Three years later, here they are, six months behind on their mortgage — part of a housing crisis that has devastated Nevada.
So they look to the presidential candidates for some kind of plan to set things right. And they don’t see one.
“I know Obama was left with a lot, but he sure hasn’t made it better,” said Amy, 63. “I voted for him last time. But I just can’t do Obama again.”
And while she and James, 66, plan to vote for Romney, they are not confident he will be able to help break the state’s economic fall. “I’ll give him a shot, but sometimes I wonder whether any of them is any good,” Amy said, as her husband nodded in agreement.
The retired couple is hardly unusual in Nevada. A catastrophic drop in prices has left nearly 70 percent of mortgage holders in this state owing more than their homes are worth, a loss they are unlikely to recover for decades.
For many of these hard-pressed homeowners, the nation’s slow-motion economic recovery has been mostly invisible, and when Election Day rolls around they are likely to vote their desperation.
The dire situation seems ripe for promises of change from the two presidential candidates working feverishly to win this critical swing state. Instead, the policies they espouse offer little to struggling Nevadans.
The pitches reflect the fundamental difference between the candidates: One wants the government to help. The other wants the market to work.
President Obama has rolled out programs that the administration says have touched thousands of homeowners in Nevada and more than 5 million nationally, but yet have failed to reverse the sharp decline in housing values.
Republican presidential candidate Mitt Romney has said government should get out of the way and allow prices to collapse so the housing market can move more quickly to recovery.
“Don’t try and stop the foreclosure process,” Romney told the Las Vegas Review-Journal earlier this year. “Let it run its course and hit the bottom. Allow investors to buy homes. Put renters in them. Fix the homes up and let it turn around and come back up.”
Neither approach has much appeal to Nevadans desperate for financial relief.
“We found a house we wanted, and we would hate to lose it,” Amy said at a foreclosure prevention workshop run by the Legal Aid Center of Southern Nevada. The sentiment echoed that of eight other struggling homeowners in the room.
Nevada is among a handful of battleground states where the fragile health of the economy — and who voters think can best heal it — is likely to determine the outcome of the fall election.
The stark difference in how the two candidates view the role of government in shaping the economy will be a critical factor as they tailor their messages to the swing states, each with distinct economic challenges.
In Wisconsin and Ohio, an uptick in manufacturing jobs aided by the government-funded auto company bailouts has helped push jobless rates below national averages. But that recovery has come after more than a decade of steep declines in factory work that has crimped prospects for the middle class.
Much of Virginia has been insulated from the worst of the downturn by federal spending, particularly in defense and homeland security. But with large budget cuts looming at the end of the year unless Congress and the White House can agree on an alternative, analysts warn that the state’s economy would take a big hit.
Meanwhile, Florida and Nevada have been pummeled by the steep decline in housing prices, which has all but halted the rapid growth that once fueled those state economies.
Leading the housing decline
Nevada carries just six of the 270 electoral votes the candidates need to win in November, but it is central to the ambitions of both Obama and Romney. The state also epitomizes the wild swings the U.S. economy has experienced in the past decade and the daunting task awaiting any candidate promising to restore past prosperity.
Since the housing crash, Nevada has led the nation in foreclosure, personal bankruptcy and unemployment rates.
The ongoing economic problems have unsettled many voters, and Obama strategists quietly worry that their candidate is in more trouble here than in any other Western battleground state.
Obama won Nevada by more than 12 percentage points four years ago. But even with the president’s decided advantage among the state’s rising number of Hispanic voters, recent polls show him running neck-and-neck against Romney, whose central campaign promise is to make the economy run better than it has under Obama.
Not long ago, Nevada boasted one of the fastest-growing economies in the country. Developers had only to publicize plans for a new housing subdivision, and people would line up, ready to buy.
“People were camping out when new projects were announced,” said Jim Denton, who runs a public affairs firm here. “ When people put homes on the market, it wasn’t unusual to get 10 offers in a matter of days.”
Those days are long gone. More than 6 percent of the state’s housing units — nearly 73,000 properties in all — were the subject of foreclosure filings in 2011, according to RealtyTrac, a real estate data firm.
The rush of foreclosures has been a huge factor in the stunning decline in housing values, which statewide are down by an average of two-thirds since mid-2006. Overall, housing prices are just 9 percent higher than they were in 1990.
For many Nevadans, the financial pain caused by the crash is intensified by the gnawing realization that it will likely be many years before they fully recover. With the massive backlog of bank-owned properties and the weak pace of sales, it could take decades before the market returns to normal.
“If getting back to normal means getting back to peak prices, you are talking 20 years plus,” said Jeremy Arguero, a principal in Applied Analysis, a Las Vegas economics firm.
The housing decline has been so deep that it seemed to swallow the rush of programs rolled out to help struggling homeowners without making a lasting difference.
Early in his term, Obama initiated a mortgage modification plan that created incentives for lenders to work with strapped homeowners to lower monthly payments. Later, the administration increased incentives for lenders to write down government-backed home loans. The administration says just over 1 million mortgages have been modified under the program.
