Joseph and Mary Romero of Chimayó wanted money to start a music and T-shirt business, but to do that they took out a new mortgage on their home that they couldn't afford to repay.

Now the Rio Arriba County couple are involved in a court battle to get their home back from the lenders.

"I feel it's really sad that these predatory lenders are going around misleading people," Joseph Romero said Wednesday. "All they want to do is take people's homes. I just wish something could be done about these lenders. They should be stopped."

However, a state district judge has ruled that the lenders didn't use deceptive marketing to encourage the Romeros to borrow more money than they have the ability to repay. The judge also found that the Romeros were aware of how much their monthly payments would be on the mortgage.

Their case is now pending before the New Mexico Court of Appeals, where the Romeros are getting support from the nonprofit Santa Fe Neighborhood Law Center.

The center has filed a legal brief urging the appellate court to stop home mortgage foreclosures based on "predatory loans," which, the group says, result in "the victimization of home owners and destabilization of neighborhoods."

The center's "friend of the court" filing was joined by seven civic groups and endorsed by the Roman Catholic Archdiocese of Santa Fe.

The center also is requesting a ban on court enforcement of "liar's loans," typically solicited by lenders without verification of the borrowers' incomes and no appraisal of home values.

The law center also argues that national banks, which have bundled and sold such loans originated by local lenders, shouldn't be "shielded by federal pre-emption from the reach of New Mexico's consumer protection laws."

The center's brief says low-income Hispanic homeowners are often "targeted and victimized by unconscionable lenders offering upfront cash and inflated property valuations."

Joshua Simms, the Romeros' attorney, said the brief from the nonprofits could help his efforts to return ownership of the home to the Romeros.

In September 2009, District Judge Jim Hall presided over the case in which The Bank of New York, which had acquired the mortgage, won the right to foreclose on the loan made to the Romeros in June 2006 in the amount of $227,240, with an interest rate of 8.1 percent.

The Romeros had secured the loan with their Chimayó home, and the loan was in default. In addition to the money they borrowed — including more than $30,000 in cash they received from refinancing their home — the Romeros owed late charges, escrow advances and other fees.

"The note provides that if there is any default in terms ... in the repayment of the debt, all sums owned by the defendants ... become immediately due and payable," Hall said.

In addition, the New Mexico Home Loan Protection Act does not apply to The Bank of New York, Hall ruled, "as it is preempted by federal law."

In his own legal brief, the Romeros' attorney said his clients' mortgage "was not a good loan," and is the kind of loan that "strips equity" from the borrower.

"The position of courts outside of New Mexico has been that a loan designed to fail is not legal and is a predatory loan," he said.

"If the lender had asked for tax returns, the lender certainly would have realized that Mr. Romero had clearly misunderstood what the question was asking for when they asked for his gross monthly income," Simms said.

In his conclusion, Simms said the Romeros applied for a loan that they should never have received.

"There was no net tangible benefit conferred on the Romeros," Simms said. "This was not because they lost the $30,000-plus that was borrowed, but because any review of their true income would have guaranteed that Equity One (the Albuquerque lender that initiated the loan through telephone calls) would not have made the loan."

Justin R. Sawyer, attorney for The Bank of New York and other appellees, could not be reached for comment.

Simms said The Bank of New York has allowed the Romeros to temporarily remain in the home, even though they no longer own it.

The Appeals Court case is expected to last several months.

In addition to the Santa Fe Neighborhood Law Center, the others involved with the "friends of the court" brief are The Santa Fe Neighborhood Network, the New Mexico Hispanic Bar Association, United South Broadway, Somos un Pueblo Unidos, Homewise, New Mexico Public Interest Research Group and Santa Fe Area Home Builders Association.

Contact Bob Quick at 986-3011 or bobquick@sfnewmexican.com.