Foreclosures Hit Rural Communities In California

April 10th, 2008

Foreclosures are now hitting even rural communities in Places like Merced, California, where only six people turned out for a foreclosure auction recently. You could say that the end was swift and brutal, especially for the Pimentels, whose dairy farm was the first offering of the day.

Despite the auctioneer taking his time reading their details and offering it to any buyers present, no one came forward to stake a claim for the property. Ultimately, the Joe T and Janice R Pimentel Dairy Farm officially became the sole property of the lender, who was its chief creditor.

Janice Pimentel said, “Well, that’s that.”

This farm was once a regular fixture here in California’s Central Valley, which has recently been ridden with foreclosures throughout the countryside. Pity that it was once known as the ‘world’s fruit basket’. A lot of the properties here have become victim to foreclosure, and the entire face of rural towns are changing due the country’s real estate meltdown that has been happening for the past few months.

When news about foreclosure spreads, you rarely get to hear about the current situation in rural America. The general focus is always on upcoming counties and major cities. Well, foreclosure has hit rural America, and hit it hard!

According to research by a Washington-based non-profit organization called the Housing Assistance Council, which helps build rural housing all across the country, foreclosures are as prevalent in small towns as they are in the major cities. It’s the same story all over again, says HAC executive director, Moises Loza.

In fact, research also showed that foreclosure rates were higher in some parts of rural America as well. As prefab and mobile housing units make up around 15% of all rural housing in the country, it was seen by the HAC that almost 75% of these were bought with personal housing loans or on instalments as opposed to mortgages. When owners would default on their instalments, their homes were immediately repossessed by the lender or loan provider. As they were repossessed, the data would not show up in foreclosure data, as they were not formally foreclosed.

Rural property owners also have less choice when it comes to picking a lender, and were often seen to fall prey to predatory lending or pay high interest rates. It becomes difficult to track rural housing data, as they are not governed by the same laws, and are not required to file mortgage and lending activity like banks in metropolitan areas have to do under federal law.