RIVERSIDE, California - There is something about coming to this sun-baked corner of California that feels like inspecting the scene of a crime.

Riverside, part of the thickly populated area known as the Inland Empire east of Los Angeles, has become synonymous with all the worst lending and spending practices of a property boom that busted and pushed the world's No. 1 economy into its longest slump since the 1930s.

Welcome to Ground Zero, said Melinda Opperman, vice president at the Riverside branch of Springboard, a nonprofit counseling group that helps homeowners avoid foreclosure. This is where the canary died.

In the early coal mines, a dead canary meant the buildup of noxious gases. And the Riverside housing market was surely one of the nation's most toxic, with some of the fastest growth rates in the boom and one of the worst reversals.

There is a call to action in the destruction of wealth.

Consumers have to bone up on finances and homeownership, banks need to tighten internal controls and corporate governance and red-faced regulators must show they can protect borrowers and oversee lenders.

But responses to the housing crisis may fall short of fostering the kind of stability required to rebuild a housing market healthy enough to withstand the next downturn.

The government's focus on American homeownership and corporate zeal to make money on loans leaves open the possibility that the same behavior that led to the market meltdown will be allowed to flourish.

Already, some are declaring the crisis is nearing its end, that the U.S. housing market has hit a floor -- though rising unemployment and an unknown quantity of inventory yet to hit the market could destabilize the market.

Others, including some of the same rare skeptical voices raised during the boom, warn that few lessons have been learned and say declarations the worst is over are at best optimistic.

The same people who told us there was no crisis are the ones who are telling us it's over, said Peter Schiff, president of brokerage Euro Pacific Capital, famous for his prediction in 2004 of impending doom due to lax lending and adjustable rate mortgages, or ARMs.

Schiff, who is running for a U.S. Senate seat in Connecticut, now warns property prices have further to fall as the billions of dollars in option ARMs begin to blow up.

This is going to get much, much worse, he said. Just how long are we going to live in this delusional state?

FINANCIALLY ILLITERATE

While still scrambling to stop more people from going into foreclosure, consumer advocates are also looking toward avoiding future crises through accountability in the real estate industry and responsibility among American consumers.

We wouldn't be saddled with all this debt if we were a financially literate nation, said Lori Gay, president of nonprofit lender Neighborhood Housing Services of Los Angeles. But we're not. We're a financially illiterate people.

The housing boom had its origins in the early years of this decade thanks to then historically low interest rates. To generate more demand for loans, banks began offering mortgages to people who could not afford them over the long term.

Borrowers blindly bought with no money down and stated income loans -- whereby prospective buyers could say what their income was but not have to prove it, earning this type of mortgage the nickname of liar loan. And then there were the deceptive ARMs that proliferated in California and elsewhere.

Alejandro Estrella is a case in point. The 47-year-old postman in Riverside, California recounts how he was given a $300,000 Option ARM -- one of the worst toxic loans because it allowed him to pay what he wanted every month but his principal increased as a result.

It's crazy to think now how stupid I was, Estrella said on his lunch break in Riverside. When I got my mortgage my broker said 'Don't worry about making the payments, you can catch up later on.' My broker has since lost her own home and I nearly lost mine.

What the hell were we thinking? he added. We Americans have been very stupid when it comes to money.

WHO TAKES RESPONSIBILITY?

Even if consumers were stupid, many blame banks and Wall Street for taking advantage of them, and argue that government action has done little to hold them accountable.

The lion's share of public money has gone to fix loans made by banks which knew they were taking too much risk but were intoxicated by riches that came from ever growing volumes.

Bruce Marks, CEO of the Neighborhood Assistance Corp. of America, likened lending practices of the boom to loan sharking, adding: You cannot blame the homeowner.

NACA says it has pressured major lenders including JPMorgan Chase & Co. (JPM.N) into doing thousands of modifications.

Homeowners are also the focus of the U.S. Treasury's $75 billion program to refinance and modify loans.

Under the Home Affordable Modification Program, borrowers can reduce housing payments to 31 percent of their income. So far, more than half a million homeowners have seen payments reduced on a trial basis.

Government help to the homeowner has a controversial side, just as does the $700 billion in taxpayer bank bailouts.

The majority of borrowers offered modifications before the launch of President Barack Obama's plan are expected to end up in default again, raising questions over the value of another costly plan. Many in real estate believe modifications are manipulating an economic cycle that will ultimately manifest itself as consumers are forced to pare back further.

They are just postponing the foreclosure process, said Fred Arnold, whose American Family Funding in Stevenson Ranch, California, provides loans. It might sound cold of me.

What's more, the government is fanning the flames of consumer entitlement, said Todd Kaufman, chief executive officer of Alta Community Investment, who led a team at Washington Mutual that encouraged the boom in lending by packaging loans into bonds.

The government is sending a very poor message to people ... you were screwed by your bank and we'll take care of you, he said. It's a systemic problem in our society and the government is pouring lots of gas on it.

California Mortgage