Her son killed himself over a house.

At least that’s what Maria Alonzo believes.

Abel Cardona Jr. and his wife, Maria Solis, bought the north Salinas home in May 2006.

“It was the home of his dreams,” Alonzo says, standing by her car in front of the house.

But the working-class family with two young children could not keep up with the $3,700 monthly mortgage payments. Alonzo and her daughter lived there, too, and she contributed $1,800 a month.

Tension between Solis and Cardona’s family resulted in Alonzo and her daughter moving out. That, plus the stress of the mortgage and other bills, led to Cardona’s suicide, the mother believes.

“He was scared not to have money to spend with the kids,” Alonzo says. “I think he was scared not to make the payments.”

Last July 15, one month after Alonzo left, Cardona hanged himself on a pine tree in the backyard while his wife and children slept.

“I lost my son for a stupid reason,” Alonzo says, holding back tears. “For a house.”

Cardona’s case is extreme. But thousands of Monterey County home-owners also are grieving over losing their homes, or are in various stages of giving them up. They are among the estimated 2 million homeowners nationwide in a similar situation.

In the first quarter of this year alone, the county had 944 foreclosures, nearly five times as many compared with the same period last year. The number of notices of default for mortgage nonpayments in March was 638, about three times as high as last March.

“This is unprecedented,” says Lou Solton, county treasurer and tax collector for 23 years. “There have been other downturns in the real estate market but never this pronounced and not this lengthy.”

If the pace continues, the number of foreclosures in the county this year will hit close to 4,000; last year the total was 1,568.

Solton thinks the pace will slow somewhat, but he still estimates foreclosures will almost double over 2007.

With housing prices continuing to rise year after year, thousands of county homebuyers got into the market on sub-prime loans. Others signed for loans beyond their means, or just didn’t understand the contracts.

Also contributing to the turmoil: the resetting of adjustable-rate mortgages, the downturn in national, state and local economies, and the drop in housing prices.

Add to that the fact that in a housing-fueled economy, state and federal lawmakers have been slow to act, only in recent months proposing refinancing strategies for sub-prime borrowers and loans so government agencies can buy foreclosed homes.

Still, there are those who have little sympathy for homeowners who got themselves into this financial fix because they were too eager for their piece of the American dream. Some say they should have read the fine print, not taken on so much debt, and not cashed in their home equity when the market was inflated.

“It was like a gold rush,” says Paul Bruno, co-owner of Monterey Peninsula Engineering and vice chairman of the California Republican Party’s Central Coast region. “It’s hard to ignore a gold rush when you see your neighbors running out panning for gold. Unfortunately…there wasn’t as much gold as people expected.”

Some mortgage companies are culpable, as well, for offering risky loan packages, including teaser interest rates that reset into expensive monthly payments. Banks also must shoulder some blame because they approved loans that required no documentation of income.

On the flip side, the ever-decreasing housing prices have opened a buying window for many who otherwise probably could not have afforded a home in Monterey County, or not as big or as nice a home as they now can. Relative bargains – for Monterey County anyway – show up every day on the Multiple Listing Service and various foreclosure websites.

But if you’re sitting comfortably and smugly in your home thinking, “Hey, this is happening to other people and doesn’t affect me,” you’re wrong.

“When properties are in foreclosure, it really has a ripple effect,” Solton says. “The value of the surrounding properties will likely go down.” That means governments will have less property tax revenue, which could translate to cuts in public services, such as teacher layoffs. The state’s projected $16 billion deficit, which is tied to the housing market and construction downturn, means a leaner year for Monterey County schools and government, as well as the rest of the state. Gov. Arnold Schwarzenegger’s proposed $4.4 billion in cuts from state education would mean the loss of $51 million for Monterey County public schools, or an average of $786 per student. Monterey County government expects to lose $25 million in state funding next fiscal year.

The toll on state and individual pocketbooks gets the most attention. But less money is not the only gauge of this housing crisis. The emotional toll on those who have lost or are losing their homes often is overlooked.

DREAM TURNS TO NIGHTMARE

North Salinas, the same part of town where Cardona lived, has been the hardest hit neighborhood in Monterey County. Close to 800 homes in the 93906 ZIP code are in some stage of foreclosure, according to Discovery Bay, Calif.-based ForeclosureRadar.com. East Salinas, ZIP code 93905, is a close second with 615 homes in foreclosure.

