news story / By Japhet Weeks

House Poor

Is the North Coast in sync with the nation’s subprime mortgage crisis?

(April 10, 2008)  The Redwood Curtain wasn’t thick enough to insulate Raul Merezko from the country’s subprime mortgage crisis.

According to public documents obtained from the Humboldt County Recorder’s Office, Merezko — chosen at random from a list of over 80 individuals who have lost their homes for nonpayment sinceJan. 1, 2007 — bought his home in a nice neighborhood in Eureka for around $180,000 in October 2004. Shortly thereafter, he took out two loans with Southern California-based Long Beach Mortgage Company.

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Merezko took out two adjustable-rate rider loans, one for $136,000 and another for $34,000, which meant he didn’t have to put any money down on the house.

According to realtor Dean Kessler, co-owner of Eureka’s RMK Realty Services, it was a golden time for homebuyers with little or no credit: “Basically you just had to fog a mirror and you could get a loan,” he said from his office last week.

A little over a year passed before Merezko decided to refinance, again with Long Beach, and this time for $238,500. On Oct. 17, 2007, three years almost to the day after he purchased his home, Merezko received a notice of default, the first step in the foreclosure process. He was behind in mortgage payments to the tune of $11,429.74. Finally, in February of this year, his house sold for far below market value in what Kessler described as an “extreme short sale.” A group of local investors picked up the property for $113,000.

Merezko was perhaps unaware when he took out a loan with Long Beach Mortgage Company that the United States government had sued them in federal court in central California for discriminatory loan practices in the early 1990s, citing the company’s “practice of illegal discrimination by basing the price of loans, at least in part, on an applicant’s race, national origin, sex and/or age.” The government claimed that Long Beach had violated the Fair Housing Act by intentionally targeting their lending activities toward the subprime market — a term that wasn’t on most people’s radar then.

The story of how Raul Merezko lost his house is not new news. Subprime mortgage woes are all too familiar in today’s slouching economy. Still, some contend that Humboldt County has weathered the national housing slump better than other parts of California. Humboldt State University economics professor Erick Eschker disagrees.

“Anybody who says that there’s a Redwood Curtain, that we’re special, that we’re immune — they’re lying,” he said last week from his office. Eschker runs the Humboldt Economic Index, a website that compiles economic data for the county.

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