Foreclosure Statistics

Fed Highlights Case Studies for Stabilizing Foreclosure-Ravaged Cities

Posted on Thursday, May 5, 2011

The foreclosure crisis and the economic downturn that followed have undoubtedly touched every corner of the nation. In cities that have been hit particularly hard, it’s not uncommon to see streets lined with foreclosure signs and vacant homes.
Federal Reserve Chairman Ben Bernanke took to the podium on Friday to shine a spotlight on several cities that have have been especially impacted and discuss what community leaders there are doing to stabilize their local neighborhoods.
Speaking at the Federal Reserve Community Affairs Research Conference in Virginia, Bernanke spoke about how high foreclosure rates in some areas have produced significant numbers of vacant properties, depressing surrounding home prices, attracting crime, and creating financial burdens for local governments. But Bernanke pointed to strong examples of communities stepping up to meet their challenges head on, “with the hope that one community’s success may lead others to emulate it,” he said.
Boston, Massachusetts
A community development financial institution called Boston Community Capital is pursuing what Bernanke described as “an innovative strategy” to prevent homes from becoming vacant and creating a strain on the community.
Through special financing entities, the institution buys foreclosed-upon but still occupied homes from lenders at market value. The initiative, dubbed Stabilizing Urban Neighborhoods (SUN) is focused on six low-income neighborhoods in Boston that have the city’s highest concentration of foreclosures, Bernanke explained.
Taking advantage of the diminished home values, the group buys the properties and then resells them at affordable prices to existing occupants — both owners and tenants — who can demonstrate that they have suffered hardship.
“This program prevents properties from becoming vacant and provides families with a sustainable and affordable housing situation; it is designed to start small and expand as needed,” Bernanke said.
San Joaquin Valley, California
In the San Joaquin Valley, the unemployment rate hovers around 18 percent, Bernanke said. In 2009, in response to the ongoing foreclosure crisis, nonprofit agencies; local,
state, and federal agencies; academics; real estate professionals; financial institutions; small business and workforce development professionals; and loan servicers organized the San Joaquin Valley Foreclosure Task Force.
As Bernanke explained, the original intent was to coordinate efforts on a regional scale to avoid preventable foreclosures. This work continues, he said, and the group is now expanding its efforts to also help families that have already gone through a foreclosure.
This year, the task force is beginning a series of foreclosure recovery workshops across the valley, where families can learn about local help programs, including job training and employment assistance. Credit counselors are on hand to help them begin repairing damaged credit. And, in cases in which they may be victims of fraud, they will receive guidance and referrals to legal aid attorneys, Bernanke explained.
Cleveland, Ohio
In Cleveland, Bernanke said local leaders in the Slavic Village neighborhood have been dealing with some of the highest foreclosure rates in the nation since the 1990s. Cleveland saw population loss for five successive decades, resulting in an oversupply of housing, he explained, and with the onset of the financial crisis, the problem began to worsen dramatically.
By 2007, Slavic Village was the Zip code with the highest number of foreclosures in the nation, according to Bernanke. By 2010, more than 1,500 properties in a neighborhood of 11,000 homes needed to be demolished.
“This community has a history of strong neighborhood organizations, and as might be expected, its residents, community leaders, nonprofits, local governments, and companies stepped up their efforts,” Bernanke said.
He went on to explain, in one partnership, community groups are using data provided by a local university to identify borrowers at risk of foreclosure and are reaching out to them, door to door, to see what might be done to prevent a foreclosure. In another example, residents and community leaders in Slavic Village alerted county prosecutors to fraudulent lending in the neighborhood.
As the crisis continues to play out, Bernanke said, community leaders have found ways to reuse vacant land, adding gardens, yard expansions, and bike trails among the neighborhood’s declining number of homes, making it safer and more attractive.
In addition, he says business leaders are helping out by purchasing and demolishing properties adjacent to the gardens and trails and supporting the renovation and expansion of a nearby school and recreation center.
Bernanke noted that the examples he illustrated are “only a small sampling of the work going on around the country.”
“If we work together, I believe we can find effective ways to repair the damage done by the crisis to the economic prospects of families and communities,” he said. “Until vulnerable families and troubled communities have regained lost progress, the economic recovery will remain incomplete.”
By: Carrie Bay DS NEWS

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