Foreclosure crisis reaches into rural communities, too
MERCED, Calif. -- The end came in a blink outside the Merced 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 of its main creditor, a local lender.
"Well," Janice Pimentel said, "that's that."
The Pimentels' farm was once a fixture in California's Central Valley, which is best known as the world's fruit basket and, these days, may have with the highest concentration 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 non-profit organization 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% of the nation's rural housing, and three-quarters of them were financed with installment or personal property loans rather than mortgage loans, 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.
Rural residents often have fewer banking institutions to choose from than city dwellers, and can fall victim to high interest rates and predatory lending practices. 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.
Related Stories
ABC News Live