Foreclosures Hurting Rural Communities

Posted on April 10th, 2008 by saman

There is much in the news about the current foreclosure crisis. While many news reports focus on cities and suburbs, little has been written about how the mortgage crisis is affecting the rural areas of America. A housing council in Washington has found that home foreclosures are just as prevalent in rural areas as they are in other areas of the country.

Prefab homes and mobile homes make up about 15% of the rural housing of the nation. About three-quarters of these homes were financed with personal property loans and installment loans instead of mortgage loans. Because of this if the owner defaults, the property will be repossessed instead of going through foreclosure. These repossession figures are included in foreclosure data.

Residents in rural areas usually have fewer banking choices than those in the city or in the suburbs. These individuals end up paying high interest rates and can become victims of lending practices that are predatory. It is difficult to find exact data on these repossessions because rural financial institutions are not required to report lending activity as larger, city financial institutions are.

Merced County and other nearby counties are heading the national foreclosure rankings according to the tool RealtyTrac. In Merced and other counties close by, foreclosure proceedings have begun on over three thousand properties and 1,300 homes were repossessed. Foreclosures have been made in just about one of every one hundred properties.

When traveling through these areas, one will find many foreclosure and for-sale signs. They will also see houses that are vacant with unkempt lawns and graffiti. Frames of houses being built stand like skeletons in an area where houses once sold for four hundred thousand dollars. Many businesses are closing and many people are filing bankruptcy. Empty houses are damaged by vandals and there are some instances were wild parties are held in abandoned homes and the homes are trashed.

In small and rural areas, just a few foreclosed properties not only cause the property values to go down but people lose their communities.

An elderly couple in Merced decided to continue in the dairy farm tradition of their families when they bought a twenty five acre property. The couple believed that they would retire and turn the farm into an orchard. Unfortunately, due the dropped price of milk, and increase in the price of feed and a five year loan with twelve percent interest all led to them losing their home. The husband also contracted cancer. The heavy financial and personal burdens made it so they could not give the farm the proper attention.

The couple’s farm is now a depressing sight with the flapping roof on the barn, empty stalls, and overgrown fields. The couple plans on moving to a small home they inherited.

Only a few people were at the auction when the couple’s farm came up for sale. No one bid on the farm and in an instant, twenty one years in the life of the family now belong to a local lender.