James Hoover knew he was behind on payments, but seeing the sheriff in his driveway with foreclosure papers was still a shock. After all, he thought he had a deal with the bank.

During the heady days of the housing bubble, a broker called Hoover promising huge savings if he refinanced his home loan. The offer seemed too good to refuse, and Hoover converted his fixed-rate loan to an adjustable-rate mortgage. The broker breezily assured him he could refinance again before the payments spiraled out of control.

But that was before the Great Recession. By 2008, the interest rate on Hoover’s mortgage was climbing into the stratosphere, and the thought of refinancing was laughable.

Worse, Hoover lost most of his income as his business installing hardwood floors drastically declined. “My slow time’s usually January and February,” he explains. “But March and April came and there was nothing going on. By the end of 2008, I got to the point where I wasn’t working at all.”

As he fell behind on his mortgage, the bank blew him off when he tried to negotiate new terms. He finally told them he would have to give up the house if it meant shelling out $1,600 a month (his original payment was less than $900).

His 20-plus years of construction experience meant nothing on a job search. “(Contractors) weren’t knocking down doors to hire anybody,” Hoover says. As a small-business owner, he couldn’t collect unemployment. He was on the verge of abandoning his trade — applying for food stamps and a part-time job at Home Depot.

Yet after some very lean months, there was hope. Early 2009 was nothing compared to the middle of the decade: Instead of installing an entire house’s worth of floors, Hoover was now doing one or two rooms. But at least he had some positive cash flow for his business.

Meanwhile, the bank seemed willing to renegotiate the mortgage. They agreed to let him pay $700 a month, an amount he could afford, on a trial basis. Hoover faithfully sent his cashier’s checks. He was grateful for a way to hang onto his slice of the American Dream.

That’s why he was shocked to find the sheriff in his driveway in November 2009. It seems the bank decided to take his money for the six-month “trial period,” then suddenly change course and proceed with foreclosure.

“I was devastated,” Hoover admits. “I tried everything I could (to negotiate with the bank). But when they finally did something, they reneged on it.”

Hoover had clawed his way back and restored part of his income, but it was too late for Bank of America. His house was in danger of going up on the auction block.

As our region claws its way back from the recession — which experts believe is largely over based on economic indicators — Louisvillians remain divided.

Those who clung to jobs feel better now than they did a year ago. Yes, consumer confidence was down for July, but that’s not the trend: Malls are filling up as fear ebbs. Homes are selling at a breakneck pace compared to 2009. The nation’s gross domestic product has been on the rise. Meanwhile, the 2010 census and the economic stimulus have pumped millions of federal dollars into our local economy.

Yet there’s a second city of people hiding just beneath the cautiously optimistic surface, and it’s populated by 62,000 out-of-work Louisvillians — about one out of 10 employable adults. When you add to that folks who have given up the job hunt, plus those doing part-time work because it’s all they can find, as many as one in six area residents are seeking positions. Optimism is a scarce commodity among the long-term unemployed, as evidenced by a recent Bloomberg Poll that found 71 percent of Americans believe the United States still is in a recession.

For people like James Hoover, who didn’t find work until it was too late, the prospects don’t look much better. Folks in his situation are ensuring brisk business at the Legal Aid Society, a nonprofit that provides attorneys for impoverished clients.

“We’re seeing two or three times as many people attending our foreclosure clinics as we did before the recession,” says Stewart Pope, the agency’s advocacy director. “We’ve also seen an increase in landlord-tenant (disputes). Other attorneys I’ve spoken with have started taking bankruptcy cases because of the increased demand — they can actually make some money doing it.”

Foreclosures, bankruptcies and evictions have all become common middle-class problems. “(Before the recession), we saw clients from low-income neighborhoods coming for help,” Pope says. “Now, we’re seeing clients from all over.”

When Hoover went to Legal Aid, his attorney helped him file a response to Bank of America’s foreclosure notice. He knew he might still lose the place, but not without a fight.

Surprisingly, the bank never responded to his legal challenge, and he remains in his house even as his lender refuses to accept payments. Hoover’s attorney told him he’s never seen a situation like this before.

“Personally, I think (the bank) knows they messed up,” Hoover says, “and I got put on the bottom of the pile.”

