For the past two years, retirement has been anything but relaxing for Margaret Gellatt.

For the past two years, retirement has been anything but relaxing for Margaret Gellatt.

The 81-year-old Ashland resident, like others in Jackson County, has found herself tangled up in the housing crisis that will intensify this year as 2,500 adjustable rate mortgages come due.

Gellatt has been dipping into her savings to help pay a bridge loan she received in 2007, hoping to find some other solution before her ARM comes due in 2014.

"All my fortunes have gone downhill in the last two years, but I'm still here," she said. "I'm still kicking."

Gellatt was in the process of selling another Ashland house in 2007 when she found a smaller house that fit her needs. With confidence she could sell her old house fairly rapidly, she took out what she thought would be a temporary adjustable rate mortgage to pay for her new house.

Then, the real estate market collapsed and she had to sell her old house for less than the loan.

"I wasn't doing anything tricky," she said. "I just chose the wrong time to do it."

She has discovered that she can't get a loan modification and can't refinance her home because of her low income. At the same time, Gellatt, an outgoing and usually optimistic woman, is worried that she might deplete her savings.

"I can't do that for too much longer," she said. "I'm laughing through my tears."

Like other residents, Gellatt said the lending institutions haven't helped the situation and have shown an unwillingness to work with people.

"My big complaint is the system is corrupt," she said.

The tough economy is placing ever greater hardships on some local residents, particularly builders, who have, in some cases, lost all hope.

"I'm sure if we had a study here, we would find we had several suicides" related to foreclosures and the economy, said Kerrie Davis, community education and outreach coordinator for the not-for-profit Rogue Federal Credit Union.

Jackson County, which saw a great run-up in home prices and building activity starting nearly 10 years ago, is now one of the hardest hit counties in Oregon for foreclosures.

It is tied with Columbia County as having the third highest rate of foreclosures per housing unit in the state behind Deschutes and Yamhill counties, according to RealtyTrac. In Jackson County, one in every 367 homes is under a foreclosure cloud.

In Oregon, one out of every 491 homes is subject to foreclosure, and in the U.S. it is one out of every 418 homes.

The hardest hit areas locally are Medford, Central Point and east county.

In Eagle Point and White City, one in every 200 homes was subject to some kind of foreclosure activity in February. In the Butte Falls area, it is one in every 149 houses.

High foreclosure rates and the economy are affecting Central Point and White City home prices, which have posted drops of 18 percent and 11 percent respectively this quarter over last quarter. Central Point had the fourth largest decline in home prices in the state this quarter, while White City ranked seventh, according to RealtyTrac.

The Mail Tribune has posted record numbers of foreclosure notices. In March, 143 foreclosures were scheduled to be published, up from 73 in February.

According to the Tribune's projections, the number of foreclosure notices could dip through the summer then continue to increase next winter.

Glancing through the foreclosure notices, a reader can find someone from every occupation — builders, teachers, a former mayor.

"You get kind of depressed when you see 75 notices in the paper," Davis said.

Some homeowners have battled for a long time to keep their homes, but the struggle has worn them out and they are ready to give up on the American dream.

"We are in the trenches right now," Davis said. "So many people have been working with lenders for the past year, and they have just hit the wall."

Now, with 2,500 adjustable rate mortgages coming due this year, the problem will likely get worse before it gets better, she said.

The struggle has taken a toll on the family structure as well.

Lucinda Weatherby, program coordinator at WinterSpring Center in Medford, said anecdotal reports indicate foreclosures and the economy are leading to more divorces and, in some cases, more suicides.

Some people have lost their jobs or business, walked away from their houses and struggle to put food on the table. "I can just remember so many people saying my husband killed himself," Weatherby said.

Suicide hits more men during these difficult times because their self-worth is wrapped up in their jobs and their ability to provide for their families, she said.

Men also tend to feel more shame about losing a job or their house and frequently try to isolate themselves.

Weatherby said it is difficult to say how many suicides have been caused by the foreclosure crisis because there are often many factors at play when a person becomes suicidal.

Financial stress brings up more conflict in families, leading to more divorces.

Weatherby said people need to reach out to friends or seek counseling when times are tough. However, she said people often lose their health insurance, which makes it more difficult to obtain counseling.

Some local agencies such as ACCESS Inc. offer assistance, but are overwhelmed by the crisis. Seminars are offered by Building Hope, a coalition of the Rogue Federal Credit Union, the Home Builders Association of Jackson County and other businesses that offer foreclosure prevention and assistance plans for families in financial crisis.

Pete Cislo, who donates time to Building Hope, said Eagle Point and White City have been particularly hard hit during the economic crisis because a number of contractors bought homes there speculating the values would continue to increase.

Cislo said the situation is sad for everyone involved and often has unexpected consequences.

One Medford woman is worried she will lose her teenage foster child because she will have to move out of the home she has lived in for the past 27 years, Cislo said. The woman probably will have to get a small apartment and may not have enough room to qualify for the foster care program any longer.

Cislo, who owns Leave Your Mark landscaping, said he has to look at the foreclosure notices himself to see if any of his customers are in trouble.

"Some of these people will rob Peter to pay Paul, and I'm Peter sometimes," he said.

For some residents, the real estate downturn has had a domino effect.

Jerry Sawtelle, a real estate appraiser, used to own two houses in west Medford. With the economy crashing, his business crashed with it and his income as well.

The 66-year-old first saw one house seized under a foreclosure action two years ago and expects the one he owns next door could see the same fate if he can't get a loan modification.

"From my own standpoint, I don't want to be living on the street," he said. "My cat over there is 15 years old, and then there's my dog."

Sawtelle said he's heard of people searching for loopholes in the law that might help them avoid foreclosures, but he thinks they're a bit extreme.

He said it irks him to see executives who helped cause the country's financial disaster receiving bonuses or escaping prosecution.

He believes the banks' practice of selling loans to second parties who sell them to third parties makes it difficult for homeowners to find solutions to their financial problems. Suddenly a loan is part of a large pool of investment that is owned by many parties, he said.

"It's difficult to itemize each loan as they are sold and sold," he said.

Sawtelle said he's hoping Americans will learn a lesson from the housing crisis.

"We need more ethics back in our system," he said. "My big complaint is the system is corrupt."

Reach reporter Damian Mann at 541-776-4476, or e-mail dmann@mailtribune.com.