Columbus, Ohio, February 17, 2005 — With the recent explosion of subprime and predatory lending, as well as the overall increase in homebuying at prices that are outpacing increases in income, many industry experts predict the rate of foreclosures will rise nationwide. Most at risk are homeowners in real estate markets such as Ohio where home prices are stable or declining.
More than 150 public, corporate, and nonprofit officials gathered on Feb. 3 to discuss and begin implementing strategies to address the rapidly increasing rate of home loan foreclosures in Ohio. According to a September 2004 report from the Mortgage Bankers Association of America, Ohio has the highest percentage in the nation—65 percent higher than the national average—of homeowners in foreclosure or with mortgage payments that are 90 days or more past due.
The forum was sponsored by the Federal Reserve Bank of Cleveland and Neighborhood Reinvestment Corporation, a Congressionally-funded organization that supports the NeighborWorks® network of more than 235 community development and affordable housing organizations. Columbus Mayor Michael Coleman and Federal Reserve Bank of Cleveland Vice President and Community Affairs Officer Ruth Clevenger opened the forum.
At the forum, officials from Chicago Neighborhood Housing Services, a member of the NeighborWorks network, shared details of a successful program conducted in partnership with the city of Chicago that prevented 650 foreclosures through innovative outreach and counseling efforts. Through the Homeownership Preservation Initiative, Chicago homeowners facing foreclosures can call 311 to be linked to a representative from a nonprofit credit counseling agency. View press release.
The Ohio and Chicago examples will be featured in Neighborhood Reinvestment Corporation’s Center for Foreclosure Solutions, which will act as a clearinghouse for best practices, research, and policies that have proven effective in reducing foreclosure rates. As the body of knowledge grows, the Center will deploy a series of clinics and training sessions for communities suffering from high foreclosure rates.
Forum participants proposed strategies for reducing foreclosure rates and the negative impact of foreclosures on communities, including:
• Increased aid and access to nonprofit credit counseling for borrowers in distress;
• Enhanced banking industry involvement in preventing foreclosures, including increased pre-foreclosure contact between loan servicers and borrowers, as well as the provision of lender-funded credit counseling available throughout the life of the loan.
• Limiting impact of foreclosures on neighbors by streamlining transfer of foreclosures to community-based developers and developing a queue of loan-ready borrowers who have completed homeownership education, among other strategies.
• Engineering foreclosures out of the system by making escrow payments standard in subprime markets, improving consumers’ ability to protect themselves, increasing penetration of effective pre-purchase counseling, and providing borrowers with better access to loan pricing information.
• Improving data collection for foreclosure monitoring—Identify foreclosure hotspot areas so that resources may be targeted to areas of greatest need
More details on issues and proposals discussed at the forum are contained in a PowerPoint presentation, “Foreclosures in Ohio: What Is Happening and What Can Be Done About It.” View presentation.
About NeighborWorks
The NeighborWorks network is a nationwide network of more than 235 community development organizations working in nearly 2,700 urban, suburban and rural communities across America. These organizations engage in revitalization strategies that strengthen communities and transform lives. Neighborhood Reinvestment Corporation provides financial support, technical assistance and training for the NeighborWorks network. In the last five years alone, NeighborWorks organizations have generated more than $8.5 billion in reinvestment and helped more than 500,000 families of modest means purchase or improve their homes or secure safe, decent rental or mutual housing.
