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Tess Vigeland: Here in California, you don't have to go far to find evidence of how deep this recession has been, especially in housing. Sun Belt states felt the boom and bust of the housing market up close. But elsewhere, the housing crisis reared its ugly head in very different ways.
Marketplace's Jeremy Hobson spent two weeks traveling through Tennessee for our series on how the recession and recovery are being felt in the heartland. In Memphis, he found that for struggling homeowners, the difference is as simple as black and white.
Jeremy Hobson: On one of my first days here, I shared a barbecue dinner of dry-rub pork ribs with a young white financial adviser named Jamie Cochran. I asked him how he and his clients see the state of the economy.
Jamie Cochran: You know, I think the United States of America is ready to bounce back. There's economic indicators, some of them are saying yea, some of them are saying nay on a bounce back. But for the most part, I would say a lot of 'em are looking pretty optimistic.
That's one view, but you don't have to travel far from the Bar-B-Q Shop in Midtown to find a very different prognosis.
Steve Lockwood: You know, a neighborhood like this was in a recession before the recession.
Steve Lockwood is a community organizer. He heads a group that is trying to improve economic conditions in the heavily black and extremely poor neighborhood of Frayser.
Lockwood: There weren't good jobs here, there is not transportation to what few good jobs there are here in town, so when there's a downturn, people may say, "What recession? We were already there."
Frayser used to be what Lockwood calls an affluent working class community, but over the last several decades, factories have closed and the housing crisis added insult to injury. Many home owners were convinced to get into new mortgages for some extra cash; they took adjustable rate loans, and when the rate went up, they couldn't afford the payments. The city has sued a major lender, claiming it targeted African-American neighborhoods with high-cost loans.
Now, on some blocks, every other house is abandoned.
Lockwood: We think that the ownership rate in the eight years that I've been here has dropped from 65 percent to 35 percent.
Hobson: And what does that do to a neighborhood when the ownership rate goes down like that?
Lockwood: It tears up the fabric.
He says crime is rampant; squatters fill many of the abandoned homes.
Sound of car starting
Lockwood took me on a drive through the worst-hit areas of Frayser.
Lockwood: Was looking to see if we had a cage around the air conditioner, which we do.
Hobson: Why, so that nobody takes it?
Lockwood: Yeah, that's part of the economy here is turning $1,400 air conditioners into $50 worth of scrap metal.
Cash here is king because credit scores are low. Lockwood tells me 540 is the average score of the people who come to him asking for assistance, and the payday lenders here charge as much as 264 percent interest. Add it all up, he says, and it's hard for those who live here to move up.
Lockwood: It bleeds over into a lot of their life, and they frankly think they've made a lot of bad decisions. I live in a neighborhood that's done pretty well. I don't think I'm any smarter than these guys. I got lucky and they didn't. You know?
Henry Carradine: And this is the front of the house, it's pretty nice, and my neighborhood's real quiet.
In one of Memphis's mixed-race middle class neighborhoods of East Memphis, Henry Carradine is showing me his home. He's not sure he and his three kids will be here long. He went through a divorce recently. Now, he's fallen behind on payments for an adjustable rate loan that had failure written all over it.
Carradine: He made it look like it was so easy in order to get in a house and be able to afford it. Two years, in two years, your credit will be A-1 and you can just come back and refinance it with a fixed rate, and it shouldn't be a problem. Two years came around, no way.
Carradine admits he was unprepared to comprehend the fine print on his loan. Now he's trying to make reduced monthly payments to avoid foreclosure and bankruptcy. He says better financial literacy would have made all the difference.
And that's a story the mayor of Memphis has heard a thousand times before.
A.C. Wharton: It's no great secret that in this town, poverty is basically another way of saying black or brown.
From his city hall office overlooking the Mississippi River, Mayor A.C. Wharton can see the effects the home foreclosure crisis is having on the city's majority black population. But it's the future that scares him.
Wharton: It becomes intergenerational. Daddy's crushed, he'll never try that again. Son seeing the hurt on Daddy's face. In a few years, when he's out on his own, you think he's going to start putting away to try to buy a house? Mm-mm. So it's immeasurable in terms of what consequences we're going to see down the road.
In Memphis, I'm Jeremy Hobson for Marketplace Money.
Vigeland: Jeremy asked everyone he met in Tennessee whether they are feeling a recovery. You can see their responses and give us an answer of your own.