(© Joann Frederick/agefotostock )

Everybody knows about the American dream of home ownership, but what about the flip side: the nightmare of losing your home?

It's not something that happens only to someone else. Toss into an average life some devastating medical bills, a sudden job loss, an overambitious home purchase or rising interest rates, and pretty soon a house that took years of toil to purchase is auctioned away in seconds.

We talked to three people or couples who saw their home slip from them. Each agreed to share their story in the hope of sparing others the same pain.

A great life . . . and then, divorce
Life happened fast for Kerry and his wife.         

In just five months starting in late 2003, Kerry, a computer technician for a nationwide bank, got married and bought a house in St. Paul, Minn. His wife gave birth to a baby boy. The next summer they dove into a complete remodel of the two-story home built in 1911 that they'd bought for $129,000. With the help of professional friends, they began to tear out walls, remodel bathrooms and replace windows. And Kerry's wife, who worked for a local college, started graduate school.

Despite the zaniness, life was pretty good and the couple was financially stable, says Kerry, who asked that his last name not be used. They had an annual income of $105,000.         

Everything changed in December 2005. After just two-and-a-half years of marriage, "she came to me and said she wanted a divorce. It kind of threw me for a loop," says Kerry, now 33.         

Kerry's grief soon was compounded by financial trouble.

The couple had bought the house together for well under market value, but in order to fix it up, they had refinanced to withdraw some of the equity. Kerry's credit was much stronger, he says, so the couple refinanced for $145,000 in his name alone. "I didn't even think twice about it. We'd given our word to each other that we were together for the rest or our lives." Similarly, he says, because he had better credit, other bills -- credit cards, auto loans -- were solely in his name.

"She moved out and washed her hands of everything," he says. "She left me with 40% of the household income and 100% of the household debt."

Unable to handle the $1,089 monthly mortgage, Kerry put the home on the market in April 2006. The timing wasn't good. "In my neighborhood in St. Paul, that week I put my home on the market, in a five-block radius there were 13 homes for sale."

Worse, Kerry's home was only halfway remodeled. "Most of the material was already purchased," he says, but "anybody who wanted to buy a house immediately knew they would have to put a lot of time into it."

Unwilling to miss any child-support payments, Kerry began to slip on his mortgage. He called his lender, Wells Fargo. But with his reduced income, the options the bank offered didn't help. "They couldn't get me a payment at which I could live." And still, the house didn't sell.

What's your home worth?

In the span of just eight months, Kerry saw his life go from wonderful to disastrous. "I was really overwhelmed," he says. "It got to the point in June where I started seeing a therapist" and started taking antidepressants, he says.

In July, Kerry received a foreclosure letter. In September, Wells Fargo bought back his house at auction for $157,000 -- $10,000 more than he owed on the mortgage. He's still not sure how that works. "I don't get to see any of it," he says. He'll be evicted in March, with only his possessions. (The difference between the paid auction price and the amount owed is often used toward the costs of the foreclosure, along with any fines and late fees, says Rick Sharga, vice president of marketing at foreclosure listings company RealtyTrac).

Sadly, Kerry will take something else with him, too: a notice on his credit report that Wells Fargo officially foreclosed on his home. "In December 2005, I had pulled my credit report . . . and I was 738 (out of 800). That's really good. When I ran my credit report a few months ago I was at a 580. It's only gone down since then.”

But there is almost a strange relief to the eviction, as Kerry sees it. "It closes a bad chapter in my life."

Struggling to keep the family home
Ericela Bolin's grandfather built the three-bedroom, one-story home in the Imperial Valley, about 20 minutes from California's border with Mexico. After he died in 1989, the family planned to sell it, but the idea saddened Bolin, who's lived in the valley since age five. So she bought it in the early 1990s for about $75,000, at what she recalls as a very high interest rate -- "10-point-something."

But home ownership has always proved a struggle for Bolin, now 36, who admits that managing money is not her strength. "At the time, my parents were helping me to make the payments, since I wasn’t married yet" and had a son, she recalls.

She faced foreclosure several times. "Every time I was able to save it," she says of the family home, often by swallowing her pride and asking family for help.

Bolin later married and had two more sons (now, the children are ages 13, 8 and 6). Both adults had jobs -- she ran a plant-and-soil lab, he worked for the county. But keeping the house continued to be a challenge.

For one thing, the home was so old the couple had to constantly make improvements. "We have invested more than $20,000 into this house," she says, rattling off examples from new fixtures and toilets to a new redwood fence. "We have poured our hearts into this house."

Appraised for about $70,000 when she bought it, the house was reappraised for about $130,000 a few years ago, she says.

But "basically it comes down to, I wasn't able to afford the house, and even when my husband moved in with me, I wasn't making my payments regularly. And I basically ruined my credit and his as well."

In July 2006, another foreclosure process began and the mortgage company required double payments totaling about $1,600 a month. Bolin was told not to be late, but she couldn't keep up. "Our expenses were more than what we were both bringing in," Bolin says. "And so we were short probably $400 every month."

Stressed out, Bolin says she would lie to her husband when he asked if she'd paid the mortgage. 

Then, at the end of October 2006, Bolin was laid off from her job -- one that paid "peanuts," she says, but was in the field she'd trained for in college. Losing her job, she says, has caused not only loss of self-esteem but "unbearable sadness."

"But they never told me they could auction (the house) without me knowing about it," she says. "It just seemed too quick. Why didn't they send me a letter, telling me that this is your last chance?"

(In some states like California, where Bolin resides, the foreclosure process doesn't go through the courts. Instead, foreclosure sales simply must be advertised publicly, as in a local newspaper. This process usually moves faster, catching stressed-out homeowners even more by surprise.)

The house was sold at auction to an out-of-county real-estate speculator, who bought it for $73,000. He's now trying to sell it for $190,000.

Bolin didn't say anything to her husband for several weeks, finally telling him just before Christmas. He was furious -- "and he still is," she says.

Now, the Bolins have until Jan. 17 to come up with the money to buy back their house -- or the new owner will begin the eviction process. Bolin said she still hopes to buy her home back, but since her and her husband's credit is so poor, she'll need to get her mother-in-law to co-sign for them. And she also must convince the buyer that the house will never sell for $190,000 and get him to reduce the price dramatically.

It seems a long shot, but "I'm optimistic that I might be able to get the house back," she says.

"We have never asked for any state help. We have earned our own money. And for this to happen to us -- for us to work so hard, to have this taken from us ..."

She adds of losing the house: "This will affect my children. This will affect my marriage. This will just cut my throat."