For Don and Rebecca Spendlove, just keeping a roof over their heads has taxed their mental, emotional and physical as well as financial capabilities.

The Nipomo couple have found themselves in the same situation as millions of other Americans: Their homes are worth less than they owe, their mortgage terms are crushing their finances and the specter of foreclosure is looming.

Their struggle may be emblematic of the times. Just across their street, in fact, a home has sat vacant for more than a year, the yard untended, the windows coated with dust.

“Our neighbor ... just walked away,” said Don. “He said, ‘I'm not paying.' He just moved away.”

The Spendloves find their situation embarrassing, but they're willing to talk about it in hopes they can help others avoid the pitfalls that led them to a crisis they never expected to face.

“If nothing else, I want other people to be knowledgeable of our mistakes - to learn from what we've done and not do the same things,” said Don, seated at his dining room table, reviewing the mortgage documents that weigh heavily on his mind.

“I don't want this to happen to more people,” he said. “I want them to be informed.”

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While the details are unique, the conditions that brought the Spendloves to this juncture - job loss, health issues, personal crises and an unfavorable mortgage they didn't understand - are the same as those pushing many homeowners over the edge.

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The Spendloves are typical, hard-working Americans, the parents of two daughters and a son. Rebecca, 44, is a librarian at Santa Maria High School.

For years, Don, now 46, worked at Grover Tool Rental in Grover Beach, then went to work as a plant mechanic at Frozsun Foods Inc. in Santa Maria, sometimes putting in 15 hours a night.

The Spendloves bought their modest Nipomo home in 1993 for $153,000, and for almost a decade, everything was fine. They had no problems making the mortgage payments, even after they refinanced.

Then six years ago, their lives fell into a long downward spiral.

Don was at work one night in early June 2001 when a fire broke out in the 26-acre complex housing California Giant Strawberries.

The fire - the largest in Santa Maria's history - quickly spread, raging into adjacent businesses. Don knew two co-workers were at the rear of Frozsun Foods, where heavy, billowing smoke quickly obscured the structures.

So he jumped on a forklift and headed back to help them escape. After locating them, he began leading them out with the forklift.

“He found himself in a tunnel of fire,” Rebecca said, telling a story Don seems reluctant to discuss. “He was going as fast as he could to get them out of there and went over a speed bump in reverse.

“The impact threw him up and he hit the overhead rails (on the forklift cage),” she said. “That started all the problems.”

Don had a pre-existing arthritic condition he was unaware of, and the impact jarred everything loose, Rebecca said. Both hips would need replacing. So far, because of the cost and insurance problems, only one has been replaced.

“We knew he'd be out of work for a time, so we refinanced and put some money away,” Rebecca said. “When that was gone, we refinanced again. We had no idea (his disability) would be a permanent situation.”

The Spendloves were considering refinancing yet again when a postcard arrived from a lender with a well-known name offering attractive refinancing programs.

“The original idea was to get some money to put into the house and to pay off some bills,” said Don, noting the house seriously needed a new roof.

The Spendloves called and started the process.

“We didn't know they specialized in people with bad credit, people facing foreclosure,” she said of the lender. “They never said, ‘You have excellent credit. Why not go to a regular bank?'”

Don had just had surgery and was on heavy medication for the extreme pain, Rebecca said. She was suffering from narcolepsy brought on by sleep apnea as well as problems with her feet.

“He couldn't drive, we couldn't read through all that paperwork and understand it,” she said. “We told them, ‘We need someone we can trust. We need someone who can explain everything to us, all the costs, all the terms.' They said, ‘You can trust us.'”

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In the midst of the refinancing process, other problems drew the Spendloves' attention away from the loan.

Rebecca's daughter had returned from a tour of duty in Iraq. An armor supply specialist, she had been in a convoy that came under heavy attack.

Now back in the States, her behavior began to change dangerously. She was diagnosed with post-traumatic stress disorder and hospitalized.

Rebecca's constant trips to and from the Veterans Administration hospital further cut into their finances.

Don was also battling with Social Security and worker's compensation insurance, and a change in Rebecca's insurance further delayed benefits.

Damaged nerves in Rebecca's feet, exacerbated by carrying books up and down library stairs, forced her to take regular breaks, and her pay was docked for time spent seeing a doctor.

The issues were becoming overwhelming.

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When the Spendloves started the refinancing process, Rebecca had just received a $950 check the lending company wanted to include that in their monthly income.

