgage Loan Trust 2007-5 were reviewed to determine the accuracy of statements that had been made to investors who bought certificates in the securitizations. The review found major discrepancies.
"Even though the certificates purchased by Fannie Mae and Freddie Mac were supposed to represent long-term, stable investments, a significant percentage of the mortgage loans backing the certificates have defaulted, have been foreclosed upon, or are delinquent, resulting in massive losses," the FHFA wrote in its lawsuit.
'Comically inept'
Ferrato's legal battle is part of a larger fight, being waged in both the state legislature and the courts, over foreclosure protections for New York homeowners.
It's a low-profile, high-stakes dispute. And its focal point is the statute of limitations — a boring but frequently decisive legal mechanism that bars plaintiffs from bringing suits after a specified amount of time has passed.
Under New York law, lenders that bring foreclosure cases face a six-year statute of limitations. Sometimes that's not enough time to complete a foreclosure sale in the Empire State, which provides borrowers with various protections, including the oversight of a judge and mandatory mediation.
"The average foreclosure in New York now takes 1,823 days — or five years — to complete, frustrating lenders' ability to recover for mortgage defaults and consuming almost the entire six-year statute of limitations," lawyers for the Mortgage Bankers Association, the New York Mortgage Bankers Association, the American Bankers Association and other industry groups wrote in a 2023 court filing.
Industry lawyers warn that a rigid application of the statute of limitations, including on older loans, would relieve borrowers of their obligations to pay on unenforceable mortgages. In other words, borrowers would get free houses.
If the courts rule against the industry, insiders predict damage to the New York mortgage market, with lenders curtailing their loans or exiting the state altogether.
More broadly, the functioning of the mortgage market relies on borrowers' willingness to pay the debts they've incurred. If every homeowner took Ferrato's approach, mortgages would no longer be available.
But homeowners' lawyers contend that banks should not get off the hook when they fail to complete a foreclosure within the statute of limitations. The deadlines have become a problem for the industry, those lawyers argue, because lenders run mistake-prone foreclosure operations.
In Ferrato's case, one New York state judge made a similar assessment. In a 2022 order, Judge Francis Kahn described the efforts to foreclose on Ferrato as "comically inept," even though he ruled in the plaintiff's favor.
"They were the gang that couldn't shoot straight," said David Wrobel, who was Ferrato's lawyer throughout most of the foreclosure fight. "Everything they did, they did it wrong."
Ferrato's mistrust of banks seems to have been fed by the byzantine, confusing structure of the mortgage securitization business, which makes it hard to even identify her adversary.
The plaintiff in the foreclosure case against Ferrato is Wells Fargo Bank, in its role as trustee for the securitization that holds the mortgage. But a Wells Fargo spokesperson said in a written statement that the bank did not originate Ferrato's mortgage or make any foreclosure decisions on the property, and that its role as trustee is "administrative in nature."
The bank's spokesperson also said the foreclosure is the responsibility of the loan servicer — in this case, PHH Corp.
A PHH spokesperson said in an email that legal papers filed in the case were prepared by PHH on behalf of Wells Fargo in its role as trustee, and that the San Francisco-based bank has no role in the servicing of the loan, the foreclosure process, or the marketing and sale of the foreclosed property.
Both Wells Fargo and PHH did not respond to numerous written questions about the case against Ferrato.
For many years, Ferrato and her lawyers seemed to be winning their longshot legal battle.
"All I did was consistently beat the bank in their foreclosure actions on technical mistakes they made. Nothing sophisticated," Wrobel said. "We beat them so many times that the statute of limitations expired."
In one instance of Ferrato's side outfoxing the bank's attorneys, her lawyers argued that an effort to serve papers on her was faulty.
On this particular occasion, a process server entered the lobby of Ferrato's building and rode the elevator to the third floor, where her condo is located. Unlike in a traditional building, the elevator in Ferrato's building opens directly into her condo, rather than into a hallway. After the process server rode the elevator, the door opened, and Ferrato's daughter, Fanny, was standing nearby.
What happened next is in dispute. The process server has said that Fanny Ferrato identified herself as "Tiffany Jones." Fanny maintains that the process server fabricated that name, and that he also forged a signature, using the same moniker.
A legal fight over whether the papers were properly served dragged on for more than two years, and the bank found itself bumping up against the statute of limitations. At that point, it abandoned its fourth foreclosure action against Ferrato.
'This is the home that I built'
On a brisk morning in late December, I walked through Tribeca, arriving at a brick building on Leonard Street, and rang the bell to Ferrato's condo. I'd arranged to interview her inside the home she's been fighting so hard to keep.
After getting buzzed in, I rode the elevator up to the third floor, where I was greeted by Ferrato, her daughter Fanny, her grandson and their cat.
