Sunridge looks no different from many newer subdivisions in the Omaha area: fresh, wooden homes painted in subdued shades with two-car garages, grassy yards and immature trees planted out front.
Residents of the tidy starter homes near 180th and Harrison Streets describe a life of friendly neighbors, block parties and serene streets where kids can play.
But Sunridge over the past year and a half also has been home to an almost invisible crisis: 13 families in the 265-house subdivision have fallen into foreclosure.
Six already have lost their homes. One faces a pending auction. And for others, it may be only a matter of time before their version of the American dream dies.
One resident returns home each day dreading the eviction notice she knows is in her future.
“It's 24-7,'' she said of her stress. “I'm just waiting for the shoe to drop.''
It's true that Nebraska and Iowa have escaped the worst of the nation's foreclosure crisis, with a rate that's half the nation's and a fraction of what is seen in home-loss hotbeds.
Still, thousands of Midlands residents have fallen victim to a quietly building foreclosure problem. And with job losses now spreading the economic distress across the income spectrum, almost no neighborhood is immune. There may be a foreclosure on your street.
Look at the nearly 3,300 houses lost to foreclosure in Douglas and Sarpy Counties since the start of 2007 and you'll find homes modest as well as majestic: trendy condos near downtown, brand-new ranches in the burbs, a $3.7 million Linden Estates mansion, ramshackle inner-city bungalows, and dwellings everywhere in between.
Defaults have been heaviest in low-income neighborhoods, especially in northeast Omaha. Such neighborhoods were ground zero for subprime loans, those high-interest loans that scrambled credit markets and helped send the economy into a tailspin.
But as America's most severe economic crisis since the Great Depression has deepened, the distress of homeowners knows no boundaries. Defaults can be found in neighborhoods across the metro area, and clusters such as the one in Sunridge are not unusual.
The number of homeowners on the brink also appears to be growing.
As of April 1, there were more than 3,700 borrowers in Nebraska and almost 8,400 in Iowa whose homes were in some stage of the foreclosure process. Each month, on average, proceedings are initiated against 500 additional homes in Nebraska — more than half in the Omaha metro area — and 800 in Iowa.
Not all those foreclosure proceedings end in the loss of a home. Some families are able to work out other arrangements with their lenders. The Obama administration has tried to stem the foreclosure tide with a $50 billion program aimed at encouraging such loan reworks. The administration last week urged lenders to pick up the pace.
But despite such efforts, scores of struggling families each month are seeing their lives upended by foreclosure.
A wide variety of circumstances other than layoffs contribute. Indeed, behind each defaulting borrower is a unique story.
Buying “too much house.” Bad loan terms. Divorce and family breakups. Big medical bills. Excessive consumption made easier by credit cards.
No matter the circumstances, the stress and pain of uprooted families are real.
“It's hard to even put into words,” said Jeff Thomas, who is trying to work out new loan arrangements with a lender to save the Lincoln house where he, his wife and their two young children live. “When you have children, this is their home. You have to do everything you can to keep it.”
Donna McFadden of Family Housing Advisory Services, a metro area organization that counsels families facing foreclosure, said many clients are under medical care.
“They're so stressed out, and a lot of them don't understand how they got to where they are,” she said. “The bottom just fell out.”
But foreclosure's impact ripples through the community.
Homeowners with no hope of catching up on their loans sometimes just walk away, leaving unkempt eyesores in the neighborhood that can sit weedy and abandoned for months.
Foreclosures add to the glut of houses on the market and affect the value of everyone's home, especially where foreclosures are heavily concentrated. Foreclosures also continue to be a major drag as the economy struggles toward recovery. The longer defaults continue, the longer it will take the picture to brighten for everyone.
“When you lose your house, it's awful for families and disruptive for communities,'' said Julie Kalkowski of the Financial Stability Partnership in Omaha, a United Way affiliate. “We need to pay attention to this.''
As with most indicators of economic misery, Nebraska and Omaha are riding out the nation's foreclosure crisis better than most places.
As of April 1, about one out of every 56 Nebraska mortgages was in the foreclosure process, ranking Nebraska 43rd among the states. Iowa ranked 30th with one out of 43 loans in foreclosure. In Florida, the nation's foreclosure capital, one out of every nine loans was in foreclosure.
A RealtyTrac study last year looking at foreclosures in the 100 largest metro areas ranked Omaha 89th.
