Foreclosure Trouble Spreads to Those Who Bet the Farm

The home-foreclosure crisis, which began in cities and suburbs, has spread to rural America. When the mortgage mess erupted, some economists believed that rural America wouldn't be heavily affected. Farms were prospering. The housing boom largely bypassed small rural towns. And exotic, new mortgages at first were seen as an urban and suburban phenomenon. But rural homeowners, it turns out, were just as susceptible to subprime loans and easy lending as the rest of the country, often refinancing existing mortgages to take out cash or pay off debts. Foreclosure rates remain higher in cities and suburbs than in rural areas, and the change in home values from boom to bust hasn't been as severe. Since the peak, values have dropped 13% in rural areas and 23% in urban areas, according to Moody's Economy.com, while from 2000-2006, home values appreciated 45% in rural areas compared with 84% in urban areas. Still, defaults in rural counties are rising rapidly and setting off concerns that the population in these already sparsely populated towns will decline further...WSJ