How 4 families try to recover from foreclosure

[March 30, 2009]  NEW YORK (AP) -- You've heard about the bad mortgages, about sad struggles with insolvency, about the wave of foreclosures that has crashed over America. But what happens next?

Every day, thousands of Americans begin their lives again after they are ejected from their homes.

They rent, live with friends or family, or seek refuge in a shelter. They usually have stacks of overdue bills, empty savings accounts, and a red flag on their credit reports that will take years to fade. They often suffer from feelings of shame, failure and displacement.

The Housers, the Melendezes, the Gambinos, the Boykins -- four families from different backgrounds and different states -- are all enduring the same life smack-down.

They've all lost their homes within the past year. They've learned lessons and changed behaviors. They've opened new doors after their front doors closed, turned to social programs that helped or let them slip through a crack.

They all seek happily ever-after endings. But there are no guarantees.

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Bitter medicine

GAHANNA, Ohio (AP) -- Her family's health fell apart with such ferocity that Sarah Houser laughs in disbelief when she remembers it.

Their troubles began in the summer of 2007 with a sharp pain in her husband Eric's stomach from a debilitating intestinal disease that required several surgeries and left him with seven hernias. Days later she came down with a scratchy throat that wouldn't go away.

"It was like the Thursday after his surgery I found out that the cancer was back," Houser, 38, says. "There's four tumors in my neck ... the biopsies say that the lymph nodes are malignant."

Eric Houser was kept out of work for months, and this family of seven -- which includes three kids, a 1-year-old granddaughter and their son's fiancee -- lost their medical coverage. Their income dropped, while their monthly health care costs soared from about $165 to about $480. Their $1,300 monthly mortgage bill went unpaid.

In November 2008, a little more than a year after they got sick, a sheriff's deputy knocked on the Housers' front door and told them it was time to leave.

"We never thought we'd be homeless," Houser says, as her granddaughter, Marleigh, toddles around the kitchen at the family's small rental home, a few miles from where they used to live.

They camped out at a Holiday Inn Express for two weeks, refusing to split their kids up among relatives and friends' homes. The couple borrowed money from friends to get by and found this house two weeks later. Houser says they were determined to stay in the same town so that Chris, 16, and Mary, 14, would not be uprooted from high school.

"That was a prerequisite for the kids and Eric and I," she says. "That as long as we're all together we'll be OK."

She coughs and takes a sip of orange juice. She has been in and out of the hospital in recent weeks for radiation treatments.

"We don't have a lot, but what we do have we own," she says. "We don't even have a credit card. And we weren't living beyond our means. It's just something that happened."

The family is slowly moving forward, trying to rebuild the lives they once had. Eric Houser works from home for an electronics manufacturer and has regained medical benefits he lost last year. And the couple is currently mulling an option to purchase the rental house.

Their eldest son, 19-year-old Alex, recently landed a full-time job, and his fiancee plans to enroll in Oberlin College in the spring. Both gave up their original plans to attend college when Marleigh was born.

But beneath the calm surface, Houser is uneasy.

"I'm still sick," she says. "Eric's better, but we didn't expect what happened to happen the first time. I can't work right now. I wish I could, but I can't. Is it going to happen again? Do you put your own health at risk to go to work?"

Over the coming months, she will continue to battle cancer, her son will prepare to graduate from high school and -- if Houser has her way -- the bills will be paid on time. For now, they are focused on simply staying together -- under one roof.

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Finding angels

MIAMI -- Laura Melendez holds dear the few "angels" who've guided her along the road out of foreclosure.

A mother of five boys, Melendez tells a story of a man named Angel who fixed her SUV on the cheap, and a woman named Esperanza -- Spanish for hope -- who hired her at Wal-Mart. There's also a nephew who has given her moral support through trying times, and her rambunctious sons' hungry mouths to motivate her daily.

"You find many people along the way who are like angels, but a lot of people who supposedly are your friends actually put more things in your way to trip you up," she says.

Melendez's path has been full of obstacles.

She and her boyfriend bought a $250,000 home near Homestead, Fla., in April 2007. They were able to pay their $2,600 monthly housing expenses through a combination of their salaries and help from Melendez's mother's Social Security checks.

Melendez says she had her doubts from the start. The interest rate on their mortgage seemed high.

"I like to think things through. Because of the kids, I didn't want to end up where I am now, because it's not easy. I told him, `Be careful.'"

She worked at a shelter for at-risk women, and her boyfriend built boats. They were managing to pay their bills until her boyfriend lost his job. He eventually left her and the five children, returning to their native Puerto Rico in December 2007.

With her boyfriend gone, Melendez, 33, found herself in even more trouble. Her mother got sick and ended up in an assisted living facility, so Melendez lost that financial help. She stopped paying the mortgage, fell behind on her SUV payments, and eventually walked away from the home last fall.

Facing life on the streets, Melendez sent three of her children to live with their father in Puerto Rico. She moved into the house of a friend for three months until he told her to leave Dec. 2, 2008.

Melendez sought refuge at a homeless shelter with her other two children the next day. She lived there for about three weeks until she got a $203-a-month apartment through a government program in late December.

