State Responses to the Foreclosure Crisis

1. State Responses to the Foreclosure Crisis The National Hispanic Caucus of State Legislators Housing Symposium Graciela Aponte Wealth-Building Legislative Analyst National Council of La Raza

2. National Council of La Raza The National Council of La Raza (NCLR)—the largest national Hispanic civil rights and advocacy organization in the United States—works to improve opportunities for Hispanic Americans. Through its network of nearly 300 affiliated community- based organizations, NCLR reaches millions of Hispanics each year in 37 states, Puerto Rico, and the District of Columbia.

3. NCLR Homeownership Network (NHN) • The network includes 50 community-based housing counseling agencies in 23 states. • NHN organizations serve more than 30,000 families. Last year, more than 3,000 of those families became homeowners. • NHN organizations have provided foreclosure counseling to more than 5,000 families since October 2007.

4. Overview • Barriers to Accessing Prime Products • Foreclosures in the Latino Community • Impact of Foreclosures on States • NCLR Home Rescue Campaign • Case Study: Ohio Foreclosure Prevention Task Force • Recommendations • NCLR Publications

5. Barriers to Accessing Prime Products Informational challenges • Lack of homebuyer and consumer information • Product complexity • Predatory lending Systemic challenges • Credit scoring • Automated underwriting • Referral systems • Compensation

6. Foreclosures in the Latino Community As a result, borrowers face a number of consequences: • Abusive lending practices • Foreclosure • Loss of wealth

7. Foreclosures in the Latino Community • Of the loans made to Latinos in 2005 and 2006, one in 12 will end in foreclosure. • 1.8 million foreclosures overall are predicted for 2008 alone. • The height of the crisis for Latinos will not come until 2009–2010, when Option ARMs and interest-only loans are scheduled to reset.

8. Impact of Foreclosures on States Top States Facing Declines in House Values and Local Tax Bases Due to Subprime Foreclosures Source: Keith Ernst, Wei Li, and Ellen Schloemer, Subprime Spillover (Washington, DC: Center for Responsible Lending, 2007).

9. NCLR Home Rescue Campaign NCLR launched the Home Rescue Campaign to help community-based organizations and Affiliates address the rising rates of foreclosures. The campaign features: • Grant funding for foreclosure prevention counseling • A Home Rescue fair pilot program • An NCLR Toolkit—Community Responses to the Foreclosure Crisis

10. Community Responses to the Foreclosure Crisis: An NCLR Tool Kit NCLR hosted a working meeting with national organizations, service providers, industry professionals, and funders. • Participants identified gaps in services and tools that community groups needed to better serve their clients. • Innovative outreach and service strategies were reviewed. • Recommendations were formulated.

11. Community Responses to the Foreclosure Crisis: An NCLR Tool Kit • Community Responses to the Foreclosure Crisis was created to provide community organizations with tools and strategies that could be implemented immediately and without new funding. • Any local organization, church, or district office can use this tool kit to develop its own response to foreclosures in your area.

12. Tool Kit Contents • Getting Started • First Responder • Community Collaborator • Direct Service Provider • Advocacy

13. Getting Started Know Your Community • Identify community leaders, service providers, and existing community responses. • Understand the experiences and needs of foreclosure victims. • Identify gaps in service. Build Community Awareness • Contact reporters from local media that cover housing or community programs • Create a Public Service Announcement (PSA). • Talk to your community leaders.

14. First Responder Know Your Strengths • Understand the needs of clients, list and prioritize them. • Decide what you can contribute. Create Your Network • Get involved in a local coalition, working group, or task force. • Ensure that the local network meets your clients’ needs. • Offer your services. • Identify who is missing. • Develop a referral network.

15. Community Collaborator Who is a Community Collaborator? • A community collaborator is a community leader, community-based organization, local government agency, public official, or community partnership that can organize outreach events for the community. What is a Home Rescue fair? • A Home Rescue fair is an outreach event that provides pro bono legal advice, housing counseling, and loan negotiation to assist families who are struggling with their mortgage payments identify resources and assistance.

16. Direct Service Provider Foreclosure Prevention Counseling—Housing Counselor Will: • Review financial information • Discuss foreclosure prevention options • Work with family to submit a budget, hardship letter, and a request for a loan modification, deed-in-lieu, or forbearance to the lender • Follow up with lender and family

17. Advocacy Types of Advocacy • Administrative • Service • Legislative Examples of Advocacy Activities • Contact elected officials • Testify at public hearings • Write a letter to the editor • Organize a rally

18. Case Study: Ohio Foreclosure Prevention Task Force Homes on the Hill Community Development Corporation, an NHN member, participated in the task force that helped Ohio develop and enhance its foreclosure prevention programs by: • Demanding more flexible underwriting requirements so that more families can qualify for state refinancing programs and avoid foreclosure • Conducting Borrower Outreach Days to facilitate communication between borrowers and lenders

19. Case Study: Ohio Foreclosure Prevention Task Force (continued) • Recruiting more than 1,000 attorneys to provide free legal assistance to families • Establishing a state hotline that families can call to connect with a pro bono attorney • Creating a new public awareness campaign, Save the Dream, to link Ohioans with local, state, and federal foreclosure prevention resources

20. Case Study: Ohio Foreclosure Prevention Task Force The task force included representation from local, state, and federal governments; lenders; and nonprofit organizations. The task force offered 27 recommendations grouped into the following categories: • Encouraging borrowers to get help early • Expanding housing counseling and intervention services • Working with lenders and servicers to maximize alternatives to foreclosure

21. Recommendations Priorities for the Latino community • Require loan servicers to provide loss mitigation to struggling homeowners. • Defer foreclosures while families are in the loss mitigation process. • Provide protections for renters and victims of predatory lending. • Offer assistance to families facing homelessness due to foreclosure. • Increase resources for local foreclosure programs and funding to develop and return abandoned homes to the affordable rental and sale markets.

22. Case Study: Ohio Foreclosure Prevention Task Force (continued) • Provide options for homeowners to refinance or restructure their mortgages. • Improve Ohio's foreclosure process. • Strengthen protections for homeowners. • Help communities recover from the aftermath of foreclosures.

23. NCLR Publications • Community Responses to the Foreclosure Crisis: An NCLR Tool Kit • Saving Homes, Saving Communities: Latino Brokers Speak Out on Hispanic Homeownership • American Dream to American Reality: Creating a Fair Housing System that Works for Latinos • Jeopardizing Hispanic Homeownership: Predatory Practices in the Homebuying Market • Increasing Hispanic Homeownership: Strategies for Programs and Public Policy For a complete list of publications, congressional testimony, and regulatory commentary, visit www.nclr.org/wealthbuilding.