The Refinancer

Jim Beltran is a shuttle bus driver, perfectly bald, dressed in a blue uniform. He ferries tourists and their stuff from Las Vegas's McCarran International Airport to hotels on The Strip. "Some of them don't know how to pack," he chuckles as he lugs a green suitcase on to the bus.

Beltran's bus route takes him by the famous sign that says, "Welcome to Fabulous Las Vegas." And for a long time, Las Vegas did seem pretty fabulous. Beltran was earning good money, $300 a day, driving this shuttle bus. Like a lot of people, he was enjoying the success of the city's tourist industry. Most workers here don't make things, like cars, cables, or other stuff you can hold. They provide services, like cleaning hotel rooms, serving cocktails, or, in Beltran's case, driving people from the airport to their hotel. And thanks to the booming economy and strong unions, all of these service jobs paid well. But things have changed.

Now Beltran is lucky if he makes $40 in a day. Tourism is way down. There are fewer hotel rooms to clean, cocktails to serve, passengers to shuttle; Las Vegas service workers are losing shifts, and jobs. And now a lot of them are stuck with bills they can't pay. Beltran is still working this job only because he desperately needs some kind of income. He is 76 years old; he wanted to be retired by now. But he's trying to hold on to his home.

Two years ago, he and his wife refinanced their house. They had paid about $130,000 for it in 1999. By 2007, it was worth $320,000. And Beltran was getting calls and mailings every week from mortgage brokers. They were urging him to refinance - cash out the equity. The Beltrans had some bills to pay - two car loans, credit card debt - and they wanted to do some landscaping in their backyard. Refinancing seemed like a smart move. They got a new mortgage for $250,000, and immediately cashed out $30,000 of it to pay bills, buy some things, and invest in a few stocks. Their mortgage broker offered a low "teaser" rate of 6 percent, which would increase in two years. She told Beltran not to worry. House values would increase too, and in a couple of years, they could avoid the higher interest rate by just refinancing again.

That was then. No one's property value is going up now. In fact, the Beltrans' home value has dropped by nearly $250,000, and they owe almost twice what the house is worth. No bank will refinance with them. Meanwhile, that 6 percent teaser rate is about to increase to 8 percent, meaning their mortgage payments will jump $300 more per month. Beltran's income is not enough to cover the new payment and their other bills. His wife recently had cancer, and she's not working anymore.

On a Friday in late January, he and his wife Ruthmarie put on matching jade pendants in the shape of monkeys eating peaches, a sign for long life and riches. They head to a local non-profit called Consumer Credit Counseling Services of Southern Nevada, where they are hoping to get help. They meet with a woman named Kendra Sellers, a graying redhead with a warm smile and tired eyes. She sees ten clients a day like the Beltrans, back to back, an hour at a time. Her services are in high demand these days.

The Beltrans explain their situation. She asks about their monthly income. Between his job as a shuttle bus driver, and the couple's combined retirement income, they make about $2600 a month. When the higher interest rate kicks in next month on their home loan, they'll have to spend $2000 on their monthly mortgage payments.

Beltran wants advice on how to approach his mortgage company for a loan modification, to extend the life of the loan and lower the monthly payments. But Sellers says every bank uses different criteria. The best advice she can give is to be persistent. Then, she leans forward a little in her chair.

"Sixty-eight percent of your income is being used toward your mortgage payment," says Sellers. "That's really, really, really high. It should be around 35 percent."

"Oh I know all that," says Beltran, with frustration in his voice. This is not the first time someone has suggested that maybe he really can't afford his house, and should just walk away and let the bank foreclose. But this is not what he came to hear. Sellers tells him she's just giving him all his options.

After she walks the Beltrans out and wishes them luck, she sits back in her chair, and takes a deep breath. She says telling people they can't really afford their houses is the hardest part of her job. "But I don't think the borrowers can be totally absolved of all this either," she says. "They wanted the house. They were taking a gamble. They thought the prices would go up. If these houses had appreciated in value, instead of depreciating, you wouldn't hear anybody complaining about their interest rates. Everybody would be happy."

But if the foreclosure crisis can be linked to some irresponsible borrowers, and some irresponsible lenders, Sellers also points her finger in a third direction, the American dream itself. "The American way is to have a house, and that's why a lot of people moved here." Sellers says, looking back, maybe some people sacrificed too much for that dream.

In March, Jim Beltran and his wife Ruthmarie are still waiting to hear back from the bank about whether their loan payments will be reduced to a level they can afford. In the meantime, they've scraped enough together to make their first mortgage payment at the new interest rate. But they doubt they'll be able to make it next month. They're trying not to dwell on how drastically life might change if they lose their house. Day to day, they keep doing the things they always do. And so even though money is tight, they go to their local casino now and then. Ruthmarie likes video poker and bingo, and Jim likes to bet on the ponies.

It would be too glib to say the gambling economy that fuels this city somehow fueled its residents' house-buying habits too. But there are parallels between what goes on in Las Vegas' casinos, and what went on all over America during the housing bubble. Buying a house is supposed to be a prudent, adult thing to do; it's a big part of the American dream. But there's always a risk. There are calculated risks, and foolish ones. It's just that it can be hard to know the difference until you win or lose.

When it comes to horse racing, "you try to look for a horse that improves" Beltran says, looking over the tip sheet that lists the stats on the horses. He puts $30 on a horse that ends up coming in last. He decides he won't bet on anything else for the night. "That's my limit. Now all I'd be doing is chasing bad money," he says. He and his wife still don't know what will come of the bet they placed on their house. If the bank doesn't agree to reduce their monthly payments, they think they'll move to a rental unit. They love their Las Vegas house. They don't want to leave it. But they might not have a choice.

Some pundits and politicians now publicly criticize people like Beltran for being foolish and greedy. "Using his house like an ATM machine," people say. But looking back on his decision even now, refinancing seemed like the wise thing to do. "Everything sounded so good," he says. "Maybe I was stupid, but look how many other people were stupid too." Some days, the threat of foreclosure haunts him. But on good days, he tries to keep the same "you-win-some-you-lose-some" attitude he has when he gambles. "I try to keep it light," he says. "What else can you do?"

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