The Foreclosure Crisis Exacerbates Regional Divides

Nov 15, 2010
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Peggy Sand Director of the Capital Area Foreclosure Network

The Brookings Institution’s 1999 report A Region Divided laid out in stark terms the metropolitan Washington region’s east-west racial economic and job opportunity divisions. The Yardstick recently commented on the related issue of racial disparities in growth in the region in terms of education health and income – housing is part of that mix.

The housing bubble resulted in some actual wealth for the region’s less affluent jurisdictions and households and some paper wealth as well. Since the bubble burst foreclosure and delinquency rates have varied significantly by jurisdiction. In our region Prince George’s and Prince William counties have been the most severely impacted. In December 2009 25 percent of Prince George’s mortgages were delinquent including those already in foreclosure. The disparate impact of the crisis on the eastern part of the region heightens divisions within an already divided region.

Although the foreclosure crisis has not been evenly distributed throughout the Washington area no jurisdiction has been immune. In December 2009 the Urban Institute found that 148000 mortgages in the region were delinquent including those that were already in foreclosure. Loan modifications in which lenders agree to lower the monthly mortgage payments to more sustainable levels allow homeowners to stay in their homes though these modifications are often complicated to negotiate. Urban Institute research also indicates that homeowners working with HUD-certified housing counselors are 1.6 times more likely to avoid foreclosure.

In response to the crisis facing our region COG and the Nonprofit Roundtable of Greater Washington teamed up to create the Capital Area Foreclosure Network (CAFN). As part of a regional response to the foreclosure crisis and with support from Fannie Mae Freddie Mac and NeighborWorks America CAFN works to:

1. Educate at risk homeowners and renters about the importance of contacting a nonprofit housing counselor.

2. Partner with the Urban Institute to conduct research on the scope and impact of the region’s foreclosure crisis including a recent study on the capacity of area nonprofit housing counseling organizations.

3. Build the capacity of counseling organizations through training and increased funding.

4. Provide additional resources and support in hot spots and for demographic groups that have been most severely impacted.

What should individuals do?

1. If you are worried about paying your mortgage contact a nonprofit housing counselor. The CAFN web site provides contact information for certified counseling organizations.

2. Beware of scam artists. If it sounds too good to be true it probably is a scam.

3. If you are in a position to help make a donation to a nonprofit housing counseling organization or a legal services provider. Case loads for foreclosure prevention services have more than doubled in the past two years.

What can we do as a region?

1. Make sure that struggling homeowners know about programs available to help them.

2. Make sure that state foreclosure processes are fair enforced and allow homeowners enough time to pursue alternatives to foreclosure including loan modifications and short sales.

3. Hold servicers accountable for their actions under the Home Affordability Modification Program.

 
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