Stockton...Foreclosure Capital of the USA!!!! WOW...Something National about our Town
 

Welcome to Stockton: foreclosure capital USA by Zachary Slobig
Thu Sep 13, 9:20 AM ET



A town in central California has become ground zero in the wave of foreclosures plaguing the US housing market in the wake of the sub-prime lending crisis.

With a population of nearly 300,000, Stockton has acquired the unfortunate distinction of having the highest foreclosure rate of any US city, with one in 27 households left counting the cost of the credit crunch, according to Realtytrac, an online marketplace for foreclosure sales.

Stockton's Weston Ranch neighborhood, a 15-year-old subdivision of modest tract homes, has the worst foreclosure rate in the area, according to ACORN, a national advocacy group for low and moderate-income families.

"It's not the CEO of Intel who lives in Weston Ranch, but the guy who details his car," Geri Taylor, broker at Weston Ranch Realty for twelve years told AFP. "They just were not prepared for this."

Adjustable rate mortgages offered to sub-prime borrowers, hopeful homeowners with shaky credit, lured families into houses with inflated prices, said Taylor.

"Many financed one hundred percent of the price, and some even financed the closing costs," she said. "They got in at a teaser rate thinking this neighborhood would be commutable and affordable, and then the rates went up."

Sign-after-sign beckon to potential buyers on the Weston Ranch streets. "American Dream Realty -- Reduced Price!" reads one placard spiked into a brown lawn.

"People are just walking away," said Taylor. "We've seen houses with food still on the table from when the sheriffs have come knocking."

Lupe Dominguez washed his car in his driveway two doors down from a shabby bungalow with a front window covered in a yellow and black poster announcing a public auction with a fifty thousand dollar starting bid.

"That house has been empty for nine months or so and the sign has been there for two," he said.

A friend who lived down the street lost his house to foreclosure and then rented a house that he had to vacate because it too was foreclosed, he said.

Gloria Johnson, another broker in the Weston Ranch area, has increased her volume of "short sales," as a method to help homeowners avoid foreclosure and wrecked credit.

In this arrangement, the borrower provides evidence of financial hardship and the lender agrees to assume a loss and sell the house below the amount owed on the mortgage.

"It is almost like begging, but I am doing everything I can to help these people maintain their dignity," she said.

Taylor too has modified her business practices, shifting her focus from home sales to rental property management, advising clients to wait out the market. She manages fifty rental homes now, properties that she hopes to sell for clients when buyer interest returns.

"There are just are no buyers out there right now," said Taylor.

Houses are sitting on the market three times as long as in 2006 and the average sale price has dropped by 10 percent, she said.

"We've got 350 homes for sale in this neighborhood right now and at this rate, that is five years of inventory," said Taylor.

"Nobody has a crystal ball, but I don't expect to see an improvement until 2010."

Potential homeowners must be better educated about the market, said Lance Hill, a housing counselor with Visionary Homebuilders, a Stockton non-profit whose goal is to extend homeownership to low-income families.

"To be mortgage ready, they need to know what adjustable rates, refinancing, and pre-payment penalties mean, and we must make sure that they have a certain education level," he said.

Stockton has had 8,000 foreclosures so far in 2007.

"Home ownership is a great thing," said Taylor, "But only if you can afford it."

http://news.yahoo.com/s/afp/20070913...vlc02kTLIvZa7g

Wow!

Greed is the basis. Also so many yuppies looked at the home as a "cash cow" instead of investment and mortagaged them 3 times

THEN put Equity Lines of credit to buy the new cars, boats, RV, Etc....

(not to discredit you RR, but it is a trend I see for I insure all the additional toys and the homes with all the changes to Mortgages)

My brother bought his house for really cheap in Stockton about 8 years ago, He almost sold the house for two times the price a couple of years ago. He never did sell it. I don't know if he should be sad he did not sell or happy he still has it at a fixed rate!

Is the problem due to adjustable rate mortgages? The only way my mortgage payment changes is if the escrow changes for some reason (insurance rate changes, etc.)

I would say for the most part, adjustable rate mortgages is the culprit. That along with unscrupulous real estate agents (not ALL of them are bad), and mortgage brokers. During the height of the market about 2 years ago, they were doing loans without full docs. I know this for a fact. Some loan companies were not requiring proper documentation of income (i.e. W-2 forms, pay stubs, etc). People were buying homes with 0 or 1 percent interest only payments for a period of time expecting to re-finanace in a couple of years. They (as well as the real estate brokers & loan officers) knew full well that they would not be able to qualify for that loan - but proper documentation was not required. Well........ the market took a down term and guess what.... some of these same people owe 100K or 200K more than the house can sell for now. So they are walking away from them. This is not hearsay - but is fact. I personally know of two different families who fall into this catagory. So sad that they got all caught up in the frenzy a couple of years ago.

And what kills me............ they just keep building more homes... I don't know when it will stop. The market just continues to fall.

I know that I was approved for about 3 times what I was comfortable spending... if people are basing the cost of the house they purchase on what their mortgage broker says, then we have a whole other problem. lol.

When researching loans, I considered an ARM way too risky, the only way it seemed even potentially worthwhile would be if you were going to turn the house around in less than 2-3 years. I plan on staying in this house for at least 10 if not forever...

Wasn't Stockton the murder capitol (per capita) of the country a few years ago?




ARPH :doggyrun

I would have thought that the larger coastal cities such as LA, San Fran, or
Orange County would have had a larger problem in the sub prime area than
a smaller inland city like Stockton.

There's a huge problem like this in our area as well...it's terrible!

Randy

This is not a problem Isolated to Calif. anymore. it's nationwide.
I have talked to people in Dallas, Atlanta, and i have a guest here from MO. they are facing the same thing.

These things usually start here before they spread to the rest of the US.
look at the imigration problem. we've been dealing with that forever. It's only received national attention since it became a nationwide problem.

The rest of the nation doesn't care what happens here in the state UNTIL it hits home - then it's usually too late. they view CA. as some fringe place that's sort of on it's own. well!!! obviously not! what we suffer the rest of you will too in due time!

Stockton is a bedroom community to the Bay area. many of its residence work and communte to the bay area

there are indeed a lot of Hispanic gangs in that area.

I Love this state even with all it's problems- still the greatest!

Things are getting bad everywhere, Brother. One of clients the company I work for services home equity lines of credit. You would not believe the number of people from California who are calling in to report they can't make their payments, can't get their houses sold for enough to cover their loans, and are in danger of losing their homes. The market has really turned, and the worst isn't over yet.

This turn in the market was bound to happen. Home prices were skyrocketing without a comparable rise in income. At some point the market has to correct itself. Don't be surprised if you see a rise in claims for home fires.

I spoke with a fella whose first mortgage payment jumped by over $2000 a month. He has one of those ARM loans. He made the mistake of trusting a family member to pay all his bills for him, and she made some of the payments so late he was reported to the credit bureaus. Because of the negative reporting, he now can not refinance his debt and is going to lose his house.

These are the same ones who resist increasing the value of the insurance for fear of increasing premium!

It adjusted in the 80's also.

It is a cycle.