March 20th, 2009
12:18 PM ET

Dispatch from Foreclosureville

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/images/03/20/art.new.home.jpg caption="The Lepley family's new home, recently purchased for $250,000 once valued at more than $550,000."]

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/images/03/20/art.newhome.family.jpg caption="Derrick, and Mary Ann Lepley with their daughter, Melody."]

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/images/03/20/art.home.sell.jpg caption="The house that the Aceves family is trying to short sell."]

Paul Vercammen
CNN Senior Producer

The two-story homes on Fir Circle in an upscale Lake Elsinore, California neighborhood tell two stunningly different tales.

Some are vacant, bank-owned and beat-up inside.

Others are filled with kids' laughter and the sounds of boxes unpacking and families moving in.

Mary Ann Lepley, her husband Derrick and their two-year-old daughter Melody have been in their 3,000 square-foot home on Fir Circle for almost three months.

They bought it for about $250,000 and it once sold for most $300,000 more than that.

The couple is in their mid-twenties.

"We never, ever expected to be able to buy a home like this," says Derrick walking through the four-bedroom house. "But look at it, we feel fortunate."

The Lepleys are “Sunday School polite” and say they feel for people in this neighborhood who have lost their homes or are fighting to keep them.

Right next door Frank and Leslie Aceves are in the midst of a different situation. They are trying to "short sell" their house in order to avoid foreclosure and lose everything to the bank.

The couple has two children, 10 and 3, and they bought their 3,500 square-foot home for $620,000 a few years ago.

A house about the same size across the street recently went for $267,000 thousand dollars.

"We just didn't think it (the plunging prices) would happen," said Leslie Aceves, who recently lost her job. "We just thought it would stop somewhere."

Lake Elsinore is in California’s Riverside County where the assessor's office says one in 80 homes is now in the foreclosure process.

"Riverside County is in the middle of the mortgage meltdown," laments County assessor Larry Ward.

"It's really tough on people, the foreclosures and prices that dropped below one hundred dollars a square foot."

The agony and the ecstasy.

For many families going through the process of home foreclosure, or selling short, there are other families buying homes they never thought they could have afforded before the downturn of the housing market.

Filed under: Economy • Housing Market • Paul Vercammen • Road to Rescue
soundoff (9 Responses)
  1. Dave

    Im an air traffic controller and make plenty of money. My house was purchased for $250,000. I could have easily had a house for $400,000. But im not an idiot. If you want a big house but think you might be cutting it short on money get a 30 year loan not 15. Saving makes life easiar.

    March 20, 2009 at 7:46 pm |
  2. Laura W

    It feels like I will never be able to afford a house – or even a new car.

    March 20, 2009 at 4:38 pm |
  3. milton smith

    I think this could have been prevented if we put oil coal etc into carbon fiber. Carbon fiber everything, coffe machines washing machines etc.

    March 20, 2009 at 3:45 pm |
  4. Neo

    OK, interesting article. Housing prices were overly inflated in recent years. What we're seeing now is close to (at about a margin +/- 25%) what we would have seen had there not been an OVERinflation. So it seems like things are evening out. Having said that, the person should be able to re-fi on the new appraisal for the house. So I don't understand why people are still foreclosing. The person who bought the house @ $500,000 can't afford it at $250,000 (that's bizarre).

    March 20, 2009 at 3:05 pm |
  5. Mark in Texas

    CommonSense...........Troubled Assets Housing Solution

    The foreclosed housing inventory is simply too big for the Treasury department to purchase from the banks.
    For every 3 jobs lost, a home goes into foreclosure. Five million people are on unemployment and by the end of the year, 5 million more unemployed will be added to the list.

    Banks must immediately "RENT" these assets.
    If the bank rented the asset at an 8% return on a $200,000 home valuation = $1,350 per month =$16,000 per year. This may be 25 to 30% less than the previous mortgage payment, but it is $16,000 more than zero.

    * Identifying a "Tenant" creates a potential buyer who can take over the asset after a qualifying period.
    * Converts a vacant unmaintained shell into an occupied and maintained property
    * Establishes an underlying basis for its valuation
    * Converts a "toxic" Liability into an income producing Asset on the bank's Balance

    March 20, 2009 at 2:32 pm |
  6. Mari

    This is a bittersweet story, indeed. One family wins, another looses. Very sad.

    The way the prices were inflated makes me suspicious. This is something that California's legislature and our government need to investigate.

    I admit I am not a financial genius, but wouldn't it make sense for the people whose homes are losing value to stay put, and weather the storm until the housing market regains some strength?

    March 20, 2009 at 1:32 pm |
  7. Michael "C" Lorton, Virginia

    It is a sad ordeal with the real estate market--it just proves that one person's loss is another person's gain,---however I would say-–buyers--beware!

    March 20, 2009 at 1:18 pm |
  8. Cameron J. Brown

    I could leave some sort of educated, intelligent response but all I can really say is that

    ...it's all quite unfortunate for most, and wonderful for some.

    March 20, 2009 at 12:59 pm |
  9. Annie Kate

    The foreclosures are so sad. I'm glad some people are getting good house deals on houses they would not have been able to afford otherwise but I ache for the people who originally bought the house and lost it. If the bank can let the house go for 300K less than it originally cost why can the bank not give the other couple trying to sell their overpriced house a break and re-adjust the principal owed on that house. I guess the bank must make more money by foreclosing and then reselling at the lower price.

    March 20, 2009 at 12:28 pm |