preserving communities in the wake of the foreclosure crisis€¦ · in chicago region and across...

WOODSTOCK INSTITUTE | JUNE 2012

Metropolitan Housing Coalition

June 26, 2012 | Louisville, Kentucky

Preserving Communities in the Wake of the

Foreclosure Crisis

Dory Rand | President

Woodstock Institute | Chicago, Illinois

P 312.3680310 | F 312.368.0316

[email protected]

@woodstockinst

WoodstockInstitute


4,000

8,000

12,000

16,000

20,000

24,000

28,000

4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11

New Foreclosure Filings

Completed Foreclosure Auctions

In Chicago region and across the country, foreclosure

filings have stabilized at new, higher levels


Local impact of foreclosure during the economic crisis

is clear: communities of color disproportionately

impacted

2006

2007

2008

2009

Source: Woodstock analysis of data provided by Record Information Services


2006

2007

2008

2009




impacted


2006

2007

2008

2009



impacted


Single-family Mortgages Entering Foreclosure in the

Six County Chicago Region, by Period of Origination,

2008-2011

23.3% 20.7% 23.7% 24.1%

75.5% 71.4% 61.8% 58.8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011

2010

2009

2008

2005-2007

Before 2005



Single Family Foreclosure in the Six County Chicago

Region by Type of Mortgage, 2008-2011

43.2% 45.9% 55.2% 56.6%

6.9% 10.7%

13.0% 11.9%

45.9% 38.9%

28.7% 27.8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011

Other

Balloon

ARM

FHA/VA

Conventional



Accumulation of Foreclosure Activity

in Communities of Color, 2006 to 2010

8.7% 9.7%

7.0%

27.0%

24.4% 23.2%

19.0%

15.1%

10.9%

26.3%

15.9%

12.8%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

80% or greater African American

50% or greater mixed Minority

50% or greater Latino

20-49.9% minority 10-19.9% minority Less than 10% minority

Share of Properties Share of Properties with Foreclosure Filings



0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

10 Percent or less Minority

10-19.9 Percent Minority



80 Percent or more African

American

50 Percent or more Latino

LTV < 75

LTV 75-94

LTV 95-99

LTV 100-109

LTV 110-124

LTV > 125

Source: Proprietary data on negative equity; 2010 Decennial Census

Loan-to-value ratios of properties with mortgages

in Chicago six county region, fourth quarter of 2011


Average home equity and outstanding mortgage debt per property in the

Chicago six county region, fourth quarter 2011

$108,069 $101,152

$60,379

$20,761 $6,800

$35,174

$226,223

$212,429

$180,455

$140,167

$79,167

$242,989

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

10 Percent or less Minority




80 Percent or more African

American

50 Percent or more Latino

Mortgage Equity

Source: Proprietary data on negative equity; 2010 Decennial Census


Change in Prime Home Purchase and Refinance

Lending in Communities of Color, 2006 to 2008

-55.8%

-70.9%

-53.7%

-68.5% -64.5%

-56.0% -52.5%

-60.3%

-16.3%

-29.9%

-20.3%

-42.7%

-33.0% -31.2%

-25.3% -28.4%

-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

Boston Charlotte Chicago Cleveland Los Angeles New York Rochester Avg All Cities

Census Tracts with 80% or More Residents of Color

Census Tracts with Less Than 10% Residents of Color

Source: Home Mortgage Disclosure Act


There is Tremendous Polarization in Credit Score

Distributions

17.6%

34.2% 30.5%

47.7%

57.7% 56.7%

51.9%

43.3%

22.9%

28.3%

16.4%

10.9% 11.5% 14.5%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80% or greater African

American

50% or greater Latino

50% to 79.9% Mixed Minority

20% to 49.9% Minority

10% to 19.9% Minority

Less than 10% Minority

State of Illinois

Over 740 Less than 580

Source: June 30, 2009 sample of national credit bureau data

Forging Solutions


• Design responses to today’s economic realities • Prioritize community needs • Collaborate to work at a regional scale

Design responses to

today’s economic realities

• Challenge: Concentrated

negative equity

– Response: FHFA should

allow Fannie Mae- and

Freddie Mac-backed loans

to engage in principal

reductions


Design responses to


• Challenge: Persistent

unemployment

– Response: Provide

payment assistance to

unemployed

homeowners through

programs like Hardest

Hit Fund


Image source: Kheel Center at Cornell University, Creative Commons license

Design responses to


• Challenge: Concentrated low credit scores in communities of color

– Response: Support efforts to build credit for credit-underserved populations

– Use additional data to build credit

– Utilize manual, relationship-based underwriting when appropriate


Prioritize community needs

• Land banks allow for

sustainable and efficient

planning of vacant

property reuse

– Exist in 12 states

– Pilot project in south

Cook County, IL


Prioritize community needs

• City of Chicago, Cook

County vacant buildings

ordinances require

servicers to maintain

properties throughout

the foreclosure process

In 6 months:

– Vacant building registrations

grew more than 2x

– Fine revenue grew by 123%


Collaborate to work at regional scale

• Regional Home Ownership

Preservation Initiative

brought regional

stakeholders together to:

– Communicate best practices

throughout the region

– Improve data collection,

delivery of housing

counseling

– Support regional housing

collaboratives

– Document impact of

foreclosure crisis and

analyze local needs


Collaborate to work at regional scale

• Sub-regional housing

collaboratives formed

around NSP and have

worked to plan housing

priorities across municipal

boundaries

– Collaboratives attracted

more than $29 million in

federal funds to areas that

rarely have access

– Channeling diverse funds to

stabilize target areas


Advocate for stronger community investment and

consumer protection laws

• Work with the Consumer

Financial Protection

Bureau to enhance

consumer protections

• Ask regulators to

modernize the

Community

Reinvestment Act



Metropolitan Housing Coalition

June 26, 2012 | Louisville, Kentucky

Preserving Communities in the Wake of the

Foreclosure Crisis

Dory Rand | President

Woodstock Institute | Chicago, Illinois

P 312.3680310 | F 312.368.0316

[email protected]

@woodstockinst

WoodstockInstitute

preserving communities in the wake of the foreclosure crisis€¦ · in chicago region and across...

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