Last January, Lopez, 75, and her 80-year-old husband, Al, moved out of the house they had owned for nearly 20 years and relocated in Redding.
To date, their lender, JP Morgan Chase, has declined to take the home back.
So the house still sits empty a year after they moved out.
"We have no idea why," said Frances Lopez, who notes the only thing that's happened is the lock on their back door was changed. "I wrote them since they changed the locks and said as far as I'm concerned, you have taken possession of the property. But we never heard a word."
The Lopezes are attempting a strategic default, a financial decision made by borrowers who figure they will never see the value of their home return to what they paid for it. So they walk away.
But Frances Lopez said money is only part of the reason they moved.
Lopez was diagnosed with a heart condition around 2008, an ailment she says has put her in the hospital twice in the past three years. So moving to Redding (they recently moved to a new rental in Anderson) put her closer to the hospital and gave her peace of mind.
"We are walking away because, first of all, our home almost can't be sold for what we owe on it," she said. "What is more important is we are here in Redding where we can get medical help much quicker than up in the mountains. And I am afraid. I am afraid to stay up in (Shingletown) for a couple of years to try and sell that property. At our age, you can't stay up there forever to try and get market value."
They know the damage a foreclosure will do to their credit, how it will affect their ability to borrow, and that they probably will never own another house.
A foreclosure remains on a person's credit report for seven years from the date the foreclosure is filed, said Rod Griffin of credit reporting agency Experian. The mark will affect the borrower's ability to borrow for the entire seven years, though over time the severity of the impact diminishes.
"Sometimes you have to make a decision, and we made it and we have to live with it," Lopez said.
RealtyTrac, the online database that tracks foreclosures across the country, said on its website last week that strategic defaults are on the rise, citing a report from Foreclosure News Report.
As of this month, 12.5 million mortgage loans nationwide were in a negative equity position, or underwater, according to RealtyTrac, which considers the loan underwater if the balance is at least 25 percent higher than the estimated value.
Redding attorney Bill Davis is all too aware of how foreclosures have touched people's lives in Shasta County. Davis leads monthly foreclosure help workshops for Legal Services of Northern California in Redding.
Davis remembers the Lopezes reaching out to him. He encouraged them to pursue a short sale, but he doesn't blame them for walking away.
"Every case is different depending on the circumstances of the individual or couple," Davis said of distressed homeowners. "I have seen almost no cases that are identical; thus there is no cookie-cutter answer."
Most important, says Davis, is troubled homeowners need to identify their alternatives.
"And one of those is a strategic default," Davis said. "That phrase has a broad spectrum of meanings. It's not just like people are trying to dump their house because they are underwater. That might be only one reason."
When Frances Lopez was diagnosed with her heart condition four years ago, she and her husband decided to put their house up for sale. Frances said their home — they purchased it for $110,000 in 1992 — was appraised for $289,000. So they refinanced, took out $45,000 and put on a new roof, put in new flooring, stainless steel appliances and redid their cabinets.
Then the market plunged.
"We became painfully aware," Frances Lopez said. "The man next door with the identical floor plan, he had paid over $250,000 the year before, and he couldn't sell."
The Lopezes needed to sell their house for $164,000 to break even. Frances Lopez didn't think they would ever get that, and she didn't want to do a short sale.
"A short sale doesn't bother me at all," Lopez said. "What I don't want to do, and I don't believe it is necessary, is they want three to five years of tax records."
Lopez believes banks want tax records to determine the borrower's ability to make monthly mortgage payments.
"That is not why we are walking away," Lopez said.
Lopez has attempted to contact Chase several times, but has yet to get an answer as to why the bank won't foreclose. She also requested a deed-in-lieu of foreclosure, a disposition in which the borrower voluntarily deeds the house in exchange for a release from all obligations under the mortgage.
"We know they have not filed a notice of default. We have not made payments in over a year," Lopez said.
Contacted via email regarding the Lopezes' situation, Chase released a statement last week that said it's working with the investor to "expedite a deed-in-lieu" at the Lopez's request. The bank did not elaborate.
FORECLOSURE HELP
What: Free workshop at Legal Services of Northern California
When: 5:30 p.m. Feb. 13
Information: 241-3565 to register for the class
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