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Rural Communities Hit by Foreclosures
Breitbart/AP ^ | 4/3/08 | EVELYN NIEVES

Posted on 04/03/2008 2:28:42 PM PDT by kiriath_jearim

MERCED, Calif. (AP) - The end came in a blink outside the Merced County courthouse.

Only six people showed up for the foreclosure auction, Janice Pimentel and her son Nick included. By chance, the Pimentels' dairy farm was the first property offered.

The auctioneer, a young man in aviator sunglasses and blue jeans, read their address and paused for bids. When none came, the Joe T and Janice R Pimentel Dairy Farm, 21 years in the life of the family, officially became the property of its main creditor, a local lender.

"Well," Janice Pimentel said, "that's that."

The Pimentels' farm was once a fixture in California's Central Valley, which is best known as the world's fruit basket and, these days, may have with the highest concentration of foreclosures in the country. Many of the properties lost to foreclosure around here are in rural towns that are changing, perhaps forever, because of the nation's housing meltdown.

While news about the mortgage crisis often focuses on cities and booming suburbs, rural America has been hit hard, too. Research by the Housing Assistance Council, a Washington-based nonprofit organization that helps build housing in rural pockets of the country, has found that foreclosures are at least as prevalent in small towns as in cities.

"It's happening all over," said Moises Loza, HAC executive director.

The foreclosure problems in small-town America may be even more widespread than in cities. 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 HAC. When the owners default, it leads to repossession rather than foreclosure, and these defaults are not included in the foreclosure data, Loza said.

Rural residents often have fewer banking institutions to choose from than city dwellers, and can fall victim to high interest rates and predatory lending practices. But precise mortgage statistics for rural areas are hard to come by, because while large banks in metropolitan areas are required under federal law to report lending activity, many small, rural financial institutions are not.

Merced is one of three adjoining counties near the top of the latest national foreclosure rankings issued by RealtyTrac, a real estate data firm. Merced County was No. 4. San Joaquin County, which includes the town of Stockton, was No. 2, and Stanislaus County, which includes Modesto, was No. 3. (No. 1 was Cape Coral-Fort Myers, Fla.)

In these three California counties in February, foreclosure proceedings were started on more than 3,100 properties and nearly 1,300 houses were repossessed, according to RealtyTrac. Foreclosure filings were made against about one in every 100 properties in the three counties, compared with one in 557 properties nationwide.

Merced County, population 246,000, underwent a housing boom over the past few years that saw developments spring up on what used to be farmland, said Rep. Dennis Cardoza, a Democrat from Merced. Now, in towns like Atwater, housing values have dropped as much as 50 percent, the congressman said.

"The impact on these small towns and cities is huge," Cardoza said. "In my district, I believe we are already in a recession."

In Merced County towns like Planada, no one needs statistics to tell them that the foreclosure crisis has hit hard here.

The landscape is filled with for-sale and foreclosure signs, vacant houses with weedy front lawns, and graffiti on boarded-up windows. The skeletons of houses where construction halted when the market went bust stand across a development where houses that sold for $400,000 just three years ago are now going begging at half the price.

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."

Janice and Joe Pimentel, who are 52 and 58, respectively, decided to follow their families' dairy farm tradition when they bought their 25- acre property in Atwater two decades ago. Their sons, now 21 and 30, decided not to go into the business, and the Pimentels thought they would retire one day and convert the farm into an almond orchard.

How they lost their farm, once a thriving business with some 200 cows, is not a simple sub-prime mortgage story. It has to do with a drop in the price of milk, a spike in the cost of feed, some bad luck and, yes, a five-year refinance loan with an interest rate of 12 percent.

On top of their financial problems, in 2007, Joe's father developed cancer. With such a heavy personal and financial burden, the Pimentels could not give the farm the attention it required.

"At 58, I'm starting over," said Joe, who has started working for the county Department of Agriculture, setting pest traps.

The Pimentels' farm is a ghostly sight, with its empty stalls, the flapping roof on the main barn, and weeds where flowers used to grow. Soon, the Pimentels will take their pets—two horses and three dogs—to the modest house Joe's father left them, about a mile away.

The Pimentels doubt their property will ever be a family dairy farm again. Maybe a developer will grab it, Janice said, "for when housing grows again in Merced, someday."

TOPICS: Business/Economy; Constitution/Conservatism; Culture/Society; Government
KEYWORDS: banking; credit; foreclosures; housing; rural
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1 posted on 04/03/2008 2:28:43 PM PDT by kiriath_jearim
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To: kiriath_jearim

Bummer - and it won’t end there. Sad to see America fall down like this.

