Los Angeles Times:
Merced, once the state's hottest housing market, is headed back to being, well, Merced again.
By David Streitfeld
Where did everyone go? Real estate agent Mark R. Gregory is holding an open house to sell a nearly new three-bedroom on a corner lot, and it's as if the Earth had been emptied.
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The market shifted in two weeks," said Gregory, the agent. "All of a sudden, nothing." Two doors down from Gregory's open house, which he has been trying to unload since September, a second home is on the market. Three more doors and across the street is another. Around the corner is a fourth. A fifth home directly across the street from Gregory's just sold after the owners slashed the price.
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Mortgage broker David Alan Love bought a list of 2,000 people who are late on their mortgage payments by at least 30 days, and he is sending them all a letter. "Home values are coming down," it says. "Call me NOW!!" And they do. A widow whose house is worth $225,000 called. She owes $98,000 on it, is two months behind and has no income other than Social Security. That makes a standard refinance impossible. Love's advice was to sell the house, but she didn't want to do that. He got her a cash loan of $25,000, a direct investment from a private lender. For a while, she has money to pay the mortgage, but of course she's more in debt than ever.
"You're putting a Band-Aid on a bullet wound," Love said he told her.