JUDY WOODRUFF: One of the gaping wounds of the housing crisis and the great recession that immediately followed it was a huge jump in the number of foreclosures in cities and regions around the country.
In many ways, the housing market today is healthier.
But, as our economics correspondent Paul Solman tells us, that painful wound still stings in a number of communities. His story is part of our ongoing reporting Making Sense, which airs every Thursday on the NewsHour.
MARC JOSEPH, Real Estate Agent: What I need to do with you now is, I need to walk through the house to make sure it's broom-swept condition.
PAUL SOLMAN: Despite what you may have heard, the foreclosure crisis is far from over, especially in Florida, which leads the nation, more than 300,000 cases still pending, another half-a-million homeowners delinquent, hundreds of thousands of modified loans about to balloon in payments.
Ten days ago, David — we have been asked not to use his last name — was in the final stage of the process, cash for keys. He'd bought this house on a quiet street in Fort Myers in 2007 for $139,000 to live in with his brother and parents. His father died soon after.
MARC JOSEPH: By signing this, you are hereby releasing all claims. If you come back to this property, it's considered trespassing.
PAUL SOLMAN: For a while, brothers and mother pooled their incomes from low-level jobs and her widow's pension to make the monthly payment. Then, one day in 2010, David came home to find that his mother, in her late 50s, had had a near-fatal heart attack.
DAVID, Florida: I had to take care of her. My brother works. I couldn't work. I had to take care of her.
PAUL SOLMAN: With no health insurance — this was pre-Obamacare — the family fell behind. Their original mortgage servicing company, Litton, agreed to modify the loan, reducing the interest rate, but not the principal, to cut payments by a third.
Two months later, though, Litton transferred the loan to Green Tree.
DAVID: Green Tree took over. The mortgage just started going up. And my 401(k), my bank account, my car that — the only car that I bought myself, an '03 Monte Carlo, brand-new, I had to get rid of that to pay for the mortgage.
PAUL SOLMAN: Last year, an independent watchdog found that Green Tree failed eight out of 29 tests of how it treated struggling borrowers. But, by then, the house was already in foreclosure, saddled with $25,000 in back payments, fees and penalties due, on a property now appraised at $45,000.
Real estate agent Marc Joseph is wholly sympathetic, but he can see the lender's point of view.
MARC JOSEPH: He signed up for $139,800. He signed up for that. If I was holding the mortgage, and I'm watching TV right now, you owe me $139,000. Get out.
PAUL SOLMAN: And that's the law. But the house is now worth only a third of that, as David has explained to his lenders.
DAVID: Oh, we will help you, we will help you. And then they give me the runaround and nothing gets done. And now I'm actually homeless once I hand you this key. I'm homeless in a little Ford Explorer. I know it's not your fault. I know it's not your fault.
MARC JOSEPH: I wish I could do a lot more. But the only thing I can do for you at this particular moment is to give you this check and wish you the best that this gets you somewhere. And I'm sorry.
PAUL SOLMAN: And so, with $1,500 in exchange for clearing out, David, his brother, mother and two dogs joined the 600,000 Florida families who have lost their homes since 2007, 5.5 million homes lost nationwide.
In fact, with one out of four Florida homes hit with a foreclosure notice in recent years, it's hard to meet anyone in this state who hasn't been touched by the crisis.
Randy Miller, who was changing the locks on David's house, managed to get a loan modification to hang on to his dream home. But even that wasn't enough when he and his wife both lost their jobs.
RANDY MILLER, Locksmith: We were just riding around, trying to figure out what we was going to do as things got worse and worse and worse and seeing all the foreclosures, and thought, you know, there has to be some way to get into this business.
PAUL SOLMAN: And so they started trashout4u.com.
RANDY MILLER: We would do the lock changes, the inspection, the clean-out, the pools. We was doing all of it.
PAUL SOLMAN: Happy ending for the Millers, tragic ending for the Meltons.
