From Home to House of Cards: Subprime Bust Hammers Families

Before you go, we thought you'd like these...
Before you go close icon
By Adam Geller, Associated Press
THORNTON, Colo. -- The lights are still on inside Foreclosure No. A200642668 -- so while there's time, have a look around.
Here's the living room, still covered in the worn blue shag Angela Sneary always intended to replace with the sheen of hardwood. And downstairs, through a curtain of plastic beads, is the basement where husband Tim was going to knock out a wall and put

By Adam Geller, Associated Press

THORNTON, Colo. -- The lights are still on inside Foreclosure No. A200642668 -- so while there's time, have a look around.

Here's the living room, still covered in the worn blue shag Angela Sneary always intended to replace with the sheen of hardwood. And downstairs, through a curtain of plastic beads, is the basement where husband Tim was going to knock out a wall and put in a foosball table.

Step this way and the Snearys point out the places where they never could find the cash to hang a ceiling fan, install a hot tub, replace the siding ... a long list of abandoned ambitions that seem almost too big to squeeze into the modest four-bedroom trilevel.

Owning a home is all about finding humor in unfinished projects. But in the house set back from a bend at 11030 Eudora Circle, the Snearys never had the luxury.

They ran out of money first. Then, they ran out of time. Soon, they'll almost certainly be out of a home.

Buying a home is the American dream and a record number of Americans -- nearly 70 percent -- are living it.

Many families, though, likely never would have become owners if not for the tremendous growth over the past decade of a new kind of mortgage business called subprime lending. It long seemed like a winning proposition for all parties. Now the costs are becoming apparent -- and they are very unsettling.

Subprime lenders peddle new kinds of mortgages, often requiring no money down and made at "teaser" interest rates that soon rise. They target marginal borrowers with weak credit or questionable incomes who previously might not have gotten a loan at all.

By last year, subprime loans made up 20 percent of the market for new mortgages.

But as the housing market cools, thousands of subprime borrowers are struggling to keep their homes. A number of subprime lenders, saddled by failed loans and a shortage of cash, have folded or staggered. In some particularly hard-hit neighborhoods in Denver's suburbs -- one of a few metropolitan areas where the problem is especially grave -- home after home sits dark.

Clearly, this isn't how the American dream is supposed to play out, but who's to blame?

The experiences of families like the Snearys show how the squeeze created by questionable lending can quickly be compounded by family economic crises, a lack of planning and knowledge, and the rapid shifts in a real estate market that once seemed unstoppable.

"You were set up to fail," one real estate agent told them.

It's a sobering thought for anybody who shares the American dream. After all, it hits so close to home.

"Not like you have a whole lot of choices"

Tim first met Angela when he was just 5. She was hours old.

Their fathers were best friends, "two old hippies who partied together." On an afternoon 33 years ago, they celebrated Angela's arrival. Tim stared at the tiny infant a nurse held up to the maternity ward window and waved.

Sixteen years later, Angela's dad died. Tim, just out of the Navy, went to pay his respects. He offered his arms to Angela -- and never let go.

In the wedding photos, Tim's rock-star hair reaches the shoulders of his white tuxedo. Angela's bridal gown does little to hide her eighth month of pregnancy.

The new family grew fast -- a year after Amanda was born, Timmy Jr. followed and three years later came Steven. Tim found work doing landscaping in Denver's mushrooming subdivisions. Angela got a job working for an insurance company. Eventually, they combined to make around $55,000 a year.

They moved from rental to rental, aspiring to buy. By 2004, their rental town house was getting tight. A neighbor complained they were noisy.

The couple set out to look at homes in Thornton, a fast-expanding, mostly working-class suburb 20 minutes outside Denver.

They loved the second house the agent showed them, tucked in a 1970s subdivision with streets curled around each other like a ball of yarn. It was painted glowing pink with a big shade tree out front. The kitchen drawer-pulls were shaped like tiny forks and spoons. It had spacious bedrooms for all three kids, plenty of space for three dogs and six cats.

Tim "walked in here and said this is perfect," Angela recalls.

It cost $204,000. "We thought we were getting a deal," Tim says.

The agent said he'd find them a mortgage, no money down. The Snearys say they never thought to shop around.

Continued on Next Page

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Read Full Story

Find a New Home

Buy
Rent
Value
Powered by Zillow

From Our Partners