DENVER -- The house across the street was the first on her block to go dark. The woman who had lived there for years -- a registered nurse with a solid job -- saw the interest rate on her mortgage surge higher, lifting her payments beyond her means. She fell into foreclosure, relinquishing her home to the waist-high weeds that soon enshrouded it.
The house next door went next, after the man who owned it ran out of cash to renovate, scotching his plans to flip it for profit. It was early 2009, and real estate prices were plunging. He walked away, surrendering a failed investment to the bank and a rapidly sprouting grove of Aspen trees.
The house on the opposite corner soon went empty, too. The couple that owned it divorced, and the woman stayed on with her son, but she couldn’t manage the payments. Soon, the windows were boarded up, and the foliage went wild, lending cover to the homeless people who began sleeping in an adjacent alley.
From her own modest home, Lisa Duran watched the darkness seep down South Eliot Street and worried that her neighborhood was being written off by the powers-that-be. On her block in southwestern Denver, she was among the more fortunate: She, too, was underwater -- she owed the bank more than her home was worth. But she was able to make her payments, even if just barely, though who knew for how long. Her husband was out of work. They were digging into her retirement savings, though she was only 51.
Duran’s one-story brick home, purchased in 2004, has a small backyard and front windows that pull in warm afternoon light. Now, the darkness on weekend nights was bringing teenagers and 20-somethings to Eliot Street. They hung out on the abandoned lawns, leaving behind discarded fast food bags and other testaments to their revelry. “One day, I picked up 18 beer bottles on my lawn,” she tells me as we sit at her wooden dining room table. Violent altercations happened with regularity –- a shooting, a stabbing.
So unfolded the better part of the last four years, undermining not only Duran’s physical surroundings but also what remained of her faith that those responsible –- the banks that controlled the mortgages, the federal agencies that were supposed to hold them to account -– had any concern for her home, her block, her community. Even as the situation has improved in recent months, with all three homes again occupied anew, the experience left a lasting impression.
“It made me feel as if our neighborhood was not worthy of being cared for,” Duran says. “If they’re letting these houses go to hell, to me that says they don't think our neighborhood is very important. And if they think that, then what other institutions think that? I just feel undervalued.”
As a fiercely contested presidential campaign nears its conclusion -– and with special intensity here in the battleground state of Colorado -- Duran’s sentiments speak to a force that may potentially influence the outcome: She is part of an inchoate yet enormous slice of the electorate that some activists have labeled the Underwater Voters, the 15 million households whose loan balances exceed their property values, and the millions more living in their midst, all of them still absorbing the consequences of the foreclosure crisis.
Particularly large numbers are concentrated in the battleground states expected to decide the election, not least Florida, Ohio, Virginia, Michigan, Colorado and Nevada. With no polling data available addressing underwater voters as a group, any discussion of their inclinations and electoral impacts is more speculative than scientific. That said, experts suggest their financial strains are likely to translate into lower voter turnout.
“You’re talking about people who feel as if they did ‘everything they were supposed to do,’” says John Della Volpe, director of polling at Harvard’s Institute of Politics. He has encountered underwater homeowners in focus groups held around the country. “They bought homes, worked jobs, saved for retirement, raised kids. Now they feel discouraged and disappointed, like it’s all been taken away from them.”
Della Volpe thinks this feeling of disaffection could be a wild card that prompts significant numbers of underwater voters to stay home on election day, a force that could play differently from state to state. It might lift President Barack Obama’s prospects here in Colorado, where lower turnout among white underwater voters could enhance the strength of the Latino support on which he is counting. It might boost the prospects of his Republican challenger Mitt Romney in Ohio, if it convinces even a thin slice of underwater African-American borrowers to forsake the voting booth, diminishing a key piece of Obama’s base.
Conversations with a dozen underwater borrowers here in hard-hit neighborhoods in Denver suggest that many nurse a bitter sense that the political process has failed them, making some inclined to fulfill Della Volpe’s prophesy and skip voting. Every borrower encountered here either plans to stay home or -- with varying degrees of reluctance -- vote for Obama.
“There's a lot of apathy out there,” says Corrine Fowler, economic justice director at the Colorado Progressive Coalition, a grassroots organizing group. She advocates for legislative measures aimed at keeping distressed borrowers in their homes. “People feel really beat down. People just feel like, ‘Screw the election, what does it matter?’ The economy is not working for them. They don't see any action toward solutions that will help them directly. They are just struggling to keep food on their table and hang on to their homes.”
