Two weeks ago, a retired telephone company worker named Ethelda Lopez watched as her dream retirement home was auctioned off on the lawn outside a county courthouse in downtown Merced.
“When I heard my address, it was so disheartening,” she said. “It’s amazing how it all works.” For six months, she had made hundreds of calls to her mortgage company, federal officials, local political leaders — begging them all for lower payments or more time. No one paid heed.
Wracked with depression and anxiety, she was too ashamed to tell her friends that she was losing her sprawling stucco-and-stone ranch home in the Atwater countryside. “I couldn’t stop crying myself to sleep,” said Lopez, 51.
“When I started to try to tell my story, it would just come out as crying. I was too embarrassed, too depressed to go out anymore. It’s very trying. I would never wish this on anyone.” Ethelda Lopez’s story is one of two dozen gathered by the Merced Sun-Star in a four-week investigation of the psychological and other health problems wreaked by the local foreclosure crisis. Over and over, residents caught up in that crisis — homeowners, renters, even Realtors — report that they are suffering from stress or depression and are sometimes too ashamed to reach out for help.
This is the hidden human fallout of foreclosure. It is going largely untreated, even as Merced County braces for more state cuts in mental health services. Thousands of new homes like Ethelda Lopez’s sprouted from farmland countywide in the past five years. Merced was gearing up for a bright new future as a college hub. Optimistic developers dreamt of throngs of buyers paying $300,000 and more so that they could raise their children in neat stucco homes along tranquil cul-de-sacs.
But the dream crumbled, and so did the peace-of-mind that home ownership is supposed to guarantee.
Now, many homeowners are caught up in a nightmare, trying to figure out how to pay mortgages on dwellings worth a fraction of what they owe — or whether they should give up the dream and move on.
Merced County ranked first in California for foreclosure filings in 2009, and sixth among counties nationwide, the national firm RealtyTrac reported two weeks ago. One in seven homes in this county of 250,000 people has been foreclosed on since September 2006, according to Foreclosure Radar, a California reporting service.
The drama plays out on the courthouse lawn like clockwork, Monday through Friday, at 12:30 and 3 p.m., when Realtors and investors bid for foreclosed homes like Ethelda Lopez’s. The crisis shows no signs of abating. In November, one in five Merced County homeowners was 90 days or more delinquent in payments, according to another service, First American CoreLogic. What the statistics don’t show is the human toll. Debt-wracked residents are suffering from anxiety, sleeplessness and depression in a universe gone sideways.
Clinically, their suffering may not qualify as PTSD, the psychological state felt by soldiers, cops, first-responders and others after a traumatic experience. But far too many Mercedians are in sad shape.
Some are reaching out for help.
At Merced-area health care clinics, workers report an increase in residents experiencing mental distress, and in the seriousness of their symptoms. Many new patients are homeowners or renters fearful of losing their homes and all the stability that a home provides, they say.
“We’re seeing more people coming for crisis services, people who have never been in the system before,” said Theresa Schoettler, who manages Merced County’s in-patient psychiatric unit and walk-in clinic. “A lot of people are self-medicating. There’s a lot more alcohol abuse. A lot more despair. Some people say they can’t live anymore.”
Many more feel so much shame about their financial and emotional distress that they shut themselves off, too fearful to ask for help, mental health workers report. Entire families suffer as stress radiates from debt-plagued parents to their frightened children, they say.
“The trickle-down of this is big. Kids have stomach aches. They don’t want to go to school. Then you find out they’ve just moved in with someone else, their parents are about to lose their homes, they’re having trouble paying the mortgage,” said Elizabeth Morrison, clinical director of behavioral health at Golden Valley Health Centers, a network of 25 nonprofit community clinics and eight dental sites serving the Merced area.
School leaders are concerned, too. In the Merced Union High School District, which covers students in all of Merced, Atwater and Livingston, 613 students, or 7 percent, reported this year that they were “doubled-up” with another family in a single-family home. At Atwater High School, the number was 12 percent.
Some residents fear they soon will have no home at all.
“I don’t want to end up at that tent camp on Santa Fe,” said one middle-aged woman, who lost her job last year. She asked that her name not be used because she’s looking for employment. “It’s terrifying for a single person to live in a car,” she said.
Another woman, also facing foreclosure, swallows Lexapro and a stew of other anti-depression and anti-anxiety drugs just to make it through the day.
The same economic downturn tied to the real estate crisis is savaging the California state budget, provoking massive cuts in mental health care throughout the state.
Merced County government has seen its number of mental health clinicians cut to 24 from 33 at a time when it needs more counselors, not fewer. Each outpatient nurse's case load has increased by 125 cases due to the latest staff cuts last September.
