addressing the foreclosure crisis: action oriented research in the greater atlanta area michael j....

Addressing the Foreclosure Crisis:Action Oriented Research in the Greater Atlanta Area

Michael J. RichEmory University

Atlanta Metro Area

Year

City population(thousands)

% of metro area

1970 495 33

1980 425 22

1990 415 16

2000 416 12

2007 464 11

Atlanta Profile

• Georgia is a nonjudicial foreclosure state—– Initiated by lender (or its agent) and not subject to

court supervision– Entire process from initial notice to court house sale

less than 45 days

• Few borrower protections• Foreclosure filings increased in 13-county metro

area from 37,000 in 2005 to 58,000 in 2007 (57%), which is almost 4 times the level of 2000

Metropolitan Housing Conditions and TrendsU.S. Average Atlanta Chicago Washington, DC

Population (000s, city/suburbs), 2007 433/4,839 2,738/6,785 588/4,718

Poverty (%, 2007, city/suburbs) 21/10 20/8 16/6

Housing Units (000s) 2007 % chg/yr, 2000-07

127,8951.4

2,1133.6

3,7521.2

2,1331.7

Vacancy rate (%, 2007) Renters Owners

8.02.5

11.54.3

8.12.7

7.42.3

Homeownership (%, 2007) Total Minority

6750

7055

6953

6857

Housing Values Owner-Occupied, 2007 Avg. Gross Rent, 2007

278878

260909

325920

5211,282

Housing Prices (OFHEO Index) Q1/2000 – Q4/2006 Q4/2006 – Q2/2008

5.5-5.9

2.5-4.4

5.3-5.5

11.5-11.7

Housing Affordability Pay more than 30% income for housing Renters Owners

4949

5050

5050

4747

Hendey, Kingsley, Pettit, Metropolitan Profiles, 2008

Home Value Trajectories for the Atlanta Metropolitan Area

50

100

150

200

250

300

Pri

ce G

ain

Over

Jan

uary

2000

20 Metro Index

Chicago Metro

Atlanta Metro

San FranciscoMetro

ClevelandMetro

Los AngelesMetro

Source: Case-Shiller Index, Immergluck and Lee , 2008

Table 5

Ave. 100Largest Washing-Metros Atlanta Chicago ton DC

Mortgages originated/ 1997 44 65 48 57 1,000 units 1-4 unit 2000 55 81 62 89 structures in 2000 2006 80 144 84 117

2007 54 87 53 75

Mortgage denial rate 1997 22 19 11 12 (%) 2000 22 20 14 11

2006 18 20 21 15 2007 19 21 21 16

Subprime % of purchase 1997 4 5 3 2 mortgages 2000 8 9 6 5

2006 12 13 15 12

Subprime % of refinancing 1997 21 23 21 16 loans 2000 26 29 22 19

2006 17 16 20 16

Investors as % of 1997 8 5 7 3 all borrowers 2000 7 7 5 3

2006 14 17 11 7 2007 13 14 11 6

Source: Analysis of DataPlace Home Mortgage Disclosure Act data files.

Mortgage Market Conditions and Trends

Hendey, Kingsley, Pettit, Metropolitan Profiles, 2008

Percent of Home Mortgage Loans Made by Subprime Lenders, 2003-2005

Foreclosure filings, June – August 2008Number of filings Foreclosures per square mile

Atlanta Area Response

• Limited response prior to NSP– Prevention activities

• Consumer Credit Counseling Services• CD and Housing counseling groups• Atlanta Legal Aid Homeowner Defense Project• DeKalb County Foreclosure Task Force

– Mitigation activities• Land bank authority reinvigorated• ANDP, Enterprise launched initiative (50 homes)

Neighborhood Stabilization Program Profile

• Six recipients in Metropolitan Atlanta– DeKalb County $18.5 million– City of Atlanta $12.3 million– Gwinnett County $10.5 million– Fulton County $10.3 million– Clayton County $ 9.7 million– Cobb County $ 6.9 million

– State of Georgia $77.0 million

DeKalb County NSP Strategy• Geographic targeting: five tiers• Social targeting: 25-30% of NSP funds to households

<50% of AMI ($35,600)• Strategic use of funds (leverage):

Strategy Dollars Units

Financing mechanisms $.7.5 million 100 single family1 multi-family

Purchase and rehab $7.5 million 56 units

Land bank $500,000 4 units

Demolition $500,000 28 units

Redevelopment $500,000 4 units

Administration $1.8 million

Less than 200 units v. 10,000 foreclosure filings Jan – Sep 2008

DeKalb County Priority Areas

• Number and percentage of subprime loans

• Number and percentage of foreclosures

• Number and percentage of defaults and delinquencies

Source: DeKalb County NSP Application, draft

Sustainability/Stabilization Principles

Priorities for properties located in areas with:• Existing community group or organization• Overlay zone or LCI initiative• Senior citizens or youth facilities• High crime rate• Major employment center• Special needs • Threat to major multi-family development

Partners• Public Agencies

– Atlanta Regional Commission– DeKalb County, Fulton County, Atlanta– GA Dept. of Community Affairs– Federal Reserve Bank of Atlanta

• Nonprofit Organizations– NeighborWorks– Atlanta Legal Aid Society– Atlanta Neighborhood Development Partnership– Enterprise Community Partners– Annie E. Casey Foundation Atlanta Civic Site– Atlanta Housing Association of Neighborhood-Based Developers

Work Plan

• Focus on DeKalb and Fulton Counties and city of Atlanta (about 42% of foreclosure filings)

• Assist with NSP application– Identifying areas of concentration

• Emphasis on REO neighborhoods– Subprime Foreclosure filingsREOs

1. Identify inventories and hotspots2. Profiles of neighborhoods3. Monitoring response

Challenges and Opportunities

Challenges• Building a data system across multiple counties• Time and attention of partners• Crowded field but lack of coherence• Lack of fit between need and organizationsOpportunities• NSP funds as a spark for action• Recognition of need for good data• State funding (NSP) potential for greater state-

local interaction