Ferrato, 75, has shoulder-length hair, an intense gaze and the vitality of a much younger person. She evinces a distrust of authority and a DIY ethic, reflecting the spirit of both the 1960s and the punk-rock era.
After Ferrato bought this unit, she worked hard to create what today looks like an artist's dream home. The cavernous layout provided space for a darkroom. The tall walls allowed for the bold addition of two trees.
Ferrato and one particular worker used wood they found on the streets to build large open shelves. Plaster art and a chandelier were added to the ceiling.
"This is my home that I built, really, with my hands and with the help of this young man that I'd met," Ferrato said. "And I love this place."
Even before Ferrato bought the Tribeca unit, it had a feature that captivated her. On one wall, there is the signature of a man named Thomas I. Lee. Lee was a worker who lived in this building in the late 1800s, according to Ferrato. She pointed to a drawing of a man's visage on the wall, saying it's a self-portrait of Lee.
"I'm looking at this, and I'm thinking, 'Oh my God.' I fell in love with this man," Ferrato told me as we stared at the drawing. "Look at him with his ruffled shirt and his goatee and his long wavy hair and his black eyes. And just everything about him was just like, 'I'm a conqueror. .. I made it to America. I'm gonna stay here.'"
"And so I just fell in love with this place, and I only wanted this place. And I said to the contractor, 'I don't even care what the price is. I'm not gonna quibble.'"
After the 9/11 attacks on lower Manhattan, Ferrato's attachment to the neighborhood grew. She was in Germany on Sept. 11, 2001, but returned home as fast as she could.
"From that point on, I never wanted to leave," Ferrato told me. "And we had a lot of problems with this building, because it is very old. We had a lot of flooding in the basement. We had flooding from the roof."
Ferrato said she poured a lot of her own time and energy into fixing the problems in the building's basement. "I had to pull the whole floor out and to connect all the pipes and put down a massive lead pan and fill it up again," she said. "So things were always setting me back."
Before we sat down to talk, Ferrato showed me books that feature her photographs, including a self-published book titled TriBeCa 9.11.01-9.11.11. One of the pictures shows a man reading a 2009 Wall Street Journal article about foreclosures.
"This is when I was starting to realize that I was caught in a scam," Ferrato said. She referenced then-Treasury Secretary Henry Paulson's comment that "if you've got a bazooka, and people know you've got it, you may not have to take it out."
"Basically, what he was doing was telling all of the citizens of the United States that we were going to have to support the banks," Ferrato told me. "They needed our help. We were going to have to make the sacrifice. And that was the bazooka — that if we didn't do that, we would all crash and burn."
Ferrato also showed me a book that features Time magazine's choices for the most influential photographs of all time. The book includes
"That's all I did for 10 years," she said. "I had to really understand, how does this happen? Where do women go? I started living in battered-women shelters … riding with the cops nonstop, living in prisons with women who kill."
When we sat down to talk over lunch, Ferrato told stories about situations where despite being the underdog, she stood up for herself and prevailed.
In 1993, Ferrato sued the Whitney Museum of American Art, which had displayed a collage by another artist that incorporated images from Ferrato's photography of domestic violence without her permission. The museum later issued an apology.
"I would say that winning that case … gave me tremendous confidence," Ferrato told me. "And it showed me that I have a powerful voice, and I should use it."
'Strange abuse'
Ferrato's foreclosure case took a major turn in 2021, after she became one of four defendants whose cases were heard together by New York's highest appeals court.
In layman's terms, the legal issue was whether lenders should be able to restart the statute of limitations by revoking a prior action that had triggered the ticking of the clock. The judges
One effect of the ruling was to allow the bank to move ahead with its fifth foreclosure action against Ferrato. That might have been the end of the story, at least with respect to the statute of limitations issue. In Florida, where the state's highest appeals court
But in Albany, state lawmakers responded to the appeals court ruling by drafting legislation that effectively sought to overturn the court's decision. A fierce lobbying campaign ensued. "It was a real war," a source familiar with the matter told me.
Backers of the legislation included the National Urban League, AARP New York, the Hispanic Federation and more than 50 council members and borough presidents in New York City.
Of course, the bill drew opposition from the lending industry. The FHFA, which regulates Fannie Mae and Freddie Mac, warned about "unintended adverse consequences."
One issue raised by the FHFA was that the bill would apply retroactively, imperiling the collateral of existing Fannie and Freddie loans in New York. In other words, the measure would apply to mortgages that, like Ferrato's, were already in the foreclosure process.
In March 2022, the New York State Assembly passed the bill by a lopsided margin of 107 to 40. The Senate followed suit, voting 52-10 in favor. Democratic Gov. Kathy Hochul later signed the measure into law.