These neighborhoods are where the city’s newer homes have been built in developments such as Creekbridge, Harden Ranch and Monte Bella. They were supposed to be the way families achieved an illusive dream in a county considered among the nation’s most expensive to buy a home, based on the portion of income people spend on their mortgage. A home purchase was supposed to be a sure investment that never lost value – one that provided people a means to move up the economic ladder.

But home prices have dropped by as much 38 percent in the past year in north Salinas, according to a county report. Hundreds of homeowners owe more on their houses than they’re worth. Plus, many of the loans were adjustable-rate mortgages and owners’ monthly loan payments have jumped.

Now, whole blocks along Georgetown Way and Bradbury Street are practically abandoned. Renters are surprised to find auction notices on their doors. A Salinas-based foreclosure counselor is so overwhelmed she’s booked for a month. To help, Assemblywoman Anna Caballero (D-Salinas) has partnered with a for-profit company to help Salinas Valley homeowners facing foreclosure.

Gary Davidson is a marriage and family therapist and program director for Community Human Service’s family service centers in Seaside and Salinas. He likens losing a home to the death of a loved one.

“It is a loss and there is actually a grieving process,” Davidson says. “The psychological dynamics would certainly be depression and a great deal of anxiety.”

While Davidson says he hasn’t seen an increase in clients seeking substance-abuse or behavioral-health counseling at his service centers, he says losing a home can exacerbate those problems. And waiting to get evicted can be even more intense.

“It’s living under that pressure knowing that it is coming,” Davidson says. “I think people can feel really scared just knowing that it’s right around the corner. It’s like living in a bad dream.”

In Maria Solis’ case, she is working a lot, trying not to dwell on her husband’s death.

She and her kids moved out of the house and Solis stopped paying the mortgage, on which she owes $468,000. The family lives in a converted garage at her mother’s east Salinas house.

“It’s sad to lose a home like that,” Solis says. “We wanted [it] for the future, the kids to get their own house and not have to worry about renting an apartment.”

Ariel Torres auctions off foreclosed homes every day at the county courthouse; Solis’ was on the block April 8. No one bid on it so the bank now owns it. Torres also has the cheerless job of taping notices to owners’ doors letting them know their lender is selling the home.

On a recent Friday, Torres sifts through stacks of auction notices in his Ford Escape hybrid. His biggest stacks are from north and east Salinas. Last year, Salinas had 797 foreclosures, about half of the county’s total and about twice as many as the Peninsula cities combined. 

Driving along Freedom Parkway in east Salinas, Torres says many low-income buyers now in foreclosure simply got into homes they could not afford.

“They got into these stated-income loans,” he says. “They were making $10,000 a month on paper, and they can’t make the payments. Some lenders straight-up lied. Most loan agents in town kind of looked the other way.”

Also to blame, Torres says, are banks that underwrote the loans, appraisers that inflated prices and the government’s loose regulation of the mortgage industry. Wherever the fault lies, the foreclosure crisis has hit home in this new neighborhood filled with two-story homes with Spanish-tile roofs.

On Antelope Drive, for-sale signs hang in a streak of five houses. A room-for-rent sign hangs in another house – perhaps to help the owner pay the mortgage and not end up like the neighbors.

“The owners are just letting them go,” Torres says. “There are a lot of homes that are already bank-owned that are not on the market.”

Carol Crandall, a Carmel-based real estate broker who has many listings of bank-owned homes, says she thinks a lot of people were taken advantage of.

“Everyone bought the house, thinking the house was going up in value and they could refinance,’’ she says.

Crandall says she knows homeowners in Carmel who are in foreclosure because they refinanced and spent the cash. “The market went up, people got excited and took all the money out of it,” Crandall says. “When their loan adjusted or they had financial changes they weren’t able to make the payments.”

While Bruno agrees that some first-time homebuyers got caught up in the real estate frenzy, he says others bought homes simply to flip and make a profit. “A lot of people that really weren’t investors became investors,” he says.

“We need to make sure consumers are educated,” Bruno continues, “that they understand what they are getting into when they buy a home.”

Fernando Ruíz and his wife refinanced their east Salinas home in June 2005. The market was hot. Ruíz borrowed $459,000 on an adjustable-rate mortgage; his original loan in 2003 was $216,000. After his mortgage payments jumped from $2,700 to $4,000 a month, Ruiz stopped paying his home loan.

“I didn’t really pay attention to what I signed,” Ruíz admits.

His mortgage debt, coupled with expenses from 17 surgeries after a brutal car accident, led Ruíz to file bankruptcy. The move delayed the foreclosure but tarnished his credit. He’s now having trouble even renting an apartment, despite earning the necessary income.

