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One of the places hardest hit by foreclosures is California. And over the last three months, a record number of residents have lost their homes. NPR's Karen Grigsby Bates reports that some of these losses lead to tragedy.

KAREN GRIGSBY BATES: Scott Harder lives on a quiet street in North Pasadena in a neighborhood that is aptly named Bungalow Heaven. Residents visit on each other's porches and gossip in rockers. They check up on each other to make sure everything's all right. Before dawn one recent morning, Harder woke up and smelled smoke coming from the home of his 53-year-old neighbor, Wanda Dunn.

Mr. SCOTT HARDER: I went out front and looked at the front of her house and could see plumes of smoke wafting across the street, across the streetlight.

BATES: Harder called 911. When emergency personnel arrived, they found Dunn's body in her rear bedroom. She'd apparently set her house afire and shot herself in the head as she faced eviction from the only home she'd ever known. Harder understood Dunn's anguish.

Mr. HARDER: She'd grown up in the house from what I understand, and had lived there her whole life. So it was really all she had. I talked with one of the other neighbors up the street that sort of through the grapevine he had heard that she really didn't know what she would do if she'd lost her house.

BATES: Dunn had inherited her bungalow from her family and lost it after she stopped working because of a disability and some bad financial decisions. The new owner let Dunn rent the yellow stucco bungalow, but he lost the house when the subprime meltdown put all of California's real estate in a tailspin. Beverly Hills psychologist Kenneth Siegel says Californians are especially attached to their residential real estate.

Dr. KENNETH SIEGEL (Psychologist, Beverly Hills): California represented for many of us the pinnacle of the effects of hard work, of our ability to pull ourselves up from our bootstraps. And having a home was the physical manifestation of all that we have done and how hard we have worked.

BATES: But Californians' dream of a modest detached home, Siegel says, often morphed into something far grander when the economic boom of the '90s made home loans - many of them subprime - easier to come by.

Dr. SIEGEL: And so here, as much as anyplace else, people did overbuy. Houses were bigger than their egos. And they in fact invested more of themselves and more of their savings in them.

BATES: Wanda Dunn's suicide is the latest in a series of events that seem to be linked to financial problems. Shortly before Dunn's death, financier Karthik Rajaram killed his wife, mother-in-law, three sons, and himself inside the home they rented in an upscale L.A. suburb. At a press conference, LAPD Deputy Chief Michael Moore explained the presumed motive.

Captain MICHAEL MOORE (Deputy Chief, LAPD): We believe that he has become despondent recently over financial dealings and the financial situation of his household, and that this murder, suicide event is a direct result of that.

Dr. KITA CURRY (President & CEO, Didi Hirsch Community Mental Health Center): There is more loss now that could trigger suicide among people that are already vulnerable.

BATES: Dr. Kita Curry heads the Didi Hirsch Community Mental Health Center in Los Angeles and says she has a gauge of how tough things are getting.

Dr. CURRY: Our 24-hour suicide prevention crisis line has seen an increase in calls, and it does seem to be partially fueled by anxiety and a sense of hopelessness and powerlessness. What can I do? I don't know what to do about this situation.

BATES: And middle-class status that once seemed a given, isn't anymore. Scott Harder says there are more and more signs saying "Band Owned" popping up on his town's lawns, something he never thought he'd see.

Mr. HARDER: As this is happening throughout Pasadena, I think it's sort of shaking people to their core.

BATES: Anxiety can be contagious, but psychologist Ken Siegel says taking the long view is a good antidote.

Dr. SIEGEL: The people who tend to believe that this is how it's going to be for a long period of time, they're the ones who are feeding off the misery of the current situation. We are at a point in time, but it is only a point in time, and it's not likely to continue forever.

BATES: It only feels that way to people who are struggling to stay afloat until the economy recovers. Karen Grigsby Bates, NPR News.

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