The law's supporters argue that the appeals court had inappropriately created an exemption for mortgage bankers from the statute of limitations. The court's ruling allowed lenders to manipulate the statute of limitations unilaterally, they say. "If you start the clock running, you don't get to just reset it in a way that's arbitrary and capricious," said Jacob Inwald, an attorney at Legal Services NYC.
Mortgage industry officials counter that even before the law's passage, New York was one of the most difficult states for conducting foreclosures on delinquent homeowners. And they note that federal mortgage servicing rules have been overhauled since the 2008 crisis, providing more protections to borrowers.
The two-year-old New York law is called the Foreclosure Abuse Prevention Act. But that title is a misnomer, said Brian McGrath, co-chair of the consumer financial services practice group at the law firm Hinshaw & Culbertson.
People who haven't paid their mortgages for many years have had opportunities to explore various options, such as establishing a payment plan or selling their property, he said.
"The very purpose of the legislation — to address some sort of foreclosure abuse — is just not there," said McGrath, who has represented the Mortgage Bankers Association and the New York Mortgage Bankers Association in litigation over the law. "That borrower ends up with a free house. That's a strange abuse to me."
But the debate over the Foreclosure Abuse Prevention Act runs deeper than the substantive arguments. On both sides, there have been accusations and insinuations about the motives and interests of the opposition.
For example, the law's opponents point to a New York Post article about state Sen. James Sanders Jr., who sponsored the Foreclose Abuse Prevention Act. In 2022, the Post
Sanders, a Democrat who chairs the state senate's banking committee, said there is no conflict of interest.
"The best legislation often stems from personal experience," he told American Banker in a written statement. "In my case, while I successfully won, they have continuously found ways to drag me back into the situation. Personal experience is what inspired my run for office and continues to guide my work as a legislator."
He added, "My district has long been preyed upon by predatory lenders, so it's only natural that I would fight tirelessly to get this legislation passed and protect my constituents from these exploitative practices."
Meanwhile, the law's supporters pointed to reporting by the
In Ferrato's case, the law firm Greenberg Traurig was representing Wells Fargo. In a separate legal matter, Greenberg Traurig was reportedly representing DiFiore in her official capacity, and Ferrato's lawyers said DiFiore never disclosed that fact to them.
DiFiore, who resigned in 2022 amid an unrelated ethics investigation, did not respond to a request for comment made through a spokesperson for the Court of Appeals.
While I was reporting this story, a supporter of the Foreclosure Abuse Prevention Act drew my attention to another connection between Greenberg Traurig and the New York Court of Appeals. Hope Engel, the wife of Greenberg Traurig lawyer Henry "Hank" Greenberg, has served as a consultation clerk at the Court of Appeals, according to public records.
A spokesperson for Greenberg Traurig, which has more than 2,700 lawyers on four continents, declined to comment.
Some members of the New York State Legislature have been explicit about their view that certain members of the judiciary have come under the sway of the banking industry in foreclosure cases.
"From the Great Recession until the present, all but one of the fifteen cases decided by the Court of Appeals relating to a lender's enforcement of a mortgage against an owner benefitted the mortgage holder," Democratic State Sen. Julia Salazar
"This bill is intended to promote faith and trust in the integrity of the residential mortgage foreclosure process by equipping our courts to meet their most urgent challenge of averting an emerging crisis of 'public confidence in the judicial process.'"
Meanwhile, Sanders told American Banker in his written statement that he has been hearing "troubling reports" that some judges are not adhering to the two-year-old state law. He added that the issue has been brought to the attention of the chief judge's administration.
For Donna Ferrato, the enactment of the Foreclosure Abuse Prevention Act came too late to stave off the scheduling of a foreclosure auction in late 2022. By that time, Ferrato owed nearly $2 million, or roughly $1 million more than she'd owed back in late 2008, according to her adversary's calculations.
'My loyalty is to this wall'
Ferrato took me on a walk around Tribeca, pointing out how much has changed since she arrived in the neighborhood three decades ago.
Across the street, where a parking garage previously sat, there's now a luxury residential building. A block down is an eight-year-old skyscraper where one penthouse apartment sold for $45 million.
But there are also reminders of what hasn't changed. As we entered the Square Diner, a Tribeca institution, Ferrato had just been telling me about a neighbor who'd been aiding in her fight to keep her home. Immediately, she was greeted warmly by the same neighbor, who happened to be seated in a booth, having lunch with his daughters.
Back in her condo, I asked Ferrato why she should be able to have this house without paying her mortgage. "The underdog has to have their day, too. And I believe in poetic justice," she said, arguing that the bank has wronged her.
