State Responses to the Foreclosure Crisis

The National Hispanic Caucus of State Legislators Housing Symposium

Graciela AponteWealth-Building Legislative AnalystNational Council of La Raza

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National Council of La Raza

The National Council of La Raza (NCLR)—the largest

national Hispanic civil rights and advocacy

organization in the United States—works to improve

opportunities for Hispanic Americans.

Through its network of nearly 300 affiliated community-

based organizations, NCLR reaches millions of

Hispanics each year in 37 states, Puerto Rico, and the

District of Columbia.

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NCLR Homeownership Network (NHN)

The network includes 50 community-based housing counseling agencies in 23 states.

NHN organizations serve more than 30,000 families. Last year, more than 3,000 of those families became homeowners.

NHN organizations have provided foreclosure counseling to more than 5,000 families since October 2007.

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Overview Barriers to Accessing Prime Products Foreclosures in the Latino Community Impact of Foreclosures on States NCLR Home Rescue Campaign Case Study: Ohio Foreclosure Prevention Task

Force Recommendations NCLR Publications

Barriers to Accessing Prime Products

Informational challenges Lack of homebuyer and consumer information Product complexity Predatory lending

Systemic challenges Credit scoring Automated underwriting Referral systems Compensation

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Foreclosures in the Latino Community

As a result, borrowers face a number of

consequences:

Abusive lending practices Foreclosure Loss of wealth

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Foreclosures in the Latino Community Of the loans made to Latinos in 2005 and 2006,

one in 12 will end in foreclosure.

1.8 million foreclosures overall are predicted for 2008 alone.

The height of the crisis for Latinos will not come until 2009–2010, when Option ARMs and interest-only loans are scheduled