Foreclosure crisis tears through valley's towns, scarring the landscape

By EVELYN NIEVES
THE ASSOCIATED PRESS

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MERCED -- The end came in a blink outside the county courthouse.

Only six people showed up for the foreclosure auction, Janice Pimentel and her son Nick included. By chance, the Pimentels' dairy farm was the first property offered.

The auctioneer, a young man in aviator sunglasses and blue jeans, read their address and paused for bids. When none came, the Joe T and Janice R Pimentel Dairy Farm, 21 years in the life of the family, officially became the property

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of its main creditor, a local lender.

"Well," Janice Pimentel said, "that's that."

The Pimentels' farm once was a fixture in the Central Valley, where dairy products top an extensive list of foods raised, grown and processed in the region. These days, though, the area also is home to one of the highest concentrations of foreclosures in the country. Many of the properties lost to foreclosure around here are in rural towns that are changing, perhaps forever, because of the nation's housing meltdown.

While news about the mortgage crisis often focuses on cities and booming suburbs, rural America has been hit hard, too. Research by the Housing Assistance Council, a Washington-based nonprofit that helps build housing in rural pockets of the country, has found that foreclosures are at least as prevalent in small towns as in cities.

"It's happening all over," said Moises Loza, HAC executive director.

The foreclosure problems in small-town America may be even more widespread than in cities. Mobile and prefab homes make up at least 15 percent of the nation's rural housing, and three-quarters of them were financed with installment or personal property loans rather than mortgages, according to the HAC. When the owners default, it leads to repossession rather than foreclosure, and these defaults are not included in the foreclosure data, Loza said.

Fewer banking choices

Rural residents often have fewer banking institutions to choose from than city dwellers and can fall victim to high interest rates and predatory lending. But precise mortgage statistics for rural areas are hard to come by, because while large banks in metropolitan areas are required under federal law to report lending activity, many small, rural financial institutions are not.

Merced is one of three adjoining counties near the top of the latest national foreclosure rankings issued by RealtyTrac, a real estate data firm. Merced County was No. 4. San Joaquin County was No. 2 and Stanislaus County was No. 3. (No. 1 was Cape Coral-Fort Myers, Fla.)

In these three California counties in February, foreclosure proceedings

were started on more than

3,100 properties and nearly 1,300 houses were repossessed, according to RealtyTrac. Foreclosure filings were

made against about one in every 100 properties in the three counties, compared with one in 557 properties nationwide.

Merced County, population 246,000, underwent a housing boom over the past few years that saw developments spring up on what used to be farmland, said Rep. Dennis Cardoza, D-Merced. Now, in towns such as Atwater, housing values have dropped as much as 50 percent, the congressman said.

"The impact on these small towns and cities is huge," Cardoza said. "In my district,

I believe we are already in a recession."

In the Merced County town of Planada, residents don't need statistics to tell them the foreclosure crisis has hit hard here.

The landscape is filled with for-sale and foreclosure signs, vacant houses with weedy

front lawns, and graffiti on boarded-up windows. The skeletons of houses where construction halted when the market went bust stand across a development where houses that sold for $400,000 just three years ago are now going begging at half the price.