In foreclosure capital, few see election help

STOCKTON, California (Reuters) - Stockton, California, may be the foreclosure capital of the United States, but that is not influencing how residents like Michelle Encinias who are losing their homes will vote on "Super Tuesday."

Encinias recently cast a mail ballot for Sen. Hillary Clinton, but has little faith that the New York Democrat or other presidential candidates can do much about foreclosures if they make it to the White House.

"They're just going to say what we want to hear," Encinias, who has two children, said during an interview in her four-bedroom home in a middle-class neighborhood in Stockton.

California ranks second in the nation for foreclosure filings. Stockton posted one foreclosure for every 31 households in the third quarter of 2007, the highest foreclosure rate among the 100 largest U.S. metropolitan areas in that period, according to real estate data company RealtyTrac.

California and more than 20 other states hold primaries and caucuses to nominate Democratic and Republican candidates for the November presidential election. California, the most populous state, is the biggest prize on Super Tuesday.

Encinias' skepticism is shared by Tino Gonzalez, another Stockton Democrat leaning toward Clinton for Tuesday's primary election, but who may back Arizona Sen. John McCain in November if he becomes the Republican candidate.

"I don't think either party is going to do anything about it," Gonzalez, a mechanic for the city of Stockton, said of the local foreclosure surge. "They're promising a lot of stuff to get elected but once they get elected they'll forget."

Clinton has proposed a 90-day moratorium on foreclosures and a five-year freeze on interest rates, while rival Sen. Barack Obama of Illinois has proposed a $10 billion foreclosure-prevention fund. McCain has urged more transparent mortgage documents.

HOUSING, EASY CREDIT BOOM

Gonzalez's mortgage is rock solid. He chose a fixed-rate loan because, he said, he felt adjustable rate loans were a trap waiting to be sprung on unknowing borrowers. His caution paid off, for foreclosures are soaring among borrowers with adjustable-rate mortgages, such as Encinias.

As the original low rates on those loans adjust upward over time, monthly mortgage payments rise sharply. That is why the number of borrowers nationwide who can not make those higher payments is up dramatically.

In Stockton, where single-family neighborhoods are tied together by expressways lined with small and mid-sized shopping malls, many mortgages are in defaults or foreclosure.

"I go to the gym and hear a lot of horror stories," Gonzalez said. "A lot of people bought houses a year, year-and-a-half ago and paid top dollar and now can't make the payments."

But Stockton-area voters have more pervasive concerns than foreclosures, said Bill Perkins, chairman of the region's Democratic Central Committee. "You sit in on a conversation with five people and one has a health-care story," he said.

Encinias conceded she could have avoided defaulting on her mortgage by selling her house when local home prices were peaking, but said better loan disclosure rules could have prevented her current predicament.

But many who bought during Stockton's housing boom simply ignored loan terms, said Bill Herrin, an economist with the University of the Pacific: "Everybody wanted to do it now, today ... Collectively, we went a little nuts out here."

(Editing by Philip Barbara)