Back in August 2007, when many of us were still taking out adjustable-rate loans to pay for the water slide on our new champagne-filled jacuzzis, reports of impending doom were coming Stockton, Calif., a city that had suddenly jumped to the head of the foreclosure pack, with 1-in-27 homes being taken back by the bank. Now, five years on, it looks like Stockton could be due for another ignominious honor, as it stands to become the largest U.S. city to declare bankruptcy.
CBS Sacramento reports that the city is attempting to reach last-minute deals with its creditors or face having to file for bankruptcy as early as June 27.
The city says that the housing crash has hit the property tax coffers hard. If Stockton does declare bankruptcy, it’s leadership swears that police and fire service will not be cut.
However, there will be increases in parking tickets, in addition to pay cuts for municipal employees.
In 2006, the foreclosure rate in Stockton was at 1-in-157 houses, which was high enough for RealtyTrac to list it as the 15th highest rate in the country.
But in only one year, that rate skyrocketed to the 1-in-27 number, putting Stockton just ahead of Detroit’s rate of 1-in-29.
In 2008, the city was the focus of a BBC documentary, one of the first to uncover just how royally the subprime mortgage market had been screwed up — and the far-reaching implications of the housing crash.
Later that year, it took the #2 spot in Forbes’ list of the Most Miserable Cities in the U.S.