Perris, CA in the news

[rmsmith 1]

Hey, Perris, CA made the paper today!

http://tinyurl.com/2vbr4d

A town right on the default line!

Foreclosure notices are painfully common in Perris, where easy money built a suburb.
By David Streitfeld
Times Staff Writer

March 16, 2007

Oscar De Leon was washing his car a few weeks ago when he noticed a piece of paper stuck to the front door of the house across the street. He strolled over to check it out.

"You are in default," the paper proclaimed. "Unless you take action to protect your property, it may be sold at a public sale."

De Leon, who lives in the Riverside County town of Perris, knew this official notice of foreclosure was bad news. Not just for the home's owners, who tried to sell for months, failed and quit town for parts unknown.

It was bad for De Leon too, a 28-year-old employee of a food service distribution company. He and his wife, Sandra, pay their mortgage every month, happy they can raise their three children far from the urban problems of Los Angeles.

Two years ago, this neighborhood didn't exist. De Leon, who bought in June 2005 for $324,000, got the first home on the street, the first house he had bought anywhere.

"I like it here," he says, "They could offer me a house for free in L.A. I'd take it and sell it, but I'd never live there."

It's the age-old dream of the suburbs. Now, it's at risk in communities throughout the country, thanks to lenders too eager to lend and borrowers who thought houses would dispense money forever, like magical ATMs.

In California, Perris is at the epicenter of mortgage problems. From November to January, 177 homes in Perris' central ZIP Code have received notices of default, the first step toward foreclosure.

That's about 1 of 53 houses, the highest level of any ZIP Code in California, according to a Times analysis of statistics provided by DataQuick Information Systems. The neighboring towns of Lake Elsinore and Moreno Valley came in second and third.

A few doors away from De Leon's house sits a second empty property foreclosed on by its lender. "A divorce," he explains. "The husband couldn't afford it alone. He was paying $2,500 a month. Ridiculous."

A few blocks away is a third foreclosure, this one only a frame skeleton abandoned by its builder. A young woman who answers the bell at a fourth house says through the screen door that she doesn't know anything about the place's being in default. She pays rent to someone who pays the owner, she says; please go away.

Risky loans

The trouble stems partly from a proliferation in recent years of so-called sub-prime loans to borrowers with shaky credit or erratic income, borrowers who are more likely to miss payments and not catch up. Such defaults are typically in communities like this one — a long way from the high-priced and built-out coast. The Inland Empire is full of new and almost-new homes and commuters who often travel great distances to jobs to pay for them.

The default rate in Perris compares with 1 in 105 homes in Palmdale, 1 in 150 in Van Nuys, 1 in 189 in Northridge and 1 in 283 in Altadena. Many coastal communities have so few default notices they don't even place in the top 400 ZIP Codes.

There are other signs of distress. De Leon's development, called the Villages of Avalon, has an unusual number of homes for sale, considering it's so new that the Google Earth satellite scan still shows much of it as dirt.

At the top of his street, next to the charred shell of a house that mysteriously burned a few months ago, is a house for sale. The house immediately next door is on the market too. A few doors away from De Leon's home in the other direction is a third house looking for a buyer. Some owners are trying to rent their places out, advertising with little signs on the front lawn.

De Leon fears what will become of his neighborhood if it becomes dominated by renters.

"You get people who don't care about the neighborhood and don't take pride in it," he says.

He's hardly alone in that view.

"If people start to rent, that's when you start to worry," says De Leon's next-door neighbor, Jose Serrano.

Serrano, 34, grew up in Long Beach. He saw friends die in Long Beach. He still commutes there every day to work on the docks for Toyota Motor Corp. It's an hour in the morning and two hours coming home, a grind he suffers for the sake of his three young kids.

Like De Leon, this is Serrano's first house. Like his friend, he is bracing for the future, hoping that even if things get worse now, they'll get better later.

"A lot of people got in over their heads. They are going to lose their homes," Serrano says. "The market goes up and down. You have to look at it for the long term, ride it out."

