Part I - The mortgage crisis is emptying out East Sierrita Road. Families are leaving the homogeneous neighborhood south of Queen Creek by desperation or by force. Such departures across the country have built the financial catastrophe that has Wall Street roaring.
The mortgage crisis is emptying out East Sierrita Road.
Families are leaving the homogeneous neighborhood south of Queen Creek by desperation or by force. Such departures across the country have built the financial catastrophe that has Wall Street roaring.
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Analysts blame sub-prime lending,second mortgages,small-time speculators.
Then there's Zakary and Rachel Lutterman. Like most of their neighborhood, the couple bought a home on Sierrita during the dizzied real estate market of 2006, forced to the Valley's fringes by surging prices.
The Luttermans could afford the $201,000 price tag with their two incomes, but didn't study how their lender engineered the mortgage with an adjustable rate. "There are just all these little loopholes that, at the time, you don't pay attention to," Rachel said. "You're excited."
Today, they're parents to a baby girl and living on a single income. Rachel, 25, was laid off in late 2007.
The bank foreclosed on the house next door. Months behind on their payments, the Lutterman household is nearing the same end.
This mortgage crisis doesn't have a ground zero, but rather, thousands of little epicenters like The Village at Copper Basin in northern Pinal County. Just one piece of this master-planned suburbia, a string of 65 houses along three streets, has produced eight foreclosures in 2008.
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Many more are likely in this new year.
Rather than chatting over peewee football games or recipes, neighbors exchange dour forecasts about who will be next to leave. Packs of kids still play in the street at dusk and, last month, several of the houses were illuminated with Christmas lights.
But the only decoration on a growing number of the freshly built homes is a sheet of paper taped to the front window, warning squatters to stay out.
Meanwhile, those who own houses there feel trapped in the neighborhood, strapped down by bad loans and plummeting property values.
"There's nothing any of us can do to move out of here," said Wendy Mouw, who lives on East Pinto Valley Road, one street east of Sierrita, with her boyfriend and three children.
Living in Chicago, Tony Ciciora, a pipe fitter, struggled to secure enough gigs through his union to live comfortably. Economics and union politics convinced him and his wife, Dora Gamez-Ciciora, to leave their birth city in 2005.
Through union contacts, Dora said they heard that pipe-fitting work was plentiful in Arizona. Dora, a hairdresser, knew she could find a job anywhere.
They arrived in the Valley at the peak of the housing bubble, with prices 50 percent higher than they were just two years earlier. Sellers would receive offers on a house within hours of putting it on the market.
Dora said the frenzy made her anxious that they were already priced out of the Valley. "It was getting like California at first," she recalled thinking.
Scottsdale, Tempe, Mesa, Chandler and many other communities had already priced them out.
Talking with a customer at the salon where she works, Dora said she heard there was a bundle of houses selling for around $200,000 down south on Hunt Highway.
Dora and Tony liked what they found there, particularly the price, which at the time seemed reasonable. In August 2006, they moved into a just-finished, 1,700-square-feet house on East Pinto Valley Road that they intended to make their permanent home.
A majority of the houses in The Village at Copper Basin sold to buyers in search of a home, not an investment, property records show.
"It was exploding," said Rachel Lutterman. "I mean, I would say every other day there was another family moving in. There were tons of kids. It was fun, a lot of energy."
Price was certainly the determining factor for many of the homeowners.
However, the new community also felt like a comfortable place to raise children. "It was very friendly," said Wendy Mouw, who lives across the street from the Cicioras.
And the families made Dora feel more secure about her neighbors. "Families would put up little barriers so the cars wouldn't go fast. They cared about their area. If there are kids, people care about what they're doing," she said.
Mouw bought a Pinal County house to get more space for her daughter and an unborn son. Mouw and her boyfriend have since added another baby boy.
For the Luttermans' on Sierrita, buying their home was the last major step needed to start a family.
"We got married, we got the house, got the great job," Rachel said. "Things were going really, really well. And then it all just went downhill."
The Village at Copper Basin's fall was as dramatic as its rise.
Dora Gamez-Ciciora didn't need to look for symbolic signs of trouble. Decline was spelled out on the signs advertising new houses around the subdivision.
A year after buying their home, Dora said she saw nearby houses going for $170,000. Then $150,000.
Property records show the houses on Pinto Valley and Sierrita are now worth around $130,000.
The shriveling job market exacerbated the problems.
Suddenly, her husband, Tony, could no longer find construction jobs in the Valley. Dora took a second, part-time job as a waitress while Tony travels to California and Washington state for work.
Mouw was laid off from her job as a pharmacy technician in Tempe. She got a job at a pharmacy in north Scottsdale - a longer drive for less money.
Her partner, John P. Jackson, managed to keep his truck-driving job, though his company dramatically cut his hours.
"As sad as it sounds, I'm not much help with my current position," Jackson said.
Rachel Lutterman was a loan officer when she and her husband signed their mortgage paperwork, which included an adjustable rate. She acknowledged now that she should have known to avoid such a loan.
The couple added thousands of dollars in credit card debt to their portfolio of what analysts now term "toxic assets." Regardless, Rachel said they hope to stave off foreclosure - and bankruptcy.
"You hear people say that my generation just wants to walk away from everything, that we have no respect. And that's not necessarily true. We're trying," Rachel said.
Dora saw this scenario play out in her own life about 15 years ago, when she lost a house in Chicago to foreclosure and her credit rating to bankruptcy. For their house on Pinto Valley, the Cicioras got a fixed-rate mortgage, unlike many of their neighbors.
"When they see all this, they figure the easy way out is to bail out, just like everybody else is bailing out," Dora said. "The whole world seems to be the word 'bail-out'"
Many of the neighborhood's remaining homeowners said they are fighting to make their payments. Dora's next-door neighbor took in a boarder. Others are attempting to renegotiate their loans.
Still, a number have chosen to get out.
One of the neighborhood's original owners last year sold a house on Quartz Way for $80,000, property records show. Mouw said the owners, an elderly couple, took a massive loss just to get out of their mortgage.
Families are not the only ones to vacate.
"The way the economy is, all of our little businesses out here are going under," Mouw said. "I mean, within the first few months, the little Chinese place down here, that was gone. Big Daddy's closed down. They had the best food. We just walked up one day and there was a sign on the door."
Dora worries over who will replace the businesses and homeowners who have left.
"In Chicago, you have segregated areas because of that," Dora said. "And I know from experience, living in a city like that, what will happen here as well."
Not all agree with Dora's prediction. David Bishop, who also lives on Pinto Valley, said he moved his family from Southern California to Pinal County for peace and quiet.
And Bishop said he's received tranquility, for which he ultimately overpaid.
Except for an incident two months ago, where he spotted 10 men moving clothes into the empty house next door in the middle of the night. Pinal County Sheriff's deputies later told him the men were squatters.
"They didn't bother anybody," Bishop said, shrugging.