She lost her job at the women's center in January, but she had already secured a part-time job as a cosmetologist at Wal-Mart.

The job is now full time, and she received a healthy tax refund check that has helped her catch up on her bills. She has paid off two cash advance loans and some credit card bills, fixed the brakes on her SUV and signed up for a home phone.

"It's not easy, but thank God," she says. "Until now, God has given me health, and if I have to give my heart for my kids I will. Everything I have done, I've done for them. They are the reason for me to live."

She wants to start making regular payments again on her SUV, make some additions to her new place to live and maybe even get cable and a cell phone -- all promising steps.

She has been reunited with all but one of her boys. Her goal is to find an inexpensive plane ticket and bring him back from Puerto Rico as soon as she can.

"I can't be without him," she says. "I'm happy because I'm here and with them (other kids). But he's missing. He's missing."

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Learning limits

CHESTERFIELD TOWNSHIP, Mich. -- This isn't how Fred Gambino expected to celebrate his 60th birthday or 30th wedding anniversary.

He probably would have hosted a big family party on his home patio or at his cottage up-north. And it's a safe bet he would've fired up his "monster" grill that serves 40 guests.

Instead, he and his wife, Linda, will mark both milestones this year in the condo they rent, a half-mile from the suburban Detroit ranch home they lost to foreclosure Jan. 1. They also lost their car and the cottage because they couldn't afford them after Gambino closed his real estate appraisal business last June.

He said he was left with no choice. Accounts at his company dwindled as the housing bubble burst, and costs of doing business rose.

His eight-burner grill is stored in his son's garage. He makes do with a much smaller model that fits his downsized life. Hot dogs have taken the place where expensive steaks once sizzled.

"I'm a meat-and-potato man, and all of a sudden the meat's gone," says Gambino, sitting in the condo's small living room with Linda.

The Gambinos' already fragile living situation is threatened again. They recently learned the condo's owner has fallen into foreclosure, which means they may need to find another place to live by late summer or early fall.

Still, he isn't feeling bitter, or blameless.

"I was one of those that if I wanted it, yeah, get it. Don't worry about it. We're making money. Unfortunately, I overextended myself," he says.

"That's part of why we're in a predicament. Half of it was the economy and the job, and the other half of it was if I would have put aside the money instead of buying the cottage in 2003 that cost over $1,000 a month with utilities. And that's not counting the money you spend when you go there every weekend."

The cottage on Houghton Lake, about 155 miles northwest of Detroit, was a point of stress in their marriage. Fred says Linda tried hard to talk him out of buying it.

"I used to buy things and let her worry about paying the bills," he said.

Their home sold at sheriff's auction last June, and they had to leave by Jan. 1. The vacant home once worth $185,000 is on the market for $77,000.

Help these days comes various places: A friend lent a van he wasn't using, and family members have paid their $800 rent.

Linda makes $50 a week baby-sitting a granddaughter. One son paid for Fred to take refresher courses and a test to become state-certified -- an upgrade many mortgage companies now require from appraisers.

He failed at two attempts despite intense studying with a friend and fellow appraiser. But he's making some money working for his oldest son, Fred Gambino Jr., who owns his own appraisal firm.

By summer, Fred Gambino hopes to be working steadily and paying the bills.

"We figure we've gone to the bottom as far as we can," he says. "Now we're just going to work our way back up again."

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An easy target

COLUMBIA, S.C. (AP) -- Charmaine Boykin was the ideal target of those looking to make a quick buck during the height of the housing boom. She was inexperienced in the home buying process, had less than perfect credit and a minority.

The majority of blacks who took out purchase mortgages in 2005 got high-cost subprime loans, compared with around 17 percent of whites, according to Federal Reserve data. And minority homeowners are bearing the brunt of the foreclosure crisis.

Boykin's home went into foreclosure after a difficult pregnancy forced her to quit one of her two jobs and her adjustable mortgage rate rose, doubling her monthly payments to $1,387.

"I had no choice," says Boykin, a South Carolina single mother of two. "I had to go out and get an apartment for me and my children."

Financially, Boykin says she has hit bottom. But with a new associates degree in business and a new baby, she has a plan to rebound.

"It was definitely a lesson learned," she says. "I think my interest rate was around 9 percent. And it was adjustable ... And (I) just worked with someone who was out to make money and sell a home."

She says she will use part of this year's tax return to pay off old bills, get credit counseling and educate herself on what to do when buying a home.

In addition to looking for the best loan, Boykin said she's also learned to avoid choosing the wrong house.

She bought a house from a mortgage broker who was buying houses, making cosmetic repairs, and flipping them. And soon after she moved in, she had to spend $6,000 to fix a roof leak and other things.

There will be another house, Boykin says. But this time, there will be a better chance to make it a permanent home.

"I feel like in a year or so, I'll repair my credit and get back out there and get another home for me and my girls," she says.

[Associated Press; By MEGHAN BARR, ADRIAN SAINZ, JEFF KAROUB AND KATRINA A. GOGGINS]

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