Category Archives: Housing

Foreclosure to Homelessness: the Forgotten Victims of the Subprime Crisis

Source: National Coalition for the Homeless

From press release:
The National Coalition for the Homeless released a report today forecasting an increase in homelessness due to the foreclosure crisis. The report, Foreclosure to Homelessness: the Forgotten Victims of the Subprime Crisis, summarizes the findings of a national survey of state and local homeless coalitions conducted in winter 2008 to ascertain whether their communities were seeing an increase in homelessness due to the foreclosure crisis.

Among the survey findings:
• 61 percent of survey respondents reported an increase in homelessness in their communities since the foreclosure crisis began in 2007.
• Respondents reported a variety of living arrangements among the newly homeless victims of the foreclosure crisis, including stays with family and friends, in emergency shelters, and on the streets.

The report criticizes state legislatures and Congress for their inattention to homelessness prevention initiatives in their response to the foreclosure crisis. “Nearly forgotten in the foreclosure crisis are the thousands of homeowners and renters who have become homeless once their equity is exhausted,” said Bob Erlenbusch, President of the National Coalition for the Homeless. “We hope this report will sound an alarm and inspire policymakers to take proactive measures that prevent more Americans from falling from foreclosure to homelessness.”

Full report (PDF; 524 KB)

$60 Million and Counting: The cost of vacant and abandoned properties to eight Ohio cities

Source: Community Research Partners and Rebuild Ohio, February 2008

The debilitating effects of vacant and abandoned properties are evident in neighborhoods and communities throughout Ohio and the nation, and the recent foreclosure epidemic has made the issue of vacant properties a top news story and catapulted it to the top of public policy agendas. However, this is a long-standing problem in older and central city housing markets, where the issues of predatory and subprime lending and vacant and abandoned housing have existed for many years.

This research documents the magnitude and cost of the vacant and abandoned properties problem in eight Ohio cities: Cleveland, Columbus, Dayton, Ironton, Lima, Springfield, Toledo, Zanesville. The research found:

– 25,000 vacant and abandoned properties

– Widespread vacancies in both large and small cities

– $15 million in annual city service costs

– $49 million in cumulative lost property tax revenues to local governments and school districts

– Weakened neighborhood housing markets with evidence of property flipping

– Limited capacity of cities, on their own, to track and address vacant and abandoned properties

Subprime Rescue Plans: Backdoor Bank Bailouts

Source: Dean Baker, Center for Economic and Policy Research, March 2008

From the press release:
Many of the recent proposals to help homeowners facing foreclosure provide little relief for most of the families at risk of losing their home, according to a report from the Center of Economic and Policy Research. Under these rescues, taxpayers end up underwriting a bailout that could reap billions of dollars in profit for banks and mortgage holders.

Do Subprime Loans Create Subprime Cities? Surging Inequality and the Rise In Predatory Lending

Source: Gregory D. Squires, Economic Policy Institute, Briefing Paper no. 197, February 28, 2008

From the press release:
The development of a two-tiered system of financial services, driven by the rising economic inequality in the United States, is ushering in a new era of de facto redlining, according to a new paper from the Economic Policy Institute, “Do Subprime Loans Create Subprime Cities? Surging Inequality and the Rise in Predatory Lending.”

In the paper, published by EPI as part of its Agenda for Shared Prosperity, author, Gregory D. Squires, a George Washington University sociologist, contends that increasing economic inequality and diminishing access to conventional financial services have become inextricably linked.

Responding to the Foreclosure Crisis

Source: James H. Carr, National Community Reinvestment Coalition, Testimony before United States House of Representatives Subcommittee on Commercial and Administrative Law, January 29, 2008

Regional economic downturns, speculation on skyrocketing home prices and rampant unfair and deceptive mortgage lending practices have combined to create the perfect foreclosure storm in America. According to the FDIC, there is roughly $1.3 trillion of outstanding subprime mortgage debt (Poirer, 2007). In 2006 alone, more than $600 billion of subprime mortgages were originated (Inside Mortgage Finance, 2006). RealtyTrac data shows roughly 450,000 homes experienced foreclosure in the third quarter of 2007, up a full 100 percent from the same period one year ago (Yoon, 2007). And, although foreclosures are most heavily concentrated in 12 to 20 states, foreclosures are up in 45 of 50 states. Federal Reserve Board Chairman Ben Bernanke reported that 21 percent of subprime adjustable-rate mortgages were ninety-days delinquent or more as of January 2008 and according to the Center for Responsible Lending (Center for Responsible Lending) fully one in five subprime loans are expected to fail (Bernanke, 2008; Center for Responsible Lending, 2007). That rate of foreclosure is estimated to translate into more than two million families losing their homes to foreclosure over the next year to 18 months (Center for Responsible Lending, 2007). Estimates of the full economic costs of the foreclosure crisis vary greatly. The projections share, however, a common theme: the prospect of significant financial costs that extent beyond the housing market.

