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Addressing Foreclosures in the Metropolitan Mayors Coalition communities

Addressing Foreclosures in the Metropolitan Mayors Coalition communities . Presentation to the Metropolitan Mayors Coalition Bunker Hill Community College Monday, June 16, 2008 Metropolitan Area Planning Council with Jennifer M. Raitt, Chief Housing Planner. Background .

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Addressing Foreclosures in the Metropolitan Mayors Coalition communities

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  1. Addressing Foreclosures in the Metropolitan Mayors Coalition communities Presentation to the Metropolitan Mayors CoalitionBunker Hill Community CollegeMonday, June 16, 2008Metropolitan Area Planning Councilwith Jennifer M. Raitt, Chief Housing Planner

  2. Background • Massachusetts has climbed to the top ten states with high foreclosure rates. • Lenders seized 7,653 homes from Massachusetts borrowers through March of 2008, doubling since ‘06 • A collision of bankruptcies, rising and falling values, subprime loans, poor credit histories…

  3. Background • “Upside down” lending practices led to a high number of unsustainable loans to service with limited refinancing options • Role of third-party servicers • Disconnect between borrowers and lenders

  4. Background Subprime lending was high through 2006

  5. Background Subprime loans to minorities was also high

  6. Background

  7. Petitions

  8. Auctions

  9. Spillovers • Contact between borrowers in distress and a lender is often not established resulting in foreclosures, even when avoidance is possible • Homeownership Preservation Foundation • Counseling • Boston Home Center fee-for-service expansion to MMC communities • “Homeowner Fair” in MMC region via DOB

  10. Spillovers • When Adjustable Rate Mortgages reset to a higher rate, many owners find that there are only limited loan modification and refinance options • CDBG/ HOME program allocations to FC issue via Housing/ Economic Dev’t activities • New FHA mortgage product • Legislation to support

  11. Spillovers • Foreclosed properties are often an eyesore, a site for illicit activity, and drag down local house prices • Task forces, monitoring, data sharing • Boston Ordinance

  12. Spillovers • Municipalities increasingly find themselves dealing with the peculiar problem of walkaways • Municipal streamlining, standardizing and coordination • CHAPA Committee and property transfer to community-based nonprofit developers

  13. Spillovers • Many foreclosed properties continue to deteriorate and create losses to nearby properties even after they are sold to new buyers. • Partnerships • Ready Buyers

  14. Subprime and Alt-A in Real Estate Owned REO property is currently heavily concentrated in communities already experiencing high foreclosure rates, but is not as prevalent in communities with pending loan resets.

  15. Loan resets will be concentrated in those MMC communities already experiencing heavy foreclosure rates Subprime ARMs Resetting in 0-24 Months, Owner-Occupied Units

  16. Alt-A ARMs Resetting in 0-24 Months, Owner-Occupied Units A greater number of MMC communities will be impacted by Alt-A mortgage resets over the next two years.

  17. Collaborative Planning • Local actions have been strong in response to the issue, but more can be done regionally • The MMC should develop an action plan committing to a shared response

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