So, ever since last November, he’s been living in limbo. Hoover is depositing $700 a month into savings, so that if the bank agrees to take his money, he’ll be able to catch up. The problem remains, however, that he needs some answers instead of endless uncertainty.

LEO contacted Bank of America for comment, and they sent a one-sentence statement in reply: “We have asked a home retention specialist to reach out to Mr. Hoover to understand what has transpired and see what options are available to him.”

A Bank of America rep finally got in touch with Hoover shortly after LEO’s phone call. He hasn’t reached a definite agreement with them yet, but feels encouraged to be on speaking terms with his lender again.

It’s easy to vilify big banks for their heartless tactics. Bank of America reported a $3.1 billion profit in the second quarter, while James Hoover struggled to keep his one-man business afloat.

Yet there are two sides to every recession story. Banks are businesses, so they can’t afford to let borrowers default. No one forced Hoover to sign up for an adjustable-rate mortgage. He read the paperwork; he bought into the extravagant promises; he signed on the dotted line.

It’s hard to identify a clear-cut villain in Hoover’s story. Perhaps his loan broker should be held accountable for overselling a risky product. Perhaps Bank of America was wrong to take his money for six months, only to proceed with foreclosure. Perhaps Hoover should have remembered the proverb “Let the buyer beware” and rejected the mortgage rate that was supposed to save him money.

Yet assigning blame won’t help Hoover make payments or the bank recover its investment, and unpleasant compromises must be made to minimize the damage to people’s lives while keeping the economy afloat.

Some lenders are earnestly trying to cut deals with delinquent mortgage-holders, because they don’t want to foreclose on unsellable properties. They’d prefer to have payments flowing in, even if they’re a bit smaller than anticipated.

Other institutions, however, are determined to play hardball. “Some lenders seem like they will accept payments for three-six months, but then at the end of the (trial period) — even though the person has made the payments — they’ll proceed with the foreclosure,” Pope says, explaining that many of his clients at Legal Aid have gone through such an experience. “The person will think they’re getting a payment plan, and all of the sudden … their house is going up for sale.”

That’s one reason thousands of Louisvillians like Hoover find themselves in dire financial situations they never anticipated: searching for work, living on a fraction of their former incomes, and struggling to hang onto cars and houses and apartments that used to be well within their price range.

The “new normal” has put the squeeze on people across the economic spectrum. Making do with less has become commonplace. Just ask Mike and Mitzi Pitman.

Mike Pitman was a union plumber for 20 years. But just before Christmas 2008, his employer handed him a dubious present — a pink slip. He went from earning $1,200 a week to collecting $400 unemployment checks.

Pitman has been struggling ever since. “In 2009, I worked (a total of) 30 days,” he says. He called the union weekly to check in, but from April 2009 until February 2010, he didn’t land a single job.

In the meantime, Mitzi, his wife of 30 years, injured her back. “According to the doctors, she’s not going back to work,” Pitman says. “She’s 48 years old and permanently disabled. They’re saying that she could get a sitting job, but she’d have to be totally retrained.” All of Mitzi’s work experience has involved physical labor (like cleaning and warehousing). Finding an employer that will give her a desk job during an economic downturn is unlikely.

It was Mitzi’s injury that transformed the couple’s financial outlook from worrisome to desperate. With both Pitmans out of work, they burned through their savings at an alarming rate. Mike searched outside the plumbing realm for jobs, but found only temporary and minimum wage positions.

“I didn’t sit there on my can (while I was out of work),” he says. “I picked up scrap metal and cashed it in, I hauled brush and broke up tree limbs from storms. But I can’t take a job for $7 an hour. That won’t buy groceries or pay the gas bill or anything.”

Earlier this year, the plumbers’ union finally called Pitman back, and he has been working on and off for several months. But his current job is slated to end in two months, and he doubts there will be more work waiting.

Mike and Mitzi Pitman continue to struggle, living on as little as one-quarter of their pre-recession income. Their home has gone into foreclosure, and they’re uncertain if they’ll get to keep it. Meanwhile, Mike has discovered he can draw retirement benefits next year, at age 55 — but only if he keeps working as a plumber until then.

