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I had read that the Stockton and Sacramento areas were some of the hardest hit places by the recession and housing market collapse. There was an article a little while back that people in those areas with the adjustable rate mortgages were doing something called buy and bail. Before their ARM rate unlocked and their payments often doubled or tripled they would file papers stating that they were going to be renting the house out and charging at least 80% of the mortgage. This would show on the paperwork as additional income. Then they would be free to go buy another home. Because there are so many empty homes values have often dropped in half so they could get 450K house for 200-225K. They buy the new house with a fixed rate mortgage then just walk away from the other one because once the house payment skyrockets they will never find renters for that amount.
I guess they passed a law putting an end to doing this, but it is still wild that houses have lost half their value in just a few years.
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