In all, county workers' caseload of ongoing mental health patients has grown from 2,365 in all of the last fiscal year to 2,229 for only the first six months of this one.
Yet a key piece of the department's budget was cut in half last year in Sacramento, meaning that Merced County lost $1.1 million earmarked for inpatient and crisis care.
The county's mental health director, Manuel Jimenez, reports that he, too, grappled with stress when he was forced to lay off employees last year. Now he's preparing for possible new cuts caused by the latest state budget deficit.
Local clinics are squeezed as well. Patients referred for mental health care used to wait a week or two to see a counselor at the Family Care Clinic at Mercy Medical Center Merced. Today, they may wait a month for an appointment, a clinical psychologist there said.
No statistics are available for exactly how many county residents seeking mental health help are dealing with home foreclosures. Nor has much medical research been conducted on how the wave of foreclosures can affect public health nationwide.
However, an article published in October in the American Journal of Public Health reported on a study of Philadelphia area residents undergoing foreclosure in the summer of 2008.
The findings are grim. More than one-third of those residents met the screening standards for major depression, such as feelings of sadness and changes in appetite or sleep patterns, said the article's lead author, Dr. Craig E. Pollack, a Rand Corp. researcher and assistant professor of medicine at George Washington University in Washington, D.C. That compares to about 13 percent for people living in poverty.
"The financial stress is quite severe for individuals and their families," Pollack said in a telephone interview this week. "They're buying their homes with a great deal of hope and expectation, and when that hope and expectation turns into disappointment, that can have a very harmful effect on people's health and well-being."
Another researcher, Dr. Esther Sternberg, who has studied stress extensively, said that for a homeowner, foreclosure can provoke a massive emotional upheaval.
"Moving against your wishes, and moving because you've lost everything, is one of the biggest stressors I can imagine," said Sternberg, director of the Integrative Neural Immune Program at the National Institutes of Health and author of the book, "Healing Spaces: The Science of Place and Well-being."
She continued: "There's change. Uncertainty. Fear, because you don't know what's going to happen to you. Different parts of the brain get involved. Then you're grieving the loss of your dream.
"It would be a pretty resilient person who would not develop depression as a result of all of this."
Merced County's renters, too, are wrestling with uncertainty.
To save money, Sam Matthews, his wife Jannel and three children share a rented five-bedroom home in Merced with his brother and mother.
"Everyone in the country, in Merced at least, is living paycheck to paycheck. We banded together for survival," Sam Matthews said. He and Jannel were celebrating their fourth wedding anniversary Jan. 13 when they learned their home was being foreclosed on and sold.
"Our world came crashing to an end," said Sam Matthews, 28, who worries his mother's lung disease and diabetes will worsen because of the upcoming move.
He worries where he can find a rental home for his family. He has heard stories of local college students foreclosed on twice in two separate rental homes.
"Merced seems like ground zero on this," he said.
It wasn't supposed to be this way. Just a few years ago, Merced flashed all the trappings of a boomtown.
Construction was under way on the gleaming new UC Merced campus, designed to educate 25,000 students in the San Joaquin Valley. That meant new jobs and a new college-town cachet for Merced. Developers began touting it as a bedroom community for would-be homeowners squeezed out of the pricey Bay Area housing market.
So the houses went up, and buyers bit, shouldering huge debt and risky mortgages. But campuses grow slowly; UC Merced's enrollment is 3,414 students today. Many potential out-of-town buyers weren't ready to move into the new homes intended for them.
When the housing bubble burst, Merced County fell hard. With the accompanying recession, the area lost a litany of failed retailers: Mervyns, Linens 'n Things, Circuit City and then Gottschalks, the venerable Fresno-based department store.
The county's only locally owned bank disappeared, too. The federal government took over County Bank in early February 2009 after it was trapped in a quagmire of bad loans to developers, eroding investor confidence.
Merced County's unemployment rate soared. In December, 19.8 percent of workers wanted jobs, far outstripping the 12.4 percent rate for California and the 10 percent rate for the nation overall.
Morrison remembers when she first noticed an uptick in patients seeking mental health counseling at Golden Valley. It was the same time that she began seeing day laborers lined up along Olive Avenue, hoisting signs that touted big closing sales at Mervyns and other stores. The scene reminded her of doomsayers with their end-of-the-world placards.
One of her clients, a man with almost no cash, told her that he had awakened early in hopes of getting a day job holding a sign for Linens 'n Things: "He said that he got there at 5 a.m., and the line was already around the block."