“If I can get some kind of retirement package, I’ll go out there and get a job (in another field),” he says. “But if I quit right now, I lose everything.”

Situations like the Pitman’s have become increasingly common. Some people who always supported themselves are applying for food stamps. Others are turning to Louisville’s community ministries and nonprofits for free groceries or help with overdue utility bills.

Ron Loughry, executive director of Fern Creek Highview United Ministries, interacts with those folks daily. “There’s been a 50 percent increase in the number of people we’re seeing over last year,” he says. “We’re distributing 14,000-15,000 pounds of food per month, and we’re serving about 1,000 people.”

Loughry admits some of his clients are stuck in near-constant poverty and aren’t doing much to extricate themselves. But he emphasizes that most people who seek help have a genuine need.

“Sometimes people are quick to judge,” Loughry says. “They say, ‘That person’s driving a nicer car than I do.’ Well, they bought that car when they were working. Now they’re unemployed — are they supposed to sell it to get groceries?” A little help from Loughry’s organization might help them make the payment for one more month.

“We’re seeing more people who have been laid off and their unemployment has run out,” Loughry says. “They never thought they’d be in this situation; they weren’t living beyond their means. But that income’s gone. Something outside of their control has happened, and they’re in trouble.”

Jobless individuals might be paying LG&E one month and Louisville Water Co. the next, trying to avoid disconnection. People who have never stood in a charity line — hard-working assemblers from Ford; union construction workers; white-collar employees of all sorts — have flooded Louisville’s nonprofits.

In fact, without the aid of local charities, some beleaguered Louisville residents would end up homeless. Case in point: Shively Area Ministries has proven to be a lifeline for former Metro government employee Sherry Franklin.

Since being laid off from her clerk’s position last summer, juggling bill payments and collecting free groceries have become Franklin’s “new normal.” She’s gone from $525 per week in salary to $360 in unemployment benefits (that is, when the check isn’t held up by government bureaucracy).

Franklin’s biggest problem is paying for her medications. She suffers from chronic back pain, bipolar disorder and diabetes. Her estranged husband provides her with insurance, but that only covers part of the costs: “Co-pays for my medicine are just horrible,” she says. She might be eligible for disability, but loathes the thought. “I’d rather work. I’m bored to death, and I’m ready to get out of here.”

Like many unemployed people, Franklin has been forced to depend on assistance from her family. When the repo man recently came for her car, she had no way to stop him — and without wheels, she would have no way to make her frequent doctor’s appointments. One of her grown children ultimately cosigned on a reworked loan so she could claim her vehicle.

“I guess they got tired of me calling (for rides),” Franklin says.

Although relentlessly applying for jobs, she is discouraged. “I know I’m not going to find one making what I did for the city. But I go online and look up different positions. I’ve applied a lot of places. I’ve redone my résumé.”

Making matters worse, Franklin faces two major hurdles in her job search: She can only work sitting down because of her back problems, meaning most retail positions are out of the question, and she has a lingering fear of expressways, ever since the 2004 car accident that caused her lower-back misery. She refuses to drive on interstates, and using solely city streets, there’s a limit to how far she can realistically commute.

“I applied at Dr. Bizer’s VisionWorld,” she says, “and they called me to come to work. But it was way out Westport Road — that’s too far for me. I live in the South End.”

Some might fault Franklin for living on unemployment for more than a year. Why can’t she overcome her fear of expressways and take any job she can get? Why not work retail, even if it’s hard on her back?

But Franklin bristles at the suggestion that she might not be trying hard enough. If employed people want to criticize her, Franklin says, she’ll be happy to trade places. “I listen to people talk about how bored they are (at work), and I tell them they need to shut up. They should be grateful for what they have.

“This has been the longest, hardest struggle I’ve ever had,” she says. “I’m not one of those welfare thieves. I would be happy to work, instead of waiting on an unemployment check like government cheese. I pay my taxes, and I paid on (unemployment insurance) when I was working. Don’t nobody want to be on this shit for long.”

For now, Franklin prays something will open up a little closer to home. If she hasn’t found work by November, when the unemployment benefits run out, she doesn’t know what she’ll do. She wonders aloud whether she might land in a homeless shelter.

