The American Dream is turning into a nightmare for too many Californians.
The proof is in the skyrocketing number of home foreclosures taking place throughout the state which is among the nation's leaders in terms of the number of properties in default on their mortgages. Hardly a claim to fame.
And while neighboring San Joaquin, Stanislaus and Merced counties collectively represent the worst region in the nation in terms of foreclosure rates, the statistics for Tuolumne and Calaveras counties are also tragic.
The number of property owners in the two counties in the process of losing homes to the banks and other lenders in the first half of this year has nearly tripled compared to the same period last year.
In Tuolumne County, 142 loan default notices were filed with the county recorder's office between Jan. 1 and last week, compared to 74 for the same period in 2006.
In Calaveras County, the numbers paint an even darker picture. More than 220 default notices were filed in the first six months of this year. Compare than to the just 69 filed between Jan. 1 and June 19, 2006.
Reasons for the crisis are many: Speculative buyers who snatched up properties two and three years ago in hopes of turning a profit a year or two later are now facing falling prices and a buyer's market; payments on risky adjustable rate home loans are inching up; defaults on sub-prime loans given to buyers who otherwise couldn't have qualified for a loan are skyrocketing; and those who bought via interest-only loans when the real estate market was booming are now being forced to refinance or start paying on the principal, either of which can mean hundreds more per month in house payments.
Robert Featherstone, who heads Mother Lode Bank's loan division summed up the situation well when The Union Democrat contacted him last week: "For a lot of people, their hope was to get into a home and then deal with the loan later. Now, they're paying the price."
But not all the blame should go to anxious buyers making unwise financing decisions, according to Sen. Michael J. Machado, who represents the 5th Senate District which includes nearby Stockton and Tracy among other areas of San Joaquin County, plus Yolo and Solano counties and parts of Sacramento County.
He says unscrupulous mortgage lenders and out-of-line real estate appraisals have also contributed to the foreclosure epidemic. He's right. It's clearly been too easy for some people without enough income or even decent credit to still end up with staggering mortgages they couldn't possibly cover for long. And while there are many reputable appraisers in our region and elsewhere, there are some who no doubt boosted the estimated value of certain real estate to assure that a loan would be approved.
So Machado who chairs the Senate Banking, Finance and Insurance Committee has authored two measures now considered.
Senate Bill 385 would apply federal mortgage guidance to state-regulated mortgage lenders and brokers, and ensure that all borrowers are adequately underwritten and informed about the terms of the loans they are offered.
Senate Bill 223 would outlaw the "dangerous yet commonplace" practice of pressuring an appraiser to "hit a target home value, a practice that has led to over-inflated home prices and left many homeowners owing more on their mortgages than their homes are worth," according to a statement from Machado's office.
Both measures have already handily won Senate approval.
Noted Machado: "The American Dream' of owning your own home must be kept alive, We must do all we can to prevent families from losing their investment or worse, ending up homeless."
Given the current real estate climate and foreclosures all around us, Machado was right to step up with two measures that deserve support.
Union Democrat editorial positions are formed through regular meetings of the newspaper's editorial board Publisher Geoff White, Managing Editor Patty Fuller and senior reporter-columnist Chris Bateman.