2 posted on 04/03/2008 2:32:31 PM PDT by Chili Girl
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To: Chili Girl

hmm. those who play by the rules arent affected.

3 posted on 04/03/2008 2:34:13 PM PDT by BurbankKarl
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To: BurbankKarl
those who play by the rules arent affected.


4 posted on 04/03/2008 2:35:27 PM PDT by meowmeow (In Loving Memory of Our Dear Viking Kitty (1987-2006))
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To: kiriath_jearim

I’m not sure how much of this to believe. Farm commodities prices are at record highs. Agricultural land in most states (certainly in the mid-west) is selling at record high levels. USDA reports farm incomes have never been higher. Friends tell me there is a one-year waiting list for new John Deer combines. Seems there are a lot of farmers doing pretty well.

5 posted on 04/03/2008 2:37:40 PM PDT by PGR88
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To: kiriath_jearim; All

“The empty houses are vandalized.”

The person or bank who acquires the property at auction would be wise to let the former owner stay there at an affordable rate until the new owner is ready to exercise their plans or has an active live-in buyer. There could be laws passed that would allow quick eviction in such a case.

6 posted on 04/03/2008 2:38:08 PM PDT by gleeaikin
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To: kiriath_jearim

What a deceptive story. The “mortgage crisis” they cite had almost nothing to do with this particular forclosure. They do mention it later in the article, but then why use this case as an example of the problems caused by the “nation’s housing meltdown” in the first place?

7 posted on 04/03/2008 2:43:48 PM PDT by ZGuy
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To: PGR88; All

Large farms tend to do better. Their owners are often either corporate, or well educated on the business side of farming. Small operations like the 25 acre dairy farm in the above story have a much harder time. Also large operations often produce several different things which helps protect when one is not doing so well. Only a small percentage of the money spent on farm products goes into the hands of the farmer. A lot of it goes into the hands of middlemen, supermarkets, processors, and transport.

8 posted on 04/03/2008 2:45:09 PM PDT by gleeaikin
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To: PGR88

Milk prices in CA surely havent fallen. They have banned imports from lower cost states.

9 posted on 04/03/2008 2:48:01 PM PDT by BurbankKarl
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To: kiriath_jearim

B.S. People lose their family farms in a few different ways, but NOT due to the “housing meltdown.”

First, they’re dumb@sses that overextended themselves and then this happens:

a. No one in the family (usually the kids) wants to farm anymore or,

b. They didn’t know enough about their market to grow and change with consumer demands and just kept doing the same-old, same-old, losing money every season for years on end.

c. Their farming in a state like CA that couldn’t care less about them.

d. There’s no mega-farm in the area to buy them up and absorb them.

I know of dozens of young couples that would LOVE to have a small farm to run. People really are returning to the land, and that’s what I’ll cash in on within the next decade. I don’t care if I sell to Hippies, as long as they have cash in hand, Baby! :)

This author was just looking for a sad-sack story to tell about a poor cow farmer and tie it to the housing melt-down. Boo-Freakin’-Hoo.

I haven’t heard of anyone losing their farm here in Wisconsin due to “the housing market.” Most farmers already have their HOUSE and LAND paid for. They may still owe on machinery, some of which starts at $500K for a used piece of equipment. But the house is sell-able, as is the land if you’re in that dire of straits.

But, that’s life in the Midwest. We’re pretty well insulated from the horrors of life on either coast, Thank God! However, the number of Liberals surrounding us makes us VERY nervous for the future of Ag in Wisconsin.

Full disclosure: I married into a farming family. We’re small ‘taters compared to most, but on our road (from one town to the next, about 15 miles) we have two dairy farms, a self-supporting prison farm, five stables, and close to a dozen farms that produce corn and soybean. My in-laws plant about 200 acres of seed or feed corn each season. The 700 acres around my “farmette” (I only own two, but I look very “land wealthy”) are either soybean or feed corn or sweet corn; it rotates.

10 posted on 04/03/2008 2:49:06 PM PDT by Diana in Wisconsin (Save The Earth. It's The Only Planet With Chocolate.)
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To: Chili Girl
It would be of interest to learn why, considering the federal supports and high price of milk and dairy products, they were unable to turn a profit??

I recall farms in trouble after the Carter years. I lived in an area where some went bankrupt or foreclosed. One of the reasons was that the US dept of Agri taught farmers how to “hedge the inflation.” - get loans on the spiraling upward inflation whereby they bought more and fancy equipment than they needed. When Reagan came in and inflation was checked, they lost their shirt (and a lot more)

The other problem according to the business community, was that quite a few farmers in trouble suffered from poor farm management skills. Two like farms, one well managed and doing well. Down the road the farmer went under - poor management, including wasteful spending - down the tubes.