Obama also launched, then broadened, a separate program aimed at helping people refinance their mortgages even if they had little home equity or owed more than their homes were worth. In all, the administration says, 900,000 people have refinanced under the program, saving an average of $2,500 a year.
The Federal Housing Administration has a range of programs to help distressed borrowers, and the administration has worked with private counseling agencies who negotiate with lenders to encourage loan modifications.
In addition, the $25 billion deal struck between 49 state attorneys general and the nation’s five largest mortgage servicers should result in direct relief for distressed homeowners, the administration says.
Still, the bitter reality for many Nevadans is that the government help is not sufficient to fix home purchases that have been transformed into ruinous investments by the downturn.
At a twice-monthly foreclosure-prevention class run by the Legal Aid Center of Southern Nevada, distressed homeowner after distressed homeowner is looking for a way out of a financial mess that seems to only grow worse.
One man, an Air Force veteran and former military contractor, quit his job after landing a lucrative overseas contract, only to have the deal fall apart at the last minute. Now he drives a cab for a fraction of his previous pay, and he has fallen behind on the payments for his four-bedroom home.
A couple stationed at nearby Nellis Air Force Base said they had not made a mortgage payment in more than three years. They bought their home five years ago for $355,000, and now it is worth less than half that.
Being in the Air Force, the couple — who spoke on the condition of anonymity for fear of losing their security clearances because of their financial problems — can be ordered to move at any time. With a turnaround in housing values nowhere in sight, they decided their money would be better spent helping other family members.
Their only hope for saving their home is through a substantial principal reduction, but the lawyer who led the class made it clear that such large-scale reductions are rare. Short of that, she said, having a bank repossess a home may not always be the worst thing.
“In some cases, maybe it is not a bad idea for a home to be foreclosed,” Venicia Considine said.
The Watts thought they had shrewdly avoided the madness stirred up by the housing bubble when they bought their home in 2009. They painstakingly compared prices before picking up their home for $145,000 in a short sale. They thought they had bought at the bottom of the market. Little did they know how far it would fall.
Months after moving into their home, Amy suffered a stroke, throwing the family’s finances into turmoil. Even though they have health insurance, co-pays and deductibles sucked away their savings, and soon the bills began to pile up.
When they turned to the equity in their new home for help, they discovered that it had vanished, as the value of the house had declined to $125,000. Before long, they were juggling their house note, too, and now they are six months behind.
They have worked closely with their lender to have their loan modified. Recently, they were offered new terms that would lower their $954 monthly payment by $58 — not nearly enough to provide real relief.
“I know I should probably be grateful, but it feels like a slap in the face. A modification is supposed to help,” Amy said, “but what good is $58 a month?”
Plummeting home values
Although Watt is upset with Obama for not doing more to help underwater homeowners, Romney has advocated reducing government’s role in helping them. Romney says the various programs Obama has offered to keep underwater homeowners in their houses have only delayed the inevitable wave of foreclosures that he said would allow the housing market to find a new equilibrium.
“That comment was kind of like a stick in the eye,” said Barbara Buckley, a former Democratic speaker of the Nevada Assembly and executive director of the Legal Aid Center of Southern Nevada. “People here are hard working; they are not slackers.”
Still, Buckley acknowledged that the long line of programs Obama has implemented has not had the desired effect.
In recent months, foreclosures in the state have slowed, which experts call a temporary break while banks adjust to the shifting legal landscape for foreclosures. But the fundamental problem — that so many people have lost so much value in their homes — remains.
In recent months, there has been slight improvement in the Nevada economy. Tourism and gaming revenue are up and unemployment is down — to 11.6 percent.
It is the kind of uptick that no one confuses with a recovery.
Eddie Eder, 31, a father of two, said he has been out of work for four years. Before the housing market imploded, he said he made $1,500 a week as a heavy equipment operator for a firm that built in-ground swimming pools.
“People can’t afford pools these days,” Eder said. “Heck, they can barely pay rent.”
Back then, he paid cash for a $38,000 truck. He bought his son baseball bats that cost hundreds of dollars, and never worried about money. Now money is all he thinks about, as he whiles away his days watching his two-year-old daughter while his wife, Amanda Hulsizer, goes to work.
“I used to feel like a high roller. Now I’m Mr. Mom,” he said. “Sometimes, I’m embarrassed by that.”
Last October, Obama visited Eder’s block of tan stucco homes to deliver news of his plans to make it easier for underwater homeowners to refinance their mortgages. Home refinancing applications in Nevada have more than tripled since then.
Yet Eder is unimpressed, even though he gives the president credit for trying and says he will vote for Obama in the fall.
He said housing values in his Bonita Hills neighborhood have cratered, leaving everybody he knows strapped. Homes that sold for over $200,000 when they were new in 2004 shot up to nearly $300,000 by 2006. Now, they are worth well under $100,000.
Asked what has changed since the president’s visit, Eder cracked a wry smile before answering: “Housing values have gone down another $8,000.”