Government-backed mortgages soar in Golden State

The percentage of federally insured mortgages in California jumped 18-fold between 2004 and 2009, according to new statistics from a non-profit venture called PolicyMap.

In a dozen counties, over half of mortgages were government-backed. This includes Imperial County, where more than three-quarters of home loans are backed by the feds. The statistics primarily track loans backed by the Federal Housing Authority (FHA).

Overall, a mere 1.3 percent of home loans in the state were backed by the government in 2004. This rose to 23.6 percent in 2009, the most recent year for which statistics are available.

“It’s happened all across the country, but it’s happened in particular in California,” said Maggie McCullough, director of PolicyMap. “It’s a significant trend.”

The increases in government-backed loans were most dramatic in California’s least-affluent counties. McCullough said the numbers reflect the implosion of the subprime mortgage market, which left lower income borrowers with little option besides government-backed loans.

PolicyMap is a non-profit organization that compiles data on trends in demographics, crime, unemployment, health, home sales and other figures. It supports itself by selling this data to clients, mainly government agencies, with the idea of letting government policy makers arrive at better decisions while saving time and money they might otherwise spend gathering data. It was created by The Reinvestment Fund, nonprofit community development financial institution active in several Mid-Atlantic states.

As part of the Golden State mortgage data, PolicyMap created an interactive map showing the spread of government-backed loans. Over the five years covered by this study, a mass of dark purple moves over the middle sections of the state.

The dozen counties with the highest rates of government backed mortgages also lead the state in unemployment. While the state’s overall unemployment rate for 2009 was 11.4 percent, these 12 counties had an average rate was 16.4 percent.

Again, Imperial County led the way, with a whopping 28.2 percent unemployment rate. Long known as one of the poorest places in the country, it is a vast area on the Mexico and Arizona borders. The small population consists largely of agricultural workers, who work in large irrigation-fed farms in the desert.

Oddly, over the course of the financial crisis, unemployment in Imperial barely ticked up at all. Of course, the 29.1 unemployment rate for 2009 was still the nation’s highest by a wide margin. The next highest rate in all 50 states was Yuma County in Arizona, with a 24.8 percent unemployment rate.

Even during the boom years in 2004, the percentage of government-backed loans in Imperial was nearly six times higher than the state average, at seven percent. By this measure, Imperial actually lost less ground that much of the rest of the state, since their current rate is only about a little over three times the current state average. In contrast to most of urban California, the cost of living measures in Imperial County are below the national average. The median home cost less than half the California average.

The next three counties with the highest rates of government-backed loans were Yuba (70 percent), Merced (69 percent) and Kern (60 percent).