But the fact that foreclosures are not a full-blown crisis here also makes it easier to overlook the thousands of families struggling to stay in their homes.
All the statistics for foreclosures nationally are for homes falling into some stage of the foreclosure process. Reliable numbers on homes ultimately lost are hard to come by.
But The World-Herald found just under 3,300 homes in Douglas and Sarpy Counties have been lost to foreclosure since the start of 2007. The newspaper arrived at that number by examining data on home sales that had been reported as foreclosures to county assessors.
The foreclosure numbers alone also don't capture the amount of financial distress building up. In addition to the 3,700 Nebraska borrowers in foreclosure proceedings as of April 1, almost 11,000 more were at least a month behind on their mortgages, according to the Mortgage Bankers Association.
Unless the job market improves or President Barack Obama's efforts make a big dent, those delinquencies could fuel more defaults and foreclosures in months ahead.
“I think there's a whole bunch waiting in the wings,'' said Steve Shultz, a real estate expert in the University of Nebraska at Omaha's business college. “I think 2009 and 2010 will be high.''
As with the national crisis, the foreclosure problem here largely got its start with subprime loans — loans to borrowers who didn't qualify for normal credit.
Such loans were less common here, but not markedly so. Using a definition of subprime used by regulators and researchers, Shultz found 3,500 such loans written in the Omaha metro area during 2006 and 2007 — about 13 percent of all mortgages originated during that time.
Some subprime loans had low teaser rates that spiked dramatically after two or more years.
There also was creative underwriting on conventional loans: no money down, adjustable rates, loans for more than the home's value — even loans where payments didn't cover all the accruing interest.
“We weren't immune from any of that. We just didn't have as many,'' said Jason Henderson, an economist and top executive in the Federal Reserve's Omaha branch.
Such lending practices became particularly problematic when home values plummeted in some markets and cooled here. That meant borrowers with high-interest loans who were hoping to eventually refinance couldn't do so. And some who lost jobs couldn't just sell, because their homes suddenly were worth less than what they owed.
Declining home values and questionable mortgages became a combustible mix, and foreclosures exploded. Since 2006, foreclosure rates have nearly doubled in Nebraska and almost quadrupled nationally.
Now job losses — about 6.7 million so far — are producing another foreclosure wave. Nationally, conventional, fixed-rate loans account for most new foreclosures.
And though layoffs in the Midlands haven't been as high as elsewhere, they increasingly are putting people's homes at risk.
“We're seeing a lot of families coming in now who have gone from being a two-income family to a one-income family,'' said McFadden of Family Housing Advisory Services.
Those families can be found all over. At least one Sunridge foreclosure stems from a job loss.
In late 2007, the woman had an $80,000-a-year job with a well-known company and a 780 credit rating. She bought a new villa for $150,000 in Sunridge.
Six weeks later, she was laid off. And to her surprise, she couldn't find a job paying anything close to what she had been making. The college graduate took a $9-an-hour telemarketing job.
“I couldn't believe how hard it was,'' said the woman, who shared her story on the condition she not be named.
She was able to make her mortgage payments from savings for six months, ending last summer. In January, her lender filed for foreclosure.
Problem loans also contributed to the Sunridge defaults.
According to loan documents filed with the county, 10 of the 13 defaulting owners put little or no money down, including three who took out loans for more than the home's price. Another had an adjustable rate that spiked after two years.
One family took out a loan in which payments didn't even cover accruing interest. After borrowing $155,000 on the $156,000 home, they owed $158,000 at the time they defaulted. The house is now valued for tax purposes $12,000 below that.
Several Sunridge residents expressed surprise to hear of so many defaults in their neighborhood. But some also knew of a neighbor's struggles.
Of the first eight Sunridge owners to default, six have lost their homes. The status of others remains to be seen.
Most show no signs the owners are in distress. But one home that's scheduled for auction next month has the look of surrender. Clumps of dandelions have taken hold in the lawn, and a spindly tree is dead.
Nearly all defaulting families in Sunridge declined to talk about their situation or experience. But the one who did said it's the most painful thing she's been through in her life.
As each month passed with another missed payment, it became clear her dream was slipping away. She sought medical help.
Any day, the house could be scheduled for auction. She suspects the national lender is backed up and just hasn't gotten to her.
“I don't know. I don't ask. I'm just here living in fear.''
World-Herald staff writer Paul Goodsell contributed to this report.
Contact the writer:
444-1130, henry.cordes@owh.com
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