We met street musician Jimmi Melton while taping in Fort Myers. His father had been a science teacher here for 35 years. In 2007, Edward Melton Jr., needing a new roof on his house, fell for a refinancing pitch by American Home Mortgage, now out of business.
EDWARD “JIMMI” MELTON III: And they had given him a four-option adjustable rate mortgage, only, not allowing him to know all the details of the payback on it.
PAUL SOLMAN: When his father found out:
EDWARD “JIMMI” MELTON III: He tried to get them to modify it for over two years, and every time, it was the same answer, they couldn't work with him, they couldn't do it at this time, that kind of thing.
One day, he just finally had enough, after over two years of fighting, and about 4:15 in the morning, he took his life.
PAUL SOLMAN: Jimmi Melton held onto the house for five-and-a-half years, fighting foreclosure. But it's finally been auctioned off. He will be out by April Fool's Day.
TANIA AGATHOS: You can transfer me to my point of contact, but they're not going pick up the phone, right?
PAUL SOLMAN: And then there's Tania Agathos, who wonders how much longer she can hang on to her home.
TANIA AGATHOS: December 24, Christmas Eve, I had a lovely knock on the door, and they served me with papers.
PAUL SOLMAN: On — on Christmas Eve?
TANIA AGATHOS: On Christmas Eve.
PAUL SOLMAN: Agathos paid $69,000 for her townhouse in 2002, refinanced for $89,000 in 2004.
TANIA AGATHOS: I'm not living, as you can see, in the Taj Mahal.
PAUL SOLMAN: When the bottom fell out of Florida's housing market, she fell into a spiral of unemployment, divorce, a big surgery bill, even with insurance, and personal bankruptcy. So, she's been asking her lenders to modify her mortgage for years now.
TANIA AGATHOS: They said that they wouldn't even discuss it with me until I was three months behind in my mortgage payments.
PAUL SOLMAN: You mean you had been paying?
TANIA AGATHOS: I had been paying. I was 100 percent up to date on everything.
PAUL SOLMAN: So they were essentially forcing you to stop paying?
TANIA AGATHOS: Correct.
PAUL SOLMAN: Which you did, I take it?
TANIA AGATHOS: Oh, yes, I had no — I didn't have a choice anymore.
PAUL SOLMAN: By the time she technically qualified, she was too deep in the hole to climb out, she says, as penalties and fees were tacked on to the principal and interest.
But, instead of modifying the loan, the lenders kept passing her from one case manager to another, while the tab steadily grew.
Assessed expenses, $1,700, and then past due payments of now $32,000…
TANIA AGATHOS: Correct.
PAUL SOLMAN: … just to renew your mortgage payments, which then would come in monthly after that.
TANIA AGATHOS: Correct. I don't know if I'm going to have a lock on my door tomorrow when I come home from work.
PAUL SOLMAN: So, Agathos waits for the final stage of foreclosure.
Meanwhile, says Marc Joseph:
MARC JOSEPH: There is still a lot of what they called shadow inventory that nobody wants to talk about, it's not there. It's still there.
PAUL SOLMAN: The foreclosures that are going to happen, but haven't happened yet.
MARC JOSEPH: They're going to happen, because people did loan modifications, which was only a Band-Aid on the problem. So guess who I'm out doing foreclosures on now? The people that did the loan modifications, and now they're being reset back to their old payments.
PAUL SOLMAN: And that's the shadow inventory that's out there and could flood the market?
MARC JOSEPH: This is a whole new wave of what I see coming.
PAUL SOLMAN: A wave of people like David, perhaps. Where has he been living since getting cash for his keys?
DAVID: I got a store. I got a place to walk the dogs.
PAUL SOLMAN: A truck stop.
DAVID: They got showers in here. Hopefully I don't get kicked out, but this is where I'm calling home right now. From a house to a truck, this is where I'm at.
PAUL SOLMAN: This is economics correspondent Paul Solman reporting for the PBS NewsHour from a truck stop in Fort Myers, Florida.