MICHELE NORRIS, host:

It's well-known in Las Vegas casinos that the house always wins. But in the housing market, home values are losing and big. Home values in Vegas have fallen more than a third from their peak about two years ago, and that reversal of fortunes means that people who invested in their homes now have nothing to show for it. Some of them are just walking away. In the second of two reports from Las Vegas, NPR's Yuki Noguchi reports on attempts to avoid foreclosure and whether those attempts are working out.

YUKI NOGUCHI: The day we meet Deanne O'Rear and her fiance, Sythe Cameron, they're both wearing purple and rhinestones with matching glittery cross necklaces.

Mr. SYTHE CAMERON (Musician): Sweat suits or jump suits whatever, they're matching. That's just our thing, and all the time. We're kind of bringing back that classic Vegas.

Ms. DEANNE O'REAR (Mortgage Counselor, Las Vegas): Yeah, for me, it's just fun because I guess I never realized that I would find someone that would actually want to match me, would actually want to do the matching.

NOGUCHI: The two of them embody Vegas in more ways than one. For one thing, Cameron performs with a Prince knockoff group called Purple Reign. That's reign with an E-I. He's on every Sunday at the House of Blues.

Mr. CAMERON: (Singing) I, I've been watching you. I think I wanna know you - I said I...

(Soundbite of song "Jungle Love")

PRINCE: (Singing) I'm a little dangerous Girl I'd like to show you...

NOGUCHI: O'Rear is a groupie and his unofficial manager. Separate from the House of Blues act, O'Rear says she gets very blue about the state of their actual house.

Ms. O'REAR: This home is an extension of who I am. I just really love this home, and this was to be my investment as well, a place that I knew I could stay. And, you know, it was August - it was August. All of a sudden, we get a notice on the door that the house had been sold. No warning, no nothing.

NOGUCHI: And that makes her emblematic of what you might call new Vegas. In this sprawling city, there are thousands of foreclosed homes on the market with several hundred more homeowners falling behind every month. O'Rear is one of them. She bought the house a decade ago for $279,000 and put more than a third down. She says she later took a home equity loan, missed a payment, and for more than a year now, has been fighting to keep her house. At the same time, she's trying to get her loans modified.

Ms. O'REAR: So I'm just waiting until I see what's happened. I'm just in limbo.

NOGUCHI: It's a dark irony that O'Rear herself is a loan consultant trying to help others modify their loans. Those workouts are often a way for homeowners and lenders to minimize their losses. Lenders lose less if they avoid selling a home in foreclosure. Borrowers keep their homes by extending their loans, and neighborhoods are more stable. But arriving at that kind of happy resolution is very tough. Israel and Clantha Twillie got horribly lost pursuing one of those workouts. After months of confusing paperwork, they're filled with despair.

Mr. ISRAEL TWILLIE: I probably had a lot of pride, a lot of it. But I don't know, we had to do a lot to get it.

Ms. CLANTHA TWILLIE: We borrowed money from friends. We borrowed money from our children, and we can't pay them - we can't pay them back.

NOGUCHI: Two years ago, the couple retired and moved from California hoping for a cheaper life. They used the biggest chunk of their savings, $80,000, to pay down a third of their home. Then housing prices fell off a cliff, and they found themselves owing more on the home than it's worth. After falling behind on the mortgage, Israel Twillie went back to work at a local youth center. But they say their payments have yo-yoed, rising and falling between 1,300 to 1,900 dollars a month. They keep a red folio thick with documents that read like this.

Ms. TWILLIE: We are pleased to advise you that your loan modification has been approved.

NOGUCHI: So this is reducing your payment from what it was, which is 1,528 to 1,528?

Mr. TWILLIE: Yeah.

Ms. TWILLIE: 1528.71 and 1528.25.

NOGUCHI: You're saving 50 cents.

Ms. TWILLIE: Yeah.

NOGUCHI: Less than that, actually.

Ms. TWILLIE: Yes.

NOGUCHI: Their loan is with Countrywide, now part of Bank of America. Countrywide said it couldn't discuss the specifics of the Twillie's loan for privacy reasons, but it's evaluating all loans to see who will qualify for a new mortgage workout program that started this month. I mentioned this to Israel Twillie, who gives me a searching look.

Mr. TWILLIE: Is there something out there? Is there - have you heard anything that says this is the way it's supposed to work?

NOGUCHI: I haven't, I say. But a few miles away, Adriana Camejo is trying to help people like the Twillies. Camejo works at the Neighborhood Housing Services of Southern Nevada.

Ms. ADRIANA CAMEJO (Mortgage Counselor, Neighborhood Housing Services of Southern Nevada): OK. So I'll go ahead and update my clients on this. I will tell them that you guys are expecting a down payment.

NOGUCHI: Camejo and Irma Williams are the only mortgage counselors at this tiny nonprofit. They spend their days negotiating with lenders. Williams' filing cabinet brims with 200 cases. She hasn't even looked at another several hundred that are waiting. Each mortgage workout takes hours of navigating a bureaucracy of lenders and companies that service loans. On the phone, Williams sometimes gets testy.

Ms. IRMA WILLIAMS (Mortgage Counselor, Neighborhood Housing Services of Southern Nevada): Every time I call or anytime anyone from my agency calls, we get different stories from different people. Do you not document everything that is said over the phone?

NOGUCHI: William says recently lenders have become more receptive. Still, only 11 percent of loans coming through Neighborhood Services end up with a deal. Stevone Saunders is one of the lucky few. When tips fell off at the country club where he works, he got behind and nearly lost his condo. But now with a workout, he's able to save for another rainy day.

Mr. STEVONE SAUNDERS: It was a big weight lifted off your shoulder. The future looks brighter. It does. It makes me want to just stay right, you know. I shouldn't need no help no more. And I'm glad I didn't bite off more than I can chew. I'm glad I didn't get the big old house, two-story and all this and that, five bedrooms. I'm happy with my condo, and that's it.

NOGUCHI: But as a practical matter, it's very hard to grant tens of thousands of loan workouts. Jeremy Aguero is an economic analyst in Las Vegas. He says not everyone will or even should qualify. There are those who simply cannot afford their homes even with a lower payment. And there are those who will try to game the system.

Mr. JEREMY AGUERO (Principal Analyst, Applied Analysis): There are people who are just opting not to make their payments on their houses, you know, to say, hey, look, I want to get a workout just like my neighbor did, or something along those lines. That - if that's the way we go as a society, then that is a very slippery slope that's going to be hugely problematic for us.

NOGUCHI: B.J. Wright is executive director of the Neighborhood Services nonprofit where Williams and Camejo work. She disagrees.

Ms. B.J. WRIGHT (Executive Director, Neighborhood Housing Services of Southern Nevada): And it's not just one family. It's family after family after family. And they're saying, please, can you help me? Please, can you help me? Please, can you help me? As an organization that's focused on helping those people, and not being able to help them, is overwhelming.

NOGUCHI: Wright says Washington's solutions, the bank bailout, the programs to help several hundred thousand homeowners, haven't done much. What she needs, she says, is more funding, more foot soldiers to help her fight each foreclosure at the ground level. But with her own budget tightening, she feels, like everyone else here, upside down. Yuki Noguchi, NPR News.

NORRIS: And you can hear Yuki Noguchi's other story from Las Vegas about how the city got in to this mess in the first place. That's at npr.org.

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