She indicated that she was set up for failure, since it was obvious how hard it would be to make her mortgage payments. And she said that documents have been destroyed — an allegation that evoked the so-called
Ferrato indicated that the strategy pursued by her longtime attorney Wrobel — fighting the foreclosure on the grounds that the bank had made technical errors — didn't expose the malfeasance that she believes has been undertaken against her.
"They kept fighting for me on the basis of the statute of limitations, and they had a winning fight there. But it didn't go into the whole picture … of the crimes that they committed against me," Ferrato said.
"The bank has no integrity," she added. "If they were an honorable bank … I'd say, 'Fine. I'm gone. You can have it.' But they're not honorable. They've done this to so many homeowners who've lost it all."
"I want to be the one who says, 'We can beat them, we have to stand up for ourselves, we have to expose corruption, we have to do it.' If we don't do it, then they get more bold."
A couple of weeks after I visited Ferrato in Tribeca, we talked again by phone.
I asked if she ever thinks about what her life would be like if she'd simply given up her condo and moved somewhere more affordable. There was a long pause. "It's a hard realization to face," she finally said, "that probably it would have been better if I wasn't so in love with Leonard Street."
To pay her sizable legal bills, Ferrato has gotten some help from friends, but she's largely reliant on the money she generates from selling prints of her Tribeca photographs. Her website lists some prints in the $1,500-$2,000 range, but a 16-inch by 20-inch fiber print sells for $7,500, and larger platinum prints go for $20,000, she said.
The only real wealth that Ferrato has — besides the condo, which she could one day own free and clear, or she could lose — is tied up in her photography and, by extension, her identity. She estimates that the archive of her domestic violence photographs is worth about $2.5 million, and that the Tribeca archive could fetch $1 million.
She acknowledged the emotional impact the legal fight has had on her daughter and said she has also paid a price for devoting so much time and energy to trying to hold onto her home.
"I would have been a much more productive, industrious photographer," she said, referring to a scenario in which she gave up the condo. "I would have had the time to do stronger work."
Still, Ferrato told me that she doesn't regret the flight. She said she's no longer naive.
Then she brought the conversation back to that wall signed long ago by Thomas I. Lee. She fears that the condo's next owner will cover up Lee's name and image, erasing his memory. "My loyalty is to this wall," she said. "There's so much emotion attached to this house. It's so deep."
A ticking clock
After the foreclosure auction was scheduled in late 2022, Ferrato found another way to buy more time: She filed for Chapter 11 bankruptcy, further delaying the sale of the Tribeca condo. But then in June 2024, Ferrato emerged from bankruptcy, again leaving her vulnerable.
The outcome of the foreclosure case against Ferrato may now hinge on how the courts rule on the Foreclosure Prevention Abuse Prevention Act. Lenders have challenged the two-year-old law in court, arguing both that it's unconstitutional and that it shouldn't be applied retroactively.
So far, the decisions have generally gone against the banks. But some observers think those rulings are unlikely to be the final word. New York's highest appeals court could have a say. Federal appeals judges are also weighing the matter.
On Jan. 20, Ferrato called me, sounding panicked. She'd just gotten word that the bank filed a notice seeking another foreclosure auction sale, this one on Feb. 19. That schedule had the potential to short-circuit judicial consideration of the question of whether the Foreclosure Abuse Prevention Act should be applied to Ferrato's case.
"They want to do this before the judge has a chance to even do anything," Ferrato told me.
But one day before the scheduled foreclosure sale, a judge put it on hold again — approving an agreement between the two parties to delay any sale of Ferrato's condo until after the latest appeal in the case gets decided, which will likely happen sometime this spring.
In one of our last interviews, I told Ferrato that she and I see her epic foreclosure saga — and the broader fight over foreclosures in New York state — through different lenses. I don't view it as a fight between good and evil. Rather, I said, I see it as a story about power politics. Both sides are using every legal means available to secure the outcome that would benefit them.
Ferrato responded by turning the conversation to the topic of gender. "All these men that I've been dealing with, they know how to crush the little person," she told me.
She then alluded to her groundbreaking work on domestic violence. "I've learned from these women that you don't give up, that you just keep chipping away, you stay in the game, and you don't quit. And it's all about the good fight."
During the same interview, Ferrato told me a story about one particular photo she took in the late 1990s. At the time, Ferrato was on assignment for Life magazine, chronicling evictions in Aurora, Colorado.
"One day we went to this home where a woman had barricaded herself inside," Ferrato recalled. "And she was desperate. She refused to come out for the police."
"Her face was looking at us through the window. And I photographed her face just looking at me so beseechingly. And it ripped my heart out," Ferrato said. "I could see she had children."
"I think about that woman all the time. It's almost like I'm in that picture with her."