Good advice, but Perris could be in for a rough trip. Named after a railroad engineer, it began in the late 19th century as a stop on the Barstow-San Diego line. For most of the next century, it was a farming town — sugar beets, potatoes, alfalfa.

Hustle and gloom

Cheap land drew the developers, and cheap houses drew buyers. The market may have slid over the last year, but the hustle remains. The billboards on the way into town extol 11 active developments. Signs on the city streets point visitors to them. So do curbside salespeople holding oversized arrows, and balloons floating over sales offices.

But many intersections tell a more downbeat story. Telephone poles are festooned with signs that say, "Behind in payments? We can help" or "Foreclosure loan specialist" or "We'll buy your house in nine days or less."

Lily Quinlan is thoroughly exhausted and a lot smarter about real estate than she used to be. Quinlan, 30, just sold her three-bedroom house on a cul-de-sac in one of Perris' older developments.

It went on the market last June, for $395,000. Her first agent reduced it to $383,000, then $375,000, then $369,900. Her second agent dropped it all the way to $333,000, where it finally found a buyer.

While the price was descending, Quinlan's ability to pay the mortgage was becoming intermittent. Her husband left the Navy to start a new job in Florida at a lower salary. World Savings, their mortgage company, started sending default notices.

The couple bought in 2002, as the boom was beginning. At its peak, the house was worth more than three times what they paid for it. But they refinanced and took cash out to do upgrades on the house, and then they refinanced again because — well, Quinlan isn't sure why.

She's learned this about lenders and loan agents: "They make it look like they are trying to do all this for you, but the reality is that it was mainly for them. They got their chunks out of you, and then they put you out to the wolves."

Even when she was in default over the last few months, the offers continued. "They kept calling and calling, saying, 'You won't have any payments for two months.' And I'm like, 'Dude, the last thing I need is another refinance.' "

She's sorry to be leaving for Florida. If their house had not increased in value, if it was still worth exactly what they had paid for it four years ago, they could afford to stay. But the boom ruined everything, and so Quinlan was selling what she could at a yard sale before packing for the movers.

Some of the clothing and dishware spread on the driveway belonged to her neighbors, Ron and Dawn Blacic. Their house went on the market this week for $369,900.

"The price you got is going to drag down our price," Ron tells Quinlan.

"Thanks, Lily," cries Dawn as she pretends to punch her.

The Blacics, who are moving to Yucca Valley, owe $372,000. They refinanced once, taking out cash to pay for their wedding and other bills. "We figured the value would go up and up, and it didn't," says Ron.

After the agent's cut, the couple will need to bring a check to the table for $22,000 or so to avoid destroying their credit. They're counting on a loan from Dawn's parents.

"We want to purchase another home," explains Ron, who works for a sanitation supply company. "We don't want to wait 10 years until our record is clean again."

If the house sells for their asking price, the Blacics will come out about even on their first real estate venture: First the house dispensed money, then they had to give it back. For them, it will be as if the boom never happened.

On the other hand, if the house doesn't sell immediately, they'll have to rethink their plan. They can borrow only so much.

The onset of the spring home-buying season is a matter of acute concern to the Blacics, as it will be to many others.

On Tuesday, the house in foreclosure across from Oscar De Leon's home will go up for auction.

Public records show the mortgage was held by New Century Financial Corp., the Irvine-based sub-prime lender that collapsed this week amid rising defaults.

De Leon doesn't remember much about the former owners. They had two young kids. The father might have been in construction. They put the house up for sale last fall, barely a year after moving in.

In November, a moving van showed up and the family quietly left. The house stayed on the market; the agent watered the lawn to keep it presentable. Then one day he quit too. The lawn is starting to brown.

[gonzalesna 1]

Not exactly the best of news, is it? Then again, if it was good news, it probably wouldn't have made the news, now would it?

Some people refrain from beating a dead horse. Personally, I find a myriad of entertainment value when beating it until it becomes a horse-smoothie.

[NWFlyer 2]

Articles like this have just reminded me how happy I am that 1) I didn't get in over my head when I bought my house in the first place and 2) I didn't let the "increase in value" go to my head when I did my refi ... I'm taking no cash out.