Rebecca said “no” because the checks came so rarely she never counted on receiving them.

When the refinance terms were set, the Spendloves found their payments would jump from $1,400 a month to $2,600 a month.

“As we were doing the paperwork, I told them the payments were too much,” she said. “They said, ‘No, you've got the income, and you'll be paying off your credit cards.'

“It worked out fine on paper. We

didn't know they'd included that $950 in our monthly income.”

The Spendloves had also asked for $4,000 from the refinancing, Rebecca said, but the company convinced them to take $35,000.

As it turned out, “We used that money to pay the mortgage,” she said.

“And our credit cards all went up again,” Don added.

“And not for frivolous stuff,” Rebecca continued. “We were using them to pay for gas, to buy food.”

Rebecca said she called the finance company's local office manager about the inaccurate income report and to seek some payment relief.

“His response was, ‘You do know we can foreclose,'” she said. “He offered no alternative whatsoever. ... We decided we had to sell.”

They contacted a real estate broker.

“He said, ‘Do you realize they charged you $16,000 to process this loan?'” Rebecca said, adding the broker also informed them the mortgage included a $35,000 prepayment penalty.

With the real estate market deep into its plunge, the mortgage prepayment penalty prevented them from getting out from under the loan.

“One lady at Mid-State Bank (now Rabobank) told us we should call the district attorney” about the loan, Rebecca said. “She said, ‘There's something wrong here. I couldn't live with myself if I didn't tell you.'”

Rebecca said the District Attorney's Office was sympathetic but not helpful.

“They said what happened was really bad, that what (the finance company) did was really a lousy thing,” she said. “But on the surface, it didn't appear they did anything illegal.”

She said the district attorney

wouldn't investigate the finance company unless other people had the same experience.

In a bid to make ends meet, the Spendloves emptied two bedrooms and rented them out.

“We have no life, we have no privacy,” Rebecca said. “The income is not much. It's just enough to help pay for groceries.”

Rebecca also started selling Avon. She sold all her jewelry. They sold everything they could on eBay and in yard sales, including Don's tools.

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Under the stress, Don's and Rebecca's health deteriorated even more. Seeking help, they consulted a financial adviser.

“He said, ‘No wonder your health is going down. You're paying out more than you're bringing in,'” Don said. “He said, ‘You're upside down. You owe more than your house is worth.'”

The adviser told them to contact the loan company to work out some kind of deal that would allow them to keep their house, pay off their bills and remove or reduce the prepayment penalty.

“To get someone to listen took days and days of dedicated phone calls,” Rebecca said, noting the loan company kept bouncing her from one person to another and back again.

Eventually, she said, she spoke with a loss prevention officer who promised he would make arrangements that would allow them to keep their house, but he “dragged his feet for two months.”

Then came the offer.

“They'd give back the processing fees at the end of the loan and knock off 1 point,” Rebecca said.

The deal would bring their payments down by $200 a month - still out of their range - but only if they agreed to automatic loan payments from their bank account.

“The financial adviser said to take the deal but see if we could get some money (from the company) to pay our bills,” Rebecca said, but the company refused.

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The Spendloves recently decided to accept the finance company's offer, but they fear it's only postponing the inevitable.

“If we could sell the house, they'd get their money,” Don said, shaking his head. “We'll have to walk away. I don't know why they can't understand this.”

They hope more people will plan for unexpected financial disasters, and those who find themselves in difficulty will get professional advice before refinancing their homes.

And they hope anyone who plans to refinance will pay careful attention to the terms and won't bow to pressure to sign if something seems amiss.

“My husband will not work again, and his emotional health is suffering,” Rebecca said, her voice quavering. “... I'm worried about his depression. I'm scared he'll have a heart attack.”

Tears well up as she contemplates the prospect of losing their home.

“We bought this house for $153,000,” she said. “Now we owe $416,000. Granted, we refinanced a couple of times, but we had equity, the market was good. Had I known my husband would be injured like this, we'd never have done it. We didn't know.”

The Spendloves say their faith in God and the blessings of their children and granddaughter, Madison, are the only things that have sustained them.

“Without the Lord and my grandbaby, I don't know what I would do,” Don said.

Her voice cracking, Rebecca added, “Madison, she prays for us. She says, ‘Please take away my grandparents' pain.' We live through her.”

June 4, 2008