Foreclosing in

TAMPA BAY, Fla.-Lifelong Floridian Earl Bailey has been in the construction business for 62 years, and he has the thick forearms and callused fingers to prove it. Within minutes of an introduction, he'll boast that he can press 110 pounds with his arms, push 260 pounds with his legs and ride an exercise bike on resistance level 12. Now 82, Bailey says he's worked "my butt off all my life" and claims that he didn't apply for Social Security until turning 72.

But he still needs to work to pay the mortgage on the home he bought in 2001 during the housing bubble. At the time, he had his pick of well-paying construction jobs and he made more than enough to cover his $1,500 monthly house payment. The purchase, even at his age, seemed like a sound investment especially after the value of his Clearwater, Fla., home jumped by $40,000 within the first couple of years: "I said to myself, 'Boy, were you ever lucky.'"

But, as with millions of Americans, Bailey's luck was an illusion. The housing crisis soon crunched him from two sides as both a homeowner and a construction worker. Bailey became just one of the homeowners across America who collectively are underwater on their mortgages by a total of $700 billion.

Today, Bailey hasn't had a paying construction job in more than three years. At first, he kept up with his mortgage using his savings and retirement, but he has exhausted those funds. When he became five months past due on his payments last year, the bank started foreclosure proceedings. "I have never ever been in the position I am right now," he says. "My great, great grandkids may be paying off my debt. I have got to get this straightened out."

The recent reduction of the nation's foreclosure rate has some hoping that the housing crisis storm clouds are finally clearing. But don't tell that to residents of the Tampa Bay area, which leads the nation in foreclosures. Here the number of area properties receiving a notice of default, bank repossession, or scheduled action rose 59 percent this April compared with last April. These 4,295 filings for April represent a nearly 18 percent jump from March.

I met Bailey during his recent visit to the Tampa Bay Community Development Corporation, a nonprofit that has had to undergo a transition from helping people buy homes to helping people keep their homes. Bill Sanchez, the group's program manager, said 80 percent of the nonprofit's activity the past four years has been foreclosure counseling.

"Everything the government is doing now to remedy the crisis are very temporary fixes," said Sanchez, who had a long banking career in New York before moving to Florida. "They've thrown so many programs at the problem to see what sticks that I've even forgotten what some of the names were."

Sanchez, called "Mr. Mortgage" by one client I visited, can be forgiven for losing track of at least 14 different government programs aimed at helping homeowners avoid foreclosure. Using the abbreviations popular in government, there's the HAMP, the PRA, the HARP, the HARP 2.0, and the HHF, to name just a few of the loan modification programs.

Their track records have not been stellar: Congress held hearings in February 2009 after The Hope for Homeowners program, expected to help more than 400,000 mortgage owners, had receive only 451 applications and dispersed just 25 loans nearly six months after the program's 2008 start.

The Home Affordable Modification Program aided fewer than a million homeowners after policymakers estimated it would reach 4 million. And a government report in April revealed that the Hardest Hit Fund, created in 2010, "experienced significant delay" and had limited impact due to a "lack of comprehensive planning." It spent $217.4 million on 30,640 homeowners, or 7 percent of the 475,000 homeowners that it had targeted in 18 states. In New Jersey the fund reached just 54 homeowners by the end of 2011, while in Florida the program had reached 3,400 homeowners out of a target of 40,000.

One of those people was Phyllis Dilard, who achieved her long-sought dream of homeownership nearly six years ago at the peak of the housing bubble. Dilard, then in her early 40s, worked multiple jobs to amass a down payment and made so many visits to Home Depot and Lowes that cashiers called her by name. A single parent to a 9-year-old niece she has raised since infancy, Dilard became frightened when the housing bubble burst not long after she moved into her two-bedroom, two-bath home in Clearwater. She managed to scrape by until last year when she lost her primary job as an office manager after a dozen years with the company. With little savings, Dilard fell behind fast. When she got her foreclosure notice last October, she went inside her home and just stared at the wall.

"When you go to work and that is your routine, when something does happen like this you have no idea which way to go," said Dilard, who is still unemployed. "It's like being in a dark cave and every tunnel you go through, when you think you are on your way out, just ends up leading to another dark area." Her eligibility for the hardest-hit program runs out in August. Unless the job market improves in Florida, then the government aid was just a brief reprieve for Dilard. She will face again a reckoning with her bank.

Dilard likely won't be alone. Many banks halted foreclosures in 2010 with the discovery that fraudulent and inaccurate paperwork plagued the system. But the $25 billion settlement that top banks reached with the government earlier this year over the foreclosure mistakes has now cleared the way for banks to resume going after a mountain of unpaid mortgages. "The dam may not burst in the next 30 to 45 days, but it will eventually burst," predicted RealtyTrac chief executive Brandon Moore.

Meanwhile, at least 15 states are diverting hundreds of millions of dollars from that $25 billion settlement to fill budget shortfalls instead of helping homeowners. Georgia is using $99 million to recruit companies to the state, Missouri is using $40 million to help higher education, and $125 million went to the Texas general fund.

Sanchez said his group counseled 1,500 persons facing foreclosures in 2010. While that number dropped to 800 in 2011, he expects about 1,200 foreclosure clients this year as this second wave of foreclosure hits. With the government programs faltering, people like Bailey and Dilard are hoping that they will be able to rescue themselves by finding work.

"If we have a robust job market you will see many housing problems resolved," said Chuck Bentley with Crown Financial Ministries. "The government is trying to have the dominant position in managing the housing crisis, but they are ill equipped to run the system efficiently."

Housing statistics

Eleven of the nation's 20 largest metro areas based on population documented annual increases in foreclosure activity, led by the Florida cities of Tampa (59 percent) and Miami (38 percent). Other cities with increases included St. Louis (29 percent), Chicago (26 percent), Philadelphia (24 percent), and Atlanta (21 percent).

States with the highest foreclosure rates for April

Number of housing units with a foreclosure filing:

Metro areas with the highest foreclosure rates

Number of housing units with a foreclosure filing:

Source: RealtyTrac