HousingPolicy.org Forum

Join us on Tuesday, February 9 from 2:00 - 4:00 p.m. Eastern (11 a.m. - 1:00 pm. Pacific) to hear about learnings from Living Cities' Foreclosure Mitigation Initiative and their new report, Communities at Risk: How the Foreclosure Crisis is Damaging Urban Areas and What is Being Done About It, and get answers to your questions from George McCarthy, Matt Pacenza, and Kevin McQueen.

  • Hear about the initiative: The two-part event begins at 2:00 p.m. Eastern (11:00 a.m. Pacific) with a 30-minute conference call, where major findings from the report and initiative will be presented. The call-in number is (712) 432-1001 and the access code is 452746624#.
  • Interact with the authors: Immediately following the call, from 2:30 - 4:00 p.m. Eastern (11:30 a.m. to 1:00 pm. Pacific), George McCarthy, Matt Pacenza, and Kevin McQueen will be online to answer your questions. All questions should be posted to this thread, and you are welcome to post at any time before or during the event. Questions will be answered on a first-come, first-served basis until time runs out, so post early to be sure yours is addressed.

Note: You will need to refresh your browser periodically during the live event to view new questions and responses.

Thank you to all who participated in this Live at the Forum event.  Audio from the conference call can be accessed here.

About the Initiative
Launched in late 2007, Living Cities' Foreclosure Mitigation Initiative provided $5.25 million in foreclosure mitigation grants to organizations in 10 locations.  The purpose of these grants was to support innovative local neighborhood stabilization pilot projects that could become models for the acquisition and resale of foreclosed properties.  An interim evaluation of the initiative, conducted by the Urban Institute, is available on the Living Cities website.  Three case studies related to the Initiative are available for download as PDFs below.

About the Report

Communities at Risk: How the Foreclosure Crisis is Damaging Urban Areas and What is Being Done About It describes how foreclosures are damaging America's cities, triggering a spiral of abandonment, decay and municipal budget shortfalls. It also looks at ten pilot projects that community groups and partnerships have developed to fight for their communities.  The report can be accessed at: http://livingcities.org/download/?id=41

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Would you comment on the results of the Urban Institute's work on the Living Cities effort, and how this most recent report adds to our body of knowledge?
Hi Chris,

Urban has done some great work for us on the evaluation of the Foreclosure Mitigation Initiative. In their interim evaluation, they found that the Initiative has:

* Helped to catalyze scalable and adaptable models for mitigating the consequences of the foreclosure crisis on urban neighborhoods
* Accelerated the flow of capital, including federal Neighborhood Stabilization Program funds, to local neighborhood stabilization approaches, and
* In some locations, helped create a cross-sectoral infrastructure to respond more comprehensively to the crisis; this infrastructure could be used to address other, related issues such as land use.

At the same time, the interim evaluations also finds that:

* Despite Living Cities’ relatively swift grantmaking, some of the pilot programs were slow to launch because of challenges in such areas as closing financing, the receipt of federal funds and snags in property acquisition
* Whether grantees' activities will ultimately stabilize neighborhoods remains to be seen. Moreover, it is not yet clear whether the cross-sectoral partnerships Living Cities helped to catalyze will endure beyond the current crisis.

They've also found that there is an important role for flexible, early-in capital as the field responds to crises such as this one.

Final note: I just got Urban's draft final evaluation Friday. We expect to publish it by the end of next month.
As far as the body of knowledge goes, it gives us some specific and in-depth examples about the factors that help pilots succeed and fail. The report reinforces that things like cross-sectoral collaborative infrastructure, flexible capital, relationships between funders and grantees, and established capacity on the ground are critical to the ability of a locality to respond effectively to such a tectonic change. As you probably know, Todd Swanstrom and John Mollenkopf in the MacArthur Foundation's research network write a lot about this. I believe they refer to it as the "resilience framework". Urban's findings resonated a lot with that framework.
Would you say more about the Bootcamp?

At foreclosure-response.org, we have been developing ideas for a rapid-response research program that would highlight some of the better examples of neighborhood stabilization, written for policy audiences. Right now, HUD is very focused, as they should be, on getting "tools" rapidly into the hands of practitioners. However, we believe that there's an urgent need for higher-level "policy" guidance, as well.
Chris,

Let me give you a quick overview here. The goal of the Boot Camp is to foster a "game-changing" conversation that will generate actionable goals for cities, states and key federal agencies to materially impact neighborhood stabilization efforts on the ground. We are fielding about 10-12 teams from cities whose composition will be multidisciplinary and, in some cases, disruptive in and of itself (e.g. asking teams to bring the biggest private REO investor in their area), along with experts in specific issues as "faculty". We are still refining the framework, but right now our framework has three main "buckets": "Establishing an Endgame", "Developing the Right Tools and Teams", and "Targeting". We believe that each team will bring different strengths to the camp in order to help them refine and augment their approaches. We do intend to have a discussion with high-level policy makers, and possibly others, about ways to improve the policy surround for local efforts. We would welcome your thoughts. We should follow up offline.
I haven't seen much use of eminent domain, but I have seen the use of several other tools for getting control of the properties: accelerated foreclosure; tax foreclosure that subordinates mortgage claims; and aggressive code enforcement. It is my view that these tools are less dangerous to use than eminent domain--which has lots of rancor surrounding it.

The best people to talk about the use of these tools are Alan Mallach at Brookings, Dan Kildee from Flint MI and Frank Alexander at Emory.
How successful have foreclosure court mediations programs been in conjunction with other foreclosure prevention strategies?
We've seen that required mediation accomplishes several beneficial things:

1. It slows the foreclosure process and buys some time for counselors to forge effective solutions (negotiated settlements, principal reductions, etc.)

2. It requires that the foreclosing agent and the borrower have at least one face to face meeting--these often result in favorable outcomes. For example, they might be able to negotiate to a realistic settlement; and

3. It provides the opportunity for borrowers to find some representation to defend their claims in the foreclosure process. This is important because often that agent that is trying to foreclose has no legal right to do so and just a little legal intervention often stops the process in its tracks.

There doesn't seem to be much harm in requiring a mediation. Lenders at first claimed that it would slow down the foreclosure process which would be bad for neighborhoods and communities. I'm not sure that that is a defensible claim given the pace with which foreclosures are proceding.
It's also true that, in some cases, mediation can actually speed up the foreclosure process. This may sound bad, but for a property that's already vacant and abandoned, that's a good thing. It's generally a matter of state law, and one of the big questions is whether foreclosure is a judicial process or not. For a good non-judicial foreclosure process, check out Michigan's policy. It's a non-judicial state, but if the foreclosure doesn't go to mediation it becomes a judicial process, which can be helpful for the Borrower. New York is a judicial foreclosure state and requires mediation, and nonprofits like the Center for New York City Neighborhood and NEDAP support that process.
During the discussion the information touched on how seemingly ineffective some efforts have been (i.e. housing counseling) on the larger scale. How much longer do you foresee the large amounts of dollars being allocated toward counseling efforts and such?
In addition, when the funding does subside, what direction should housing counseling agencies move toward?
I think that housing counseling agencies need to move toward a sustainable business model that does not require public subsidy that keeps them afloat. I've been working with a large number of effective counseling agencies to become mortgage lenders themselves and use their expertise at finding, training, and supporting home buyers after purchase to improve lending performance. The revenues garnered from the lending can be used to cross-subsidize the counseling.

If you're interested, you should contact the Fair Mortgage Collaborative which is a trade group of several hundred mostly-nonprofit mortgage lenders.

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