Tom Feltner | Foreclosure Impact and Prevention

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  • 1. Overcoming roadblocks to recovery: local strategiesTom Feltner | Vice President, Policy and CommunicationsWoodstock Institute | 29 E Madison Suite 1710 | Chicago, Illinoistfeltner@woodstockinst.org | www.woodstockinst.org@tfeltner | @woodstockinst | #justeconomy
  • 2. Regional Quarterly Trends in Foreclosure Filings, 2005 to 2011 New Foreclosure Filings 28,000 24,000 20,000 16,000 12,000 8,000 4,000 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 Completed Foreclosure Auctions 11,000 9,000 7,000 5,000 3,000 1,000 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
  • 3. Regional Foreclosure Filings 2006 2007 2008 2009
  • 4. Regional Foreclosure Filings 2006 2007 2008 2009
  • 5. Regional Foreclosure Filings 2006 2007 2008 2009
  • 6. Regional Foreclosure Filings 2006 2007 2008 2009
  • 7. Accumulation of Foreclosure Activity in Communities of Color, 2006 to 201030.0% 27.0% 26.3%25.0% 24.4% 23.2%20.0% 19.0% 15.9% 15.1%15.0% 12.8% 10.9% 9.7%10.0% 8.7% 7.0% 5.0% 0.0% 80% or greater African 50% or greater mixed 50% or greater Latino 20-49.9% minority 10-19.9% minority Less than 10% minority American Minority Share of Properties Share of Properties with Foreclosure Filings
  • 8. Effect of foreclosure accumulation in Englewood and West Englewood, 2007
  • 9. Effect of foreclosure accumulation in Englewood and West Englewood, 2008
  • 10. Effect of foreclosure accumulation in Englewood and West Englewood, 2009
  • 11. Effect of foreclosure accumulation in Englewood and West Englewood, 2010
  • 12. Chicago region foreclosure process times increasing, at record highs since 2008
  • 13. Strategy #1 – Foreclosure preventionfor homeowners staying in their homes
  • 14. Local strategies need to address unemployment-driven foreclosures, underwater homeownersFigure. Foreclosure Filings for Single-family Units in the Six County Chicago Region, by Typeof Mortgage, 2008-2011 100% 90% 80% 70% Other 60% Balloon 50% ARM 40% FHA/VA 30% Conventional 20% 10% 0% 2008 2009 2010 2011
  • 15. Local strategies need to address unemployment-driven foreclosures,underwater homeownersFigure. Single-family Mortgages Entering Foreclosure in the Six County Chicago Region,by Period of Origination, 2008-2011 100% 90% 80% 70% 60% 2010 50% 2009 40% 2008 30% 2005-2007 20% Before 2005 10% 0% 2008 2009 2010 2011
  • 16. Local strategies need to address unemployment-driven foreclosures, underwater homeownersLoan-to-value ratios of properties with mortgages in Chicago six county region, fourthquarter of 2011 100% 90% 80% LTV < 75 70% LTV 75-94 LTV 95-99 60% LTV 100-109 50% LTV 110-124 40% LTV > 125 30% 20%Source:Proprietary data 10%on negativeequity; 2010 0% 10 Percent or 10-19.9 Percent 20-49.9 Percent 50-79.9 Percent 80 Percent or 50 Percent orDecennial less Minority Minority Minority Minority more African more LatinoCensus American
  • 17. Local strategies need to address unemployment-driven foreclosures, underwater homeownersFigure. Average home equity and outstanding mortgage debt per property in the Chicago sixcounty region, fourth quarter 2011 $400,000 $350,000 $300,000 $250,000 $200,000MortgageEquity $150,000 $100,000 $50,000 $0 10 Percent or 10-19.9 Percent 20-49.9 Percent 50-79.9 Percent 80 Percent or 50 Percent or less Minority Minority Minority Minority more African more Latino American
  • 18. Local strategies need to address unemployment-driven foreclosures,underwater homeowners
  • 19. Strategy #2 – Reducing the impact ofvacant properties
  • 20. Concentration of Unsold Properties in Communities of ColorDisparate Impact of Lender-Owned Properties Unsold REO Properties 64 percent are concentrated in highly African American communities Absorption Rate It will take 25 percent longer for REO properties in highly African American communities to be absorbed into the market. Value Declines Highly African American communities saw declines of 35 percent, while primarily white communities saw declines of 17 percent.
  • 21. Communities of Color Hardest Hit by Vacant PropertiesVacant Properties Associated with Foreclosure Vacant Properties 18,320 properties identified as vacant or potentially vacant by the City of Chicago Nearly 70 percent of all vacant properties on the Chicago Vacant Buildings Index are associated with a foreclosure Red Flag Properties 1,896 properties on the Index are “red flag” properties, many of which may be lender walkaways 71 percent of red flag properties are located in highly African American communities, compared to only 7 percent in predominantly white communities Impact Shifts approximately $36 million in maintenance costs to City of Chicago
  • 22. Reducing the impact of vacant properties: City of Chicago vacant property ordinanceOrdinance Requirements StatusMortgagees of vacant buildings to register In effect since November 2011within the later of 30 days of becomingvacant or 60 days after a default. Supported by majority servicersMortgagees must appoint an agent located Subject to outstanding lawsuit by FHFAin Cook County to handle communicationsconcerning the ordinance.Mortgagees must maintain and securevacant buildings to the standards set by theCity. If not, the mortgagee will be finedbetween $500 and $1,000 for each day thebuilding is in violation of the ordinance.
  • 23. Overcoming roadblocks to recovery: local strategiesTom Feltner | Vice President, Policy and CommunicationsWoodstock Institute | 29 E Madison Suite 1710 | Chicago, Illinoistfeltner@woodstockinst.org | www.woodstockinst.org@tfeltner | #justeconomy