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Exploring the Dimensions of Foreclosure in the Context of Neighborhood Housing Markets.

Exploring the Dimensions of Foreclosure in the Context of Neighborhood Housing Markets. Michael Barndt Todd Clausen Jeff Arp Nonprofit Center of Milwaukee mbarndt@nonprofitcentermilwaukee.org. Not all mortgages are alike Not all neighborhoods are alike

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Exploring the Dimensions of Foreclosure in the Context of Neighborhood Housing Markets.

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  1. Exploring the Dimensions of Foreclosure in the Context of Neighborhood HousingMarkets. Michael Barndt Todd Clausen Jeff Arp Nonprofit Center of Milwaukee mbarndt@nonprofitcentermilwaukee.org

  2. Not all mortgages are alike • Not all neighborhoods are alike • Time trends and relative trends matter • Neighborhood context matters • Race still matters • Solutions need to match the local circumstance • Solutions need to address the variation in the problem • Solutions need to include a neighborhood scale component Parsing Context

  3. Purchase • Mortgage • Adjustment in loan – ARMs • Refinanced Mortgage • Sale to capture appreciation • Home Equity Loan • Financial changes for mortgage holder • Transfer of Paper • Payment experience • Les Pendens • “Short sale” • Foreclosure – “Sheriff’s Sale” • Disposition of Foreclosure “Foreclosure” is not just an event

  4. Purchase – SALES/ OWNER// LAND CONTRACT ?? • Mortgage – REGISTRATION OF DEED// HMDA • // CREDIT SCORE ?? • Adjustment in loan – ARMs - ?? • Refinanced Mortgage – REGISTRATION// HMDA • Sale to capture appreciation • Home Equity Loan - ?? • Financial changes for mortgage holder – COUNSELING AGENCIES • Transfer of Paper - ?? • Payment experience – LOAN PERFORMANCE – FED. RESERVE • Les Pendens - COURT • “Short sale” – LINK SALES/ ASSESSED VALUE • Foreclosure – “Sheriff’s Sale” – FORECLOSURE LIST • Disposition of Foreclosure – OWNER/ CODE VIOLATIONS Data is scattered and often unavailable

  5. Changing Industry Trends

  6. Percent High Cost Loans

  7. Percent High Cost Loans

  8. Percent High Cost Loans

  9. Percent High Cost Loans

  10. Use HMDA loan data. We had doubts about whether the HMDA file had enough info. • Create amortization schedules. • payment amount, interest paid, principle paid. • Compare loan costs for actual interest rates to costs for the same loans if they had a prime rate. Our Data Strategy

  11. Shift to high cost loans was substantially “Extractive” • After normalizing by the number of loans originated we mapped total extra dollars per loan. Neighborhood Effects

  12. Added cost/loan

  13. Added cost/loan

  14. Added cost/loan

  15. 2006 Applications: 24,998 Originations: 10,921 43.7% High Cost:      4,979 45.6% Average Loan Amount: $123,400 High Cost White:   26.5% High Cost Black:  72.1% High Cost Hispanic:   55.7% Distribution of High Cost Loans

  16. Foreclosure Patterns

  17. Green outline surrounds blocks within the city of Milwaukee which are greater than 75% African American Sheriffs Sales 1992 to 2007 Foreclosure Hot Spots 1992- 2007

  18. Red outline surrounds blocks within the city of Milwaukee which are greater than 75% African American Foreclosure Rate 1992 to 2007 Foreclosure Rates For single/duplex parcels 1992- 2007

  19. Loan Pattern Matches Foreclosure

  20. A Neighborhood Perspective…

  21. Westside Academy Attendance District Foreclosure Rates For single/duplex parcels 1992- 2007

  22. West Side Academy – Housing Value

  23. West Side Academy – Home Ownership

  24. Parcel View Foreclosure Events by parcel 1992- 2007

  25. Underlying Point Data Foreclosure Hot Spots 1992- 2007

  26. Foreclosure Rate 1992 to 2007 Foreclosure Rates For single/duplex parcels 1992- 2007

  27. A high mobility neighborhood on the western edge of the district with a mix of owner-occupied and investor owned properties. Tenure 2007

  28. Tenure Change1995 to 2007 Ownership Change For single/duplex parcels 1995- 2007

  29. Points indicate the locations of Sheriffs Sale Foreclosures 1992 to 2007 Tenure Change1995 to 2007

  30. Matching Foreclosure to Parcel Trends

  31. Neighborhood level trends and impacts • Foreclosure trends and distribution • Results of foreclosure sales – short and long term owner patterns • Investor owner patterns – effects on rental market • Changing patterns in length of owner occupancy Other dimensions of our research

  32. A Typology of the Mortgage System

  33. Not all mortgages are alike

  34. FactorsOwner occupant/ Investor/ Speculator/ AbsentTime frame for Adjustable Rate MortgagesRelationship of Market to Mortgage ValueHousehold Financial Changes Health/ Employment Investor RoleIndustry business model Conservative/ Speculative/ Extractive/ Absent

  35. Situational Matrix

  36. Not all mortgages are alike • Not all neighborhoods are alike • Time trends and relative trends matter • Race still matters • Neighborhood context matters • Solutions need to match the local circumstance • Solutions need to address the variation in the problem • Solutions need to include a neighborhood scale component Parsing Context

  37. Michael Barndt • Nonprofit Center of Milwaukee • mbarndt@nonprofitcentermilwaukee.org • National Neighborhood Indicators Partnership • Urban.org/NNIP • Center for Housing Policy • Foreclosure-Response.Org

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