The county’s rental market is tightening as the growing number of foreclosures drives more families into apartments. Foreclosures also are forcing home renters back into the market.

Kristi and Mark Olivarria came home on Easter Sunday to find a notice taped to their door that said the Coventry Street home they’ve been renting for two years was set for auction.

“We are not really sure what’s going to happen,” Kristi Olivarria says. “It’s really scary.’’

Owner Kipi Pale bought the house in January 2007, borrowing $620,000 from America’s Wholesale Lender. Less than a year later, Pale received a notice of default, saying he was late more than $20,000 in payments. The property went to auction April 7. There were no bids, so the bank owns it. The Olivarrias still live there, but now are at the mercy of the bank as to how long they’ll be able to stay.

What’s been financially and emotionally painful for many has become a great buying opportunity for others, investors as well as buyers who just want a place to call home.

Every day, real estate listings and foreclosure websites show houses in foreclosure, often significantly below market prices or below what owners paid for them only a few years ago.

For example, a recent listing was for a Pebble Beach house, 2,000 square feet on half an acre. It is bank-owned, and the asking price is $850,000; the home originally listed at $1.4 million. It has been on the market more than 400 days.

Crandall, of Preferred Properties, says she is receiving multiple offers on repossessed homes, and banks are accepting realistic bids.

William Smith, a Carmel-based broker associate with Coldwell Banker, described a young couple who were his clients. They recently bought a Seaside home for about $300,000. The same home sold for more than $500,000 a couple years ago, he says. “Now they can be homeowners…and this is an opportunity that didn’t exist for them two years ago.”

Mario Pacio is another buyer trying hard not to let a good opportunity pass. Pacio has made an offer on a bank-owned, three-bedroom home in the Creekbridge area. He bid $365,000 with a 5-percent closing discount – a good deal considering similar homes were selling for $200,000 more a year ago.

“Hopefully we’ll get it,” Pacio says. “Otherwise we’ll start looking again.”

For more than a month, Pacio and his wife, Mary, have been scouting foreclosed homes and short sales (houses on which the owners owe more than the selling price). They are on their fourth home, having been outbid twice.

“A lot of people are in the same boat as we are,” Pacio says. “[The market is] more in the price range of most people right now.”

Loans are harder to come by because lenders have tightened guidelines, often calling for stellar credit and larger down payments.

Pacio has excellent credit and is pre-approved for a Federal Housing Administration loan. He commutes to Sunnyvale where his company services semiconductors.

“It’s a long drive but hopefully it will be worth it when we get the house,” he says.

His wife works at Natividad Medical Center. The couple now rents an apartment in Harden Ranch.

By the Weekly’s deadline, Pacio was waiting to hear back from the bank. Even if he must resume the search, Pacio will have a lot of homes from which to choose.

While the federal government has been criticized for bailing out investors like Bear Sterns and not doing enough to help homeowners in trouble, Congress finally is acting on legislation designed to curtail foreclosures. On April 10, the Senate passed a bill that would expand money available for foreclosure counseling by $150 million, deliver $4 billion in grants to local governments to buy foreclosed homes, and give tax breaks to home builders and buyers whose homes have been repossessed.

The measure now goes to the House, where Rep. Barney Frank (D-Mass.) wants to help as many as 2 million homeowners at risk of foreclosure by having the FHA insure up to $300 billion in refinanced mortgages.

President Bush has proposed a plan similar to Frank’s that offers help to only 100,000 homeowners.

Rep. Sam Farr, D-Carmel, supports Frank’s proposal. “In essence what we are trying to do is keep people out of foreclosure,” Farr says.

While partisan debate likely will stall swift progress, Farr is optimistic Congress will pass a bill.

“If the country is having an economic disaster then you are going to have disaster relief,” Farr says. “Whether it’s enough, whether it’s efficient, whether it’s timely, I don’t know.’’

The bottom line is Congress needs to do something to stop foreclosures and their ripple effects, Farr says. “The people that are foreclosed on…get screwed the most. Not only do they lose their home, what a burden of fear to put on young children. Because they’ve been foreclosed if they don’t resell that house within a certain period of time their credit score is ruined for a long period of time.”

In north Salinas, Alonzo has not given up on getting back her son’s house, even though she still is afraid to step inside. For certain she will cut down the tree from which her son hanged himself.

“I want to get it for my grandkids,” she says. “They ask me ‘Grandma, can we live again together like a family?’ ”

Malvina Torres, a realtor who has volunteered to help people with loan modifications, is working with Alonzo to buy the house.

“We are not going to stop until she moves in,” Torres says.