Rural foreclosure rate may be as much as urban

The frequency of foreclosures in rural areas may be closer to the level seen in urban areas, especially when mobile and prefab homes are taken into account, reports Evelyn Nieves of The Associated Press. (Late last year, we mentioned a report that said rural lending practices might insulate smaller communities, and in February, we cited a report that predicted more foreclosures in rural Iowa.)

"Mobile and prefab homes make up at least 15 percent 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 Housing Assistance Council," Nieves writes. "When the owners default, it leads to repossession rather than foreclosure, and these defaults are not included in the foreclosure data."

Nieves focuses her report on rural Merced County in California, which has been hit hard:

Driving around depressed developments ringed by almond orchards, John Pedrozo, a Merced County supervisor who represents Planada, could not contain his distress.

"I've lived here 50 years and I've never seen anything like it," said Pedrozo, who grew up on a dairy farm. "Businesses are closing, people going bankrupt. And the empty houses are vandalized." A common problem, he said, is that on weekends, vacant, foreclosed houses are crashed for wild parties and trashed.

In small towns, even one or two foreclosed properties can have a big effect on the community, Pedrozo said. "It's not just that property values go down," he said. "But also that people lose their neighbors and their community." (Read more)