I wonder if some of these farms in trouble today are following suit.

11 posted on 04/03/2008 2:49:24 PM PDT by elpadre
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To: BurbankKarl; meowmeow

While we like to think it will only be the truly foolish or risky who’ll suffer, the fact is everybody will be aversely effected by the credit crisis.

In order:
1) Anybody who’s bought a home in the last 5 years will be faced with negative equity. (Walking away will be considered a good business decision).
2) Property Tax Rates will need to go up, because housing values will go down.
3) Fire and Police costs and Crime will increase because abandoned houses draw unsavory elements to neighborhoods (especially out in the Exurbs and Suburbs).
4) Big Businesses will find it harder to raise money, slowing down any expansion.
5) Banks will be even more risk adverse, making it harder for small businesses to expand.

12 posted on 04/03/2008 2:52:00 PM PDT by Philly Nomad
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To: ZGuy


Sounds to me that these guys just didn’t make it in the long run, like . . . say . . . a whole bunch of other family/small businesses every year.

13 posted on 04/03/2008 2:52:13 PM PDT by fightinJAG (Rush was right when he used to say: "You NEVER win by losing.")
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To: kiriath_jearim

It’s not just in the rural areas, its everywhere. Unfortunately, some of this stuff is just another scam and more people gaming the system.

14 posted on 04/03/2008 2:52:45 PM PDT by khnyny (Hillary is the national equivalent of Tracy Flick)
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To: All
All right all you posters arguing with me six months ago about houses going for 10c on the dollar.

Your argument
No way would everyone let homes fall to that level. Everyone would start buying and buying because we would never see such an opportunity again.

Sound like you can start getting that cash warmed up. We are at 50c on the dollar in some area and headed lower. That Govt. bailout of 1200.00 aint going to work with 3.50 gas prices. In most cases it will be like throwing gasoline on the fire.

15 posted on 04/03/2008 2:54:32 PM PDT by Bailee
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To: kiriath_jearim
and, yes, a five-year refinance loan with an interest rate of 12 percent.

There it is. They refinanced, i.e., they borrowed money against the inflated value of their farm and couldn't pay it back. Now the congressional mealy mouths want to make all of these spendthrift borrowers whole with the taxpayer guaranteeing the new financing. Isn't it great to be an American!

16 posted on 04/03/2008 2:55:15 PM PDT by trane250
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To: kiriath_jearim

California is dying because of liberal control!
Just look at thier track record in other states.

17 posted on 04/03/2008 2:58:10 PM PDT by ronnie raygun (I'd rather be hunting with dick than driving with Ted)
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To: ZGuy

Droughts, tornadoes and other extreme weather can destroy farm income, injure animals, and end a season with no money made. Farming has vulnerabilites that can cost a year or two’s profit, and if you have people to pay, then you pay whether you make money or not. That is why many borrow, and then if they don’t do well next year...and on and on...
Equipment breaks down, and replacement is astronomical dollars, and repairs aren’t cheap. There is nothing deceptive about how fragile farming can be.
It isn’t nine to five, you pay your own insurance, and your own hospital retirement unless you save it...

18 posted on 04/03/2008 3:08:41 PM PDT by Kackikat
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To: PGR88

Believe it. Dairy farming is a hugely capital-intensive proposition, especially in California.

19 posted on 04/03/2008 4:50:05 PM PDT by NVDave
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To: Diana in Wisconsin

You need to go to California and observe their dairy industry.

If you do, you’ll go back to Wisconsin and thank God that you’re farming there.

And to your point (c): No, the pols and people of California don’t care about farmers any more. They regard farmers as a problem, not an asset.

They probably were not bright in how they took on too much debt, but that’s not unusual in western farms. I’ve seen potato farms, HUGE operations, in Idaho go belly-up after only one bad season. Same deal for onions. In California, you see this same pattern in dairies that overextend themselves. There’s a huge pressure on dairies in CA to “get big or get out.” They’re often operating with very high debt loads, and they’re constantly trying to add fresh cows to increase their cash flow. Bankers in CA used to lend on the cash flow. Now, with so many local commercial banks in CA refusing to lend for any reason (because their balance sheets are a complete wreck), I can see how these farmers were indirect victims of the housing situation in that their lender used to lend to them, but refuses to do so now.

Seriously, if you ever get away from the farm for a bit, go to California and see how they dairy there. You’ll be shocked, amazed and frightened. All at the same time.

20 posted on 04/03/2008 4:56:29 PM PDT by NVDave
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