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A sign stands in front of a home for sale in San Francisco, June 2007. The foreclosure rate in the city's suburbs has tripled in the last year.
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In Depth: Explaining the Mortgage Mess
As the nationwide real-estate boom of recent years goes bust, economists and regulators are questioning the role that mortgage lenders played in helping to create an overheated housing environment. Read an overview of what happened.
California is becoming one of the new, big casualties in the ongoing home mortgage foreclosure crisis. The state now accounts for six of the nation's top 10 metro areas with the most foreclosures per household.
The problem there is a familiar one: subprime, adjustable-rate mortgages that homeowners can no longer afford.
That crunch can be felt in the suburbs of San Francisco, where the foreclosure rate has tripled in the last year. Recently, a hotel ballroom in Concord, Calif., was the site of a standing-room only auction of more than 80 foreclosed homes.
The properties are sold "as is." The winner of a bid must put down 5 percent of the property price and be able to close within a month.
The auctions are becoming increasingly common, says Dave Webb of Hudson and Marshall, a firm that specializes in foreclosure auctions around the country.
"Everybody wins in this deal," he says, adding, "The banks know that they are going to move a lot of property and close within 30 days, and the buyers know that when they go home, they got themselves a good price on a property."
A Problem in All Ends of the Market
The auction in Concord, Webb says, is one of five held recently in the area. Just a year ago, the region was part of California's real-estate boom; now it has gone bust, and homeowners are bailing out at a record pace.
"They're everywhere — all over," says realtor Sue Ramsdell, who works in the nearby city of Antioch. "It's sad, because we don't like to see our neighbors having problems."
In recent years, Ramsdell saw explosive growth in the number of homeowners fleeing San Francisco and Oakland for upscale suburban living — with the help of subprime loans. Not long ago, she says, if 100 homes were on the market in her area, it was considered a large number.
Nowadays, in the tri-city area of Antioch-Brentwood Oakley, "we have over 2,000 listings for sale on the market — which is huge," she says. One in three homes for sale will be sold at a loss or is in foreclosure, Ramsdell says.
"You want high end, low end, medium — it doesn't matter," she says, adding, "You're going to see them everywhere. You'll spot them — just look for the brown grass."
Homeowners Trying to Keep Their Heads Above Water
What's less apparent is the green water — the kind that occurs in backyard swimming pools left untended.
"We're seeing a lot of pools abandoned... because of the foreclosure rate," says Debra Mass of the county mosquito control program. "I think a lot of people are worried about the finances, of course, and probably not worried about what's going on in their backyard."
Realtors say people unable to pay their mortgages often withdraw, feeling isolated and humiliated. Retired machinist Robert Harrell of Richmond, Calif., had to overcome those feelings when he nearly defaulted on an adjustable-rate mortgage. He got help from a housing counselor.
"My word of advice to everybody is: Don't be ashamed. Come out and do what's necessary to keep your housing," Harrell says.
Realtors and housing counselors say homeowners facing default should contact their lender early so they can try to work out a new payment schedule.