"There is only one basic human right, the right to do as you damn well please. And with it comes the only basic human duty, the duty to take the consequences." -P.J. O'Rourke

[Remster 30]

Time to become a DZ slum lord!

Remster

[normiss 897]

someone care to post the story for those of us who don't want to REGISTER FOR ANOTHER GADDAMN USELESS WEBSITE????
Sorry...just ant-cookie here!

[rmsmith 1]

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someone care to post the story for those of us who don't want to REGISTER FOR ANOTHER GADDAMN USELESS WEBSITE????
Sorry...just ant-cookie here!

OK, I reposted it with the text this time. Sorry!

[rmsmith 1]

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Not exactly the best of news, is it? Then again, if it was good news, it probably wouldn't have made the news, now would it?

When homes were appreciating at 20% per year it was BIG news.

[airtwardo 7]

I've been keeping an eye on the market out there...L.A. area, in hope of moving that way sometime this year.

I hope it KEEPS going down!


The last few months mark the first time in years that more people have moved OUT of Ca. than IN!

~ If you choke a Smurf, what color does it turn? ~

[rmsmith 1]

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I've been keeping an eye on the market out there...L.A. area, in hope of moving that way sometime this year.

I had a solid job offer in Temecula, which is just south of Perris, and it paid $85k/yr. However, I'm supporting a family, and with the regional housing costs it just wouldn't "pencil-out", and I sure as hell didn't want to be that close to the DZ...and be penniless too.

[itllclear 1]

Note that Lake Elsinore came in 2nd.

Good thing for skydivers. When the city councils realize that the feal estate boom is over for now, they're going to want to keep businesses in town that generate sales taxes.

In both these cities, the skydiving centers are pretty big contributors to the tax revenue and will continue to get city support.

This also means that there will be a slowdown in plans to build houses near either of these airports, which puts off the day that the noise complaints will cause us a problem.

"Harry, why did you land all the way out there? Nobody else landed out there."

"Your statement answered your question."

[ltdiver 3]

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the feal estate boom

Well stated!

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slowdown in plans to build houses near either of these airports, which puts off the day that the noise complaints will cause us a problem.

Nah. I think the reason people are "purposely" faulting is that they don't like the new jet we have and are running away! What power we have!! j/k

ltdiver

Don't tell me the sky's the limit when there are footprints on the moon

[diablopilot 2]

That boom was bound to pop at the end. What did banks expect when they were lending "intrest only loan payments".

----------------------------------------------
You're not as good as you think you are. Seriously.

[airtwardo 7]

Note that Lake Elsinore came in 2nd.

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I saw that too...

I had to smile where it said they are suburbs of L.A.

I understand that a LOT of people do commute from those outlying areas but DAMN that's gotta be along way every day!

We actually looked at a beautiful 'architect special' on 5 acres at the top of the hill from Elsinore, a few years ago.

It was priced right, and we gave it a lotta thought, but I'd be commuting to San Diego, and my wife to L.A.

Time on the road isn't 'quality time' when ya get to our age!

~ If you choke a Smurf, what color does it turn? ~

• Quote

[itllclear 1]

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It was priced right, and we gave it a lotta thought, but I'd be commuting to San Diego, and my wife to L.A.

Time on the road isn't 'quality time' when ya get to our age!

But you could buy a couple of C-150's and she could fly it to LAX from Elsinore, while you commute to MYF or SEE. Only a few days per year that you actually couldn't do that. Only problem would be flow control in to LAX, but HHR & SMO are a short cab ride away.

"Harry, why did you land all the way out there? Nobody else landed out there."

"Your statement answered your question."

[Deuce 1]

JP, a whole bunch of those loans were 100%r's that allowed "negative amortization" payments. Basically, taking even more money out on the loan. That is, there was a payment option to not even pay the interest, adding to the amount owed. If the owner took that option, and was late on payments, the interest rate went up!

I sold real estate first, and got into loans to protect my friends from these horrible, life-wrecking loans.

If it sounds too good to be true, it is.

Other JP