As a therapist, Morrison is trained to ask clients in crisis to think about alternatives -- say, friends and relatives who can loan money or open up their homes. Too often these days, her clients have no alternatives at all. If they lose their homes, they can't rent new quarters without first putting down cash. That can mean a $700 deposit for a one-bedroom apartment, and another $700 for the first month's rent.
"It might as well be $70,000 or $700,000," Morrison said.
One client already had displayed anxiety and other mental health problems so severe that she was on a fixed disability income. When the house she rented went into foreclosure, she had no money to rent another home. So she moved in with her ex-husband, who had a history of physical abuse and continues to verbally abuse her.
"Now it's the only place she can go," Morrison said.
Some people who hold out hope that they will escape foreclosure find that the stress keeps building, said Robin Adam, district director for state Assemblywoman Cathleen Galgiani, D--Livingston. Adam has fielded countless calls from homeowners seeking help.
"People want to be good for their debts, and it takes them kind of a while to get to the point of saying, 'This isn't working at all, no matter what I do,'" he said. "All that time, they worry about it every single day. They talk about it. They just are so stressed about it."
That pressure can lead to irritability and growing conflict with family members. Men in particular see financial distress as failure, experts said, and they may turn to substance abuse, domestic violence or thoughts of suicide.
"The financial burden can cause other things -- maybe hidden, not talked about -- to come to the surface. Maybe a marriage isn't able to withstand the conflict that this creates," said Pastor Jay K. Pierce, who has counseled his parishioners facing foreclosure at the United Methodist Church in Merced.
Tensions can build as families move in together and adult children return home.
"There could be a rosy glow put on that, a silver lining," Morrison said. "But anecdotally, from what we hear, it's just a huge amount of stress. People are living in spaces that are much too small to accommodate them. Long-term conflicts are brought to the fore."
Sam Matthews feels so stressed out about losing his rental home that he "might be meaner to the kids, and then that affects them. The effects get spread all around."
For Merced County residents on the verge of losing their homes, knowing that their neighbors and friends are in the same straits may or may not be reassuring.
The stigma of foreclosure and bankruptcy may sting less here because so many people are struggling. But jobs remain scarce, and that, coupled with the high foreclosure rate, may make residents even more pessimistic, said Jim McDiarmid, director of behavioral sciences at the Mercy family medical residency program.
"It's depressing when you realize that you're living in a community with such high unemployment," McDiarmid said. "Your chances of getting back on your feet are so much less."
This would seem a neighborhood of hope and calm, with its newish middle-class homes, sapling-lined lawns and curving streets christened Early Light, Daybreak, Twilight and Evening Star.
The short drive called Solstice generated a real down-home feel when Michael and Kathi Murdock moved to the development called Horizon at Compass Pointe in North Merced in late November 2004.
Nearly everyone on the street owned their own home. They organized block parties with children's games and grilled tri-tip. Murdock would turn the garage of his $255,000 home into a local movie theater, projecting films onto a big screen. His cousin lived at one end of Solstice, and a close friend across the way.
All that is gone now. One recent day, his cousin's home had just sold for $115,900 at the 3 p.m. foreclosure auction on the courthouse's front lawn. Now, as darkness falls, he watches his best friend, Tim Stanley, as he loads up a U-Haul. Stanley is leaving his rented home because his landlady is being forced to sell it, fast.
The Murdocks are among the last homeowners left.
Michael gestures across the street: "Renter. Renter. Original owner. Renter. Original owner. Renter. Renter. Renter. Foreclosed."
Some homes are vacant. Others are rented out to UC Merced students who live six to a house for a few hundred dollars apiece. Landscaping goes unpruned here and there, and lawns turn yellow. A local self-storage firm recently hung advertizing fliers on the doorknobs of every house on the block.
Solstice was built for children on tricycles and teenagers on skateboards. Now it feels like a ghost street.
Michael and Kathi may leave, too. They have talked about letting their house go, walking away after their five-year-fixed rate expires on their adjustable rate mortgage.
Kathi works for a credit union, and he works at the high school district in technology and as a freshman football coach. They expected to have money saved for a higher mortgage payment, but neither of them has gotten a raise in three years, Michael said.
Kathi suffers from epilepsy, and she recently took one month's disability leave from her job as a bank teller. That may mean a missed mortgage in February.
Now the couple is prioritizing bills, paying the ones they can, putting off the others. When they paid all the bills, there was no money left for food and gas. The creditors are calling.
"They Fed-Ex stuff to you. They call you at work. They call you at home," Michael said.
"I'm trying not to stress about it," Kathi said.
But for them and hundreds -- maybe thousands -- of Mercedians, stress is all that's left.