So far, Sherry Franklin is managing to hold onto her apartment. Homelessness is a distant threat.

That’s not the case for Carmen Gartner.

In 2000, Gartner began working as a file clerk at Jewish Hospital. After two years, she was promoted to database administrator, earning more than $50,000 a year before she was 30 years old, not bad for a single mother with an associate’s degree.

But after five years in her new position, Gartner learned her IT job was being outsourced. She had a difficult choice: She could apply to do the same work with the outsourcing firm, but wouldn’t be guaranteed a job, or she could take a $20,000 pay cut to stay at Jewish and return to her old job as a file clerk.

With kids to raise, Gartner decided to put her money on the sure thing. She tightened her family’s budget and went back to filing.

Unfortunately, her “sure thing” was short-lived. When the next round of job cuts was announced in fall 2007, Gartner got the ax. Her boss told her she might eventually get called back to work, but three years later, she’s still waiting.

“I was in shock for a really long time,” Gartner says. “I applied for unemployment, which lasted six months.”

But her job search efforts were futile.

“Nothing panned out,” she says. “We went from living in this nice house to a (much smaller) two-bedroom place. I was able to keep my car for six or eight months, but then that got repossessed.” Her landlord let Gartner and her six children move into a bigger dwelling, where they’d have more space — until the bank foreclosed on it.

Finally, Gartner and her children began staying with friends and family. She tapped into her retirement account to feed herself and the kids. “I was really trying to keep my family off welfare,” she says.

Yet by early 2010, the retirement funds were exhausted. Gartner was without a home, a job or money. She was out of options.

“I called Volunteers of America, and I was actually hoping they wouldn’t have a place (in their shelter),” she says, crying as she recounts that low point in her life. Gartner had never been what she calls a “welfare mother.” Having spent years proudly and successfully supporting her family, Gartner was ashamed to be living in a homeless shelter. “When you think about homeless people, you think about the bum on the street with the trench coat and scraggly hair.”

Driven by desperation, Gartner managed to get past the shame, moving her entire family to the shelter. “It was the only stability I could think of,” she says, sounding as though she is pleading for understanding. “I had to think of my babies. My kids are my world.”

There are no easy, long-term solutions to Gartner’s predicament. Her job simply isn’t coming back, and neither are millions of others in fields ranging from construction to customer service. The ultra-low unemployment rate of 2007 — 4.4 percent — is a distant memory.

Gartner recently began taking classes to earn a Certified Nursing Assistant certificate, deciding to train in an entirely new field in an effort to help her re-enter workforce. It’s a path many out-of-work Louisvillians are taking, flooding community colleges with the hope of finding a job. In the meantime, charities like Volunteers of America are fulfilling the needs of those who have not yet managed to dig themselves out of the rut caused by recession.

And although Gartner has faced a great deal of challenges due to the economic crisis, she is lucky to have found long-term living arrangements for her family given 40 percent of homeless individuals are part of a family with children. That said, the Volunteers of America Transitional Housing Program is only equipped to serve 40 families per year. With Louisville’s jobless rate hovering around 10 percent, it’s not nearly enough to meet the demand.

It’s a grim statistic that underscores the importance of helping those affected by the recession before their problems spiral into homelessness — helping them pay utility bills, stock the cupboards, and keep that eviction or foreclosure notice from arriving.

According to Stewart Pope of Legal Aid, financial planning is a vital first step for any family in trouble.

“Start working with your creditors right away,” he advises. “It’s much easier to work out something in advance than when you’re thousands of dollars behind.”

But he also gives an important warning: “Pay attention to secured debt first. The credit card people are going to call and call, because they know if they don’t get paid, there’s not much they can do. People tend to pay the (collectors) who make the most noise.”

That’s why — no matter who calls incessantly — Pope says car and house payments should be priorities. Miss a few credit card payments, and the company may harass you. Miss a few rent payments, and you could end up without a home, just like Carmen Gartner.

Determined to move out of the shelter and support her family once again, Gartner tries to remain positive.

“I’ve grown a lot closer to my kids,” she says. “When I had a job, sometimes I would work 60-hour weeks. Now I have time to get to know them better.”