Analyzing Affordability In Metropolitan Housing Markets: An Examination Of Affordability For Middle-Income Households

Source: Daniel Melser & Celia Chen, Moody’s, January 28, 2008

As we begin 2008, the U.S. housing and mortgage markets are in the midst of what now accurately can be characterized as a housing bust. Mounting anecdotal reports from metro areas across the country – both recognized housing hot spots and slow-growth markets – indicate that middle-income households are the hardest hit by this ongoing crisis. But it is wrong to assume that the dramatic downturn is easing the housing-cost burden on middle income families either in the short-term or over the long-term. This report shows that these families remain unable to access affordable homes in their communities under current market conditions, and that policy solutions focused on this crisis will only be successful if they are implemented in tandem with a long-term strategy for keeping our communities affordable.

Foreclosed: State of the Dream 2008

Source: Amaad Rivera, Brenda Cotto-Escalera, Anisha Desai, Jeannette Huezo, and Dedrick Muhammad, United for a Fair Economy, January 15, 2008

This report finds that due to racial bias, people of color are being hit especially hard by the current subprime lending crisis. As homes are foreclosed and families of color find themselves in financial ruin, the racial and economic equality that Martin Luther King, Jr. once envisioned is moving even further out of reach. We found the estimated total loss of wealth for people of color to be between $164 billion and $213 billion for subprime loans taken during the past eight years. This breaks down to losses of between $71 billion and $92 billion for Black/African-American borrowers, and between $75 billion and $98 billion for Latino borrowers for the same period.

Census Bureau News for New Data on Residents of Adult Correctional Facilities, Nursing Homes and Other Group Quarters

Source: U.S. Census, Press Release, CB07-CN.11, September 27, 2007

New data released today from the U.S. Census Bureau provide the first social and economic characteristic profiles of the people living in group quarters — such as adult correctional facilities, college dorms and nursing homes — in nearly three decades.

“This release marks the first in-depth look at the characteristics of the nonhousehold population since the 1980 Census,” said Census Bureau Director Louis Kincannon. “These are important data to understand as decision makers grapple with policies that impact the people who live in these facilities.”

The latest data from the American Community Survey also include profiles of more than 100 race and ethnic group iterations such as blacks, Chinese and Mexicans. In addition, profiles for 72 ancestry groups, from Afghani to Welsh, are also available.

• Links to the primary documents that this summary reports can be accessed in the upper right corner of this web page.

Economic Pessimism Grows as Nation’s Real Estate Slump Hits Wealthy Areas

Source: Pew Research Center for the People & the Press, October 11, 2007

From the summary:
Public assessments of the nation’s economy have fallen to a two-year low, and the nation’s economic outlook remains relatively gloomy. In particular, faced with a steady stream of negative news about the U.S. housing market, Americans are substantially less inclined than they were even a few months ago to say they expect home prices to increase over the next few years. People living in areas with the most expensive homes and middle-income Americans are particularly likely to say that future home prices will decline.

Foreclosure Exposure: a study of racial and income disparities in home mortgage lending in 172 American cities

Source: ACORN, September 5, 2007

Over the last two years, Americans have increasingly recognized the harm done to homeowners (both families who refinance their homes and new buyers) and neighborhoods by the sharp increase of the issuance of subprime loans. Perhaps most damaging among subprime loan products are Adjustable Rate Mortgages (ARMs), exploding ARMs, no-document loans and other products that do not require lenders to take into account the loan’s long-term affordability for the borrower. ACORN’s report on the 2005 Home Mortgage Disclosure Act (HMDA) data, “The Impending Rate Shock,” demonstrated that unaffordable loans disproportionately impact minority and low- and moderate- income families and neighborhoods. Now these high-cost loans – many of which are exploding ARMs – have led to the foreclosure crisis that we hear about daily.

See also:
National Tables 2007 HMDA Report
2007 Subprime Study National Map
Metro area data by state (scroll down)

Related articles:

Home Insecurity: A set of reports on neighborhoods in trouble due to foreclosures

Of the wretched and the reckless

Source: The Economist, Vol. 384 no. 8545, September 6, 2007