Though Obama and Romney have been competing aggressively for Colorado, making
frequent appearances while unleashing a relentless assault of television advertisements, neither has had much to say about housing, locals complain.
“I haven't heard either one of them mention foreclosure,” Fowler says. “It’s stunning and shocking to me that our policymakers aren't honed in on this issue.”
Or, in the words of Diane Hochhalter, who is behind on her mortgage, and whose partner recently lost her townhouse to foreclosure: “It’s Mitt Romney and Obama. It’s like you’ve got a handgun in one hand and a shotgun in the other. Either way, you’re going to get a bullet in the brain. They are talking about welfare, energy, abortion, but not about what we have been going through.”
Duran is not among the apathetic. As the executive director of a non-profit, she champions the rights of immigrants. To this end, she sees Obama’s reelection as critical, holding out hope that a second term can deliver long-sought immigration reforms built on the administration’s recent decision to stop deporting people who entered the country at a young age.
Duran fears Romney’s election would reinforce what she sees as a continued Republican assault on vulnerable people, something her organization is seeking to counteract by registering large numbers of new voters. She also has managed to refinance her mortgage under an Obama administration program, dropping her payment by some $200 a month. “I’m grateful for that,” she says.
But her grievance over the foreclosure crisis is persistent. As she sees it, major banks got bailed out while ordinary people had their lives upturned. Many underwater voters she knows feel similarly, she says, a mindset that could translate into lower turnout. In Colorado, a state Obama won by a mere 200,000 votes four years ago, and now widely seen as a toss-up, that might give Romney an opening.
“I think there is a danger that people are so disgusted that they won't go out,” Duran says.
“CAN’T SHOP FOR CLOTHES OR SHOES”
Underwater voters are far from a monolith, making predictions about their voting inclinations complex. They span retirees in Florida and young families in California; Republicans and Democrats; whites, blacks, Hispanics and Asians; white-collar professionals with six-figure incomes and blue-collar workers subsisting on unemployment checks and food stamps.
But above all they are plentiful. Nearly one-third of all mortgage holders in the United States are underwater, according to Zillow, the online real estate marketplace, a ratio that runs considerably higher in several crucial states.
In Florida, some 1.4 million homeowners were underwater as of the end of last year, according to Moody’s Analytics. That accounts for 43 percent of all mortgage borrowers in the state. Nearly half of all home borrowers in Michigan were underwater, and about 36 percent in Ohio. In Nevada, the ratio reached a staggering 79 percent, according to Moody’s, with 17 percent owing the bank more than one-and-a-half times their home value. Here in Colorado, 29 percent of mortgage holders were underwater. Virginia holds roughly the same percentage.
Collectively, those six states alone –- all considered up for grabs –- hold 91 electoral votes, just more than a third of the 270 needed to claim the presidency.
In all of these states, “turnout is a huge issue,” says Della Volpe, the Harvard expert, noting that both candidates are banking on strong support from their bases -– Obama from younger voters, African-Americans and Latinos; Romney from white voters, and particularly blue-collar whites. If large numbers of underwater voters stay home that could imperil these strategies.
Duran’s neighborhood, Athmar Park, has been hit hard by the foreclosure crisis. This owes less to fluctuations in home prices -– the boom never lifted Denver housing prices the way it did in southern California, Florida and Arizona -– than the simple fact of the Great Recession, coupled with often-predatory lending practices.
Predominantly Latino, the community has in recent years seen an influx of Chinese and Vietnamese immigrants attracted by relatively affordable housing stock located within view of downtown. Many of the people who live here earn their living with their hands -- a fact underscored by the pick-up trucks parked in numerous driveways emblazoned with the names of landscaping, construction and plumbing businesses. At the taco trucks lining major thoroughfares, men with work boots congregate.
When the building boom in Denver’s suburbs subsided, so did did demand for people who work in trades, yielding high unemployment. Deprived of paychecks, many local homeowners fell behind. As their property values dropped, they lost the ability to refinance. An epidemic of foreclosures followed.
In 2008 alone, Duran’s zip code -– 80219, home to about 62,000 people -– saw 2,276 foreclosure filings, according to RealtyTrac, a real estate investing Web site.
