William and Laura Betts live on Dana Lane in the community of Moreno Valley, Calif. The couple stand out because they actually paid off their mortgage in 2005. William, who lost his job in November 2009, is glad they don't have to worry about making payments on their house.
William and Laura Betts live on Dana Lane in the community of Moreno Valley, Calif. The couple stand out because they actually paid off their mortgage in 2005. William, who lost his job in November 2009, is glad they don't have to worry about making payments on their house. Tamara Keith/NPR
Dana Lane doesn't look devastated.
It's part of a California subdivision built in the late 1980s, a mix of stucco and wood siding with mismatched fences. It looks like so many working-class suburban blocks.
But since the foreclosure crisis started, Riverside County, Calif., has ranked near the top of the list for its rate of homes being taken back by banks. This is a county that has long attracted Los Angeles refugees who drove east until they could afford to buy, then had to commute hours every day. Neighborhoods are hurting. Even people who didn't get swept up in the bubble have been hurt by the bust.
Dana Lane is one particularly hard-hit block in the city of Moreno Valley. There are hints of what its residents have been through — a broken window, for-sale signs and brown lawns.
More than two years into the housing bust, 20 percent of the homes on Dana Lane have gone into foreclosure, and residents here wonder who will be next.
Anita Sandoval stopped paying her mortgage five months ago.
"There's nobody living next door," Sandoval says. "If you look here, this house across the street is empty."
And those who stayed? Virtually all of them are underwater, meaning they owe more than their homes are worth. Sandoval and her landscaper husband bought their bright yellow two-bedroom home near the height of the market.
The house across the street just went for $75,000 in a foreclosure sale.
"And I bought mine for $260,000, and it's the exact same home," Sandoval says. "I've been in the house. It's the exact same home."
But that's not why Sandoval stopped making her mortgage payments. Her savings ran out, and she was finally hit with the painful reality that she and her husband really couldn't afford this house. They never could.
The Bubble Mindset
There are basically two kinds of homeowners on Dana Lane — those who bought high like the Sandovals, and those who had been there awhile and saw their equity ballooning until it stopped.
"Like everybody else, I'm in an upside-down loan," says Brenda Moore, who owes more than $300,000 on her mortgage. This is remarkable considering she bought her house in 1989 for $80,000. A search of public records reveals that Moore, a retired nurse, has refinanced her home eight times since 1998.
The loans are from a who's who of subprime lenders. With each loan she took out more equity, and each time the loan terms got worse.
"Hey, I had a lot of equity, so I would just go in there using it and having a lot of things done — outside and inside," Moore says.
Moore replaced a sagging fence. She put in new carpet and a tile floor in the kitchen. But that doesn't explain where all the money went. Most of it didn't go to tangible things; it went to raising her five grandchildren and two great-grandchildren even after she was no longer able to work.
At one point, Moore had just pulled out a chunk of equity when a family member passed away. She used the money to help pay for the burial.
"So that was a blessing because I had just — about a week [ago] — had just did the refi and was going to do some more work around the house, and that happened," Moore says.
The bubble mindset here was infectious, but it didn't affect everyone.
Brenda Moore paid for a wrought-iron fence around her two-story home with equity she pulled out of her home. Her mortgage is now more than $300,000 underwater. Some of the money went to home improvements, but much of it went to raising her five grandchildren and two great-grandchildren.
Brenda Moore paid for a wrought-iron fence around her two-story home with equity she pulled out of her home. Her mortgage is now more than $300,000 underwater. Some of the money went to home improvements, but much of it went to raising her five grandchildren and two great-grandchildren. Tamara Keith/NPR
William and Laura Betts stand out on Dana Lane. They've actually paid off their mortgage. They made their last payment in 2005 at the height of the refinance frenzy. It was a goal from the moment they moved in back in 1986.
"Payment was $750, I think, and the very first payment we sent in 10 extra dollars, and they sent it back because we had to pay at least a whole month's principle, and that was $15 or something — I forget the exact number, but it was more than we had sent in," says William Betts.
Every month they sent in a little extra. They are Mormon and say their faith guided them to be fiscally responsible. Sure, they got calls from mortgage brokers who were eager to help them turn their home into an ATM. But they resisted. They weren't even tempted.
"I'd hear the commercials on the radio about OK, 'This is the ultimate refinance.' And then three months later, the same company and the same radio host was [saying], 'This is the ultimate final refinance,' " William Betts recalls. "And you know that things just can't keep going like they're going without something happening. You think, this is crazy, this is insane. These people — they're foolish."
You can see the consequences up and down Dana Lane. Brenda Moore says that at her end of the block, there have been five foreclosures. The house across the street became a real problem.
"It stayed vacant for so long," Moore says. "We had never had no graffiti. And then they started marking graffiti on that fence on that house right there, on the corner right here."
But Dana Lane is too proud for graffiti. Moore says neighbors painted over it. A black wrought-iron fence gives Moore's two-story home the look of a fortress. But it could have just as easily wound up like the long-abandoned foreclosure across the street.
To Walk Away Or Stay?
When it got to the point that she could no longer make her mortgage payments, Moore thought about walking away.
But she says the Lord intervened. A nonprofit group helped her get a loan modification. Her payments have been cut in half. When a reporter tells her about the Betts family down the street, she seems a little surprised that there's anyone on the block who didn't refinance.
"So that's good they didn't have to," Moore says. "But then, too, I look at it this way: You're sitting on a bank, so if you can use it, use it because you can't take it with you, so enjoy it while you can."
At the other end of the block, Anita Sandoval isn't enjoying her situation. She's worried about how she and her husband can possibly hang onto their home.
"All the money you put into it and all the months you paid for nothing," Sandoval says.
She fears the day the sheriff comes knocking on their door. It happened to one of her neighbors a few months ago.
"He was taken out of the house," Sandoval recalls. "It was devastating how he was taken out of the house for everybody to see. They had all his things at the curb."
Searching For The Bottom
At the peak of the market, homes on Dana Lane were going for four and five times what they can sell for now.
When William Betts thinks about what's happened to this street, he doesn't resent his neighbors' choices or the nice furniture and granite countertops they bought with imagined equity. He just feels bad for them.
"How do I say this?" Betts asks. "Most of our neighbors, I think, sold their inheritance for a bowl of pottage. The Jet Skis are gone, and so is their house."
Actually, there's one Jet Ski left on the block, parked in front of a house that is now about $100,000 underwater.
Back in November, Betts lost his job. It's the second time in four years he and his wife have had to live off of savings and unemployment. But at least they don't have to worry about their home.
"I just remember the day that we signed the papers that the house was now ours," Betts recalls. "You know, I've slept pretty good every night since then, 'cause when you own your house, you never have to worry about where you're going to live."
Home prices in this neighborhood may have bottomed — nobody knows. The Bettses' home is now worth little more than it was when they bought it 25 years ago — not much of a reward for doing everything right.
But that's not how the Bettses see it: "Be it ever so humble," says William Betts, "it's ours."