ARTICLE (April 25 2010): It used to be famous as the breadbasket of America. Now California's massive Central Valley, long renowned for its fertile fields, is notorious as the epicentre of the housing crisis,a place where ordinary folks have seen their American dreams drown into billions of dollars in debt.
"It turns your life upside down, it affects everything you do and everything you believe in," says Janine Wells, whose home in the farming town of Stockton is being sold by the bank for half the 540,000 dollars she paid in 2005. At the time, Janine was a hospital clerk who had just had her first child. Her husband Rick was a well-paid construction worker.
"We thought we were kings of the world," she recalled with a bitter laugh on a recent rainy afternoon, surrounded in her suburban living room by packing boxes. In just two days she was to move from the fancy four-bedroom two-bathroom home to a tiny two-bedroom apartment.
"We took out loans to buy cars and go on vacations," she sighed. "The day we bought the house, we took out a loan on it because our realtor said it was already worth 50,000 dollars more than we paid for it. Now we learnt the hard way, what goes up must come down." Cities in the Central Valley, including the troubled California state capital of Sacramento, occupy four of the top ten spots nationally for foreclosure rates.
In Modesto, 6.6 per cent of all houses were in foreclosure in January - sold off by the mortgage holder for a cut price after the owner fell too far behind on payments. Many more foreclosures are waiting in the pipeline. According to figures released in early March, almost 20 per cent of all the home loans in the city were delinquent for 90 days or more.
The situation is similar in neighbouring Stockton, where 6 per cent of homes were in foreclosure and 18 per cent of homeowners were 90 days or more late. According to the Central Valley Business Times eight out of ten homes in the town are underwater - meaning they are worth less than their outstanding mortgage. Many families just decide to walk away in such cases.
Stockton ranked second on the Forbes List of America's Most Miserable Cities. While it was briefly a symbol of California's boom times in the roaring 1990s, it now ranks behind only the perennial rust belt dinosaur Cleveland. The survey judged the nation's 200 largest cities on aspects like taxes, pollution, unemployment, violent crime, weather and schools.
"The only good news is that we're not No 1 in the nation anymore," said Stockton Mayor Ann Johnston. "We were a community that experienced rapid growth in the 2000s. When everything crashed in the recession, those people lost their jobs and lost their homes."
In Sacramento, where the state government is the city's largest employer, the situation is somewhat better, probably because - despite its notorious budget crises - Governor Arnold Schwarzenegger's government has yet to resort to large scale firings.
Still, 12 per cent of mortgages there are delinquent, and almost 4 per cent of Sacramento homes are in foreclosure. The housing crisis cuts across race and class lines. Though the initial impact was strongest on poor families who took advantage of lax credit rules to take out mortgages they could never afford - so- called subprime loans - the current victims can be found all over the socio-economic map.
"It's hitting the middle class, the working class and the upper class. Whoever was overextended is finding themselves in deep trouble," says mortgage broker Jim Chubb. "I'm seeing tons of foreclosures on million-dollar homes." The fallout has even hit Hollywood celebrities. Actor Nicholas Cage has been forced to surrender much of his extensive real estate portfolio to the bank, while actor Stephen Baldwin also saw his house foreclosed on last year.
Even Nadya Suleman, the world famous octo-mom is facing the prospect of life on the streets after failing to meet payments on her 450,000 dollar house. "The lesson is that no one's immune," says Chubb. "A job loss, a medical emergency or just bad spending habits. The credit market is so tight these days that even relatively minor problems can cause people to lose their homes."
Source: http://www.brecorder.com/index.php?id=1049304&currPageNo=1&query=&search=&term=&supDate=
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