Behind these numbers are the grim facts of dislocation.
“It produces a feeling of sadness,” Duran says. “It’s depressing. When I can see my neighbors, I feel better. There’s something desolate about abandoned homes.”
The local economy now bears the imprints of so many homeowners losing equity at once, reinforcing a widespread pullback in spending that is depriving even healthy businesses of sales and limiting hiring.
Five blocks east of Duran’s house, what had been a Lowe’s Home Improvement center now sits empty, with even the logo excised from the blank white shell. The same forces that have put electricians and carpenters out of work depressed sales here, prompting Lowe’s to shutter the store last November, less than two years after its opening.
On the opposite side of the mall, an electrical supply store sits abandoned, save for a shopping cart and empty soda bottles strewn across the dusty floor. Across the street, Ideal Furniture has seen its business crater as the construction workers who are its core customers grapple with lost jobs.
“This year is really, really bad,” says Helba Banuelos, an employee overseeing the store on a recent afternoon. In good times, the store sells perhaps $800 worth of furniture in a day. Through all of the previous week, it had seen only $500 in sales.
A single mother of two boys, Banuelos, 32, depends upon commissions for her income, which has dropped from about $2,500 a month to below $1,500.
“We can’t shop for clothes or shoes,” she says. “We can’t save any money.”
She recently canceled medical and dental coverage for herself and her children, saving about $600 a month.
For her troubles, Banuelos blames not the president, but his predecessor.
“This is George W. Bush’s fault,” she says. “It’s not Obama’s fault. Three years is not enough to fix all this.”
She distrusts Romney deeply. “He comes from a rich, rich family, so he doesn’t care about middle class and poor people at all,” she says. “He doesn’t care if people have anything to eat, or even something to drink. The one who is talking about helping people is Obama.”
But despite these sentiments, Banuelos will not vote, she says, because she is not yet a citizen.
And within her Latino community, even people who have the right to vote are unlikely to exercise it, she predicts, because of broad and sustained anger –- over Obama’s deportation of illegal immigrants and his failure to rescue troubled homeowners; over what she describes as Romney’s insulting depiction of working poor people as lazy.
“Obama’s losing a lot of support from the Latino community,” she says, “and they don’t like Romney. They are just going to stay home."
"A DETRIMENT TO MY SOUL"
People who are underwater describe a constant psychological tug, a troubling knowledge never far from their mind that they have no cushion, making them reluctant to spend –- not even on necessities. This is a condition that afflicts even people who are current on their mortgage payments. It seems a powerful factor shaping how underwater voters are experiencing the presidential campaign.
Eight years ago, Kelly Perry and her husband paid $245,000 for their home in the Denver suburb of Thornton. They tacked on a $60,000 home equity loan to add a deck out back and to finish their basement, carving out extra space for their three children, now 21, 20 and 10.
Their home has appreciated modestly and is worth about $250,000, yet they owe the bank about $300,000. Perry’s husband is a military retiree with a pension, and she works part-time at a window and siding company. They have no trouble making their $1,300 monthly mortgage payments.
But they are still hesitant to spend, rarely going out to eat and putting off purchases of clothes, plagued by the sense that they are operating without a net.
“When you buy a house, that’s the biggest thing you buy,” Perry says. “It’s supposed to be an asset, and it’s a liability.”
Perry voted for Obama enthusiastically four years ago, she says, and will do so again. “He’s the one who’s talking about the middle class,” she says.
And yet she harbors disappointment that he has done little to assist underwater borrowers like her.
“Housing is not being addressed,” she says. “We bailed out the banks and no one at the banks has gone to jail. No one’s been convicted. It’s obvious that you can do terrible things to millions of people and make money doing it and still face no consequences.”
Aaron Meier doesn’t understand why his lender cut off his line of credit just as he was nearing the last part of the renovation of his home in southwestern Denver, a handsome, Victorian A-frame with a turret.
A carpenter by trade, Meier had planned to fix the place up on his own before selling it. He had already separated the house into halves -– a rental unit upstairs, and his own living space downstairs. He added a new roof and affixed hand-cut fish scale shingles to the sides of the house. He replaced aging wood floors, added two new kitchens –- his own, with granite countertops and cherry cabinets -- and replaced an upstairs bathroom. All that remained was completing one more bedroom, the downstairs bath, and a sun porch.
But one day in 2009, as he went to Home Depot to pick up a fresh batch of supplies, the cashier told him he had been declined. His credit line had been mysteriously cut, he says. So began the unraveling.
Without capital, he could not complete the work. As his hired carpentry jobs dried up, he fell behind on his mortgage, and has not made a payment in more than a year, he says. He could not refinance to take advantage of lower rates, because he was underwater. He had purchased the house for $150,000 in 2004, and then watched it more than double in value. Today it is worth less than $200,000.
The lender on his primary loan, Wells Fargo, offered him a series of trial loan modifications, including through the Obama administration’s signature program. But the bank repeatedly turned him down for permanent relief, he says. The documents of two-plus years of futile exchanges with Wells lie scattered across his kitchen counter. He is facing a September court date, on which he assumes the bank will take the property.
“This fight, it’s such a detriment to my soul that it’s hard to explain,” he says. “You can't imagine the stress, the anger and frustration that you go through. You've got hopes for your life and these people are putting them on hold. Fighting the bank, it’s like David and Goliath, only David doesn’t even have a stone.”
Wells Fargo says Meier is more than three years delinquent on his mortgage payments, adding that he failed to send in documents required for a permanent loan modification, including complete tax returns.
“We worked with Mr. Meier repeatedly in seeking options that would allow him to maintain ownership of his home,” said a Wells Fargo spokeswoman, Vickee Adams. “Regrettably, no option was found.”
Meier’s sun porch is like a shrine to a project set aside indefinitely, with tools scattered across stained carpets. A hole mars the ceiling in his spare bedroom, the result of leaky pipes. He is earning enough from odd jobs to endure. But he has no incentive to complete the work.
“I’ve got a broken down house that I can't fix, because as soon as I fix it they’re going to steal it and sell it,” he says.
Where will he go after his foreclosure case is complete? He has no idea.
Is he going to vote? He lets out a long sigh.
“I definitely won't vote for Obama, because he's the one who put me in this place,” he says. “He’s the one who created the program, and all I got was this heartbreak. And I'm not going to vote for Romney because he's a frickin’ thief. The man's a business man. He's going to bankrupt the country. He's a dismantling businessman. That's what he knows, and that's what he's going to do."
AT WATER’S EDGE
On South Eliot Street, Duran has seen a sense of order restored. The carloads of kids have moved on, presumably repelled by the return of porch lights as the houses have been filled anew. A recent visit to Zillow surprised her with news that her home is now worth roughly the sum she owes the bank, $137,000, up from about $125,000 two years ago.
Still, she paid $174,900, meaning that the money she has been sending the bank over the last eight years has been going into a declining asset. A sense of insecurity lingers, along with a general tightness of finance.
Duran’s husband, James Johnson, is now delivering the local newspaper, a job that sometimes leaves him with no more than $15 a week, after accounting for the gas he puts in his car and the late charges that come out of his pay if his aging vehicle misbehaves and he is late.
Back in Los Angeles, where she grew up, Duran’s parents worked in government jobs –- her mother as a librarian, her father as a probation officer. In their senior years, they have their pensions along with Social Security. Duran has a college diploma and two master’s degrees, yet she feels no assurance of a stable future.
“This house is the only thing I have that is going to build wealth for me,” she says. “Because we’re living paycheck to paycheck, and we’re struggling to pay our bills. James and I are thinking that we’re never going to be able to retire.”
They recently visited a financial planner who told them that in order to retire at 65 with an annual income of $50,000, they would need to put away more than $1 million. Her current retirement account balance is about $40,000.
Her kitchen cabinets are beaten up and she would like to replace them. Her garage door is rotting, but she lacks the money to fix it.
As a child, her family moved from a cramped house in which she shared a bedroom with two brothers into what felt like a mansion in which she had her own room.
“It was like moving on up,” she says. “I remember growing up and feeling like it’s all going to be okay.”
Now, thoughts of moving up have been set aside in pursuit of a way to merely maintain moving sideways –- not just under her roof, but all around her.
This is the reality in which the nation now decides who will be president, a nation in which “underwater” has become a commonly accepted term, no more exotic than “home equity line of credit,” or “re-fi” just a few years back.
“I’m going to vote for Obama, and I’ll probably work for him, too,” Duran says. “But it’s because I have to, and not because I have the same degree of excitement that I did in ’08. And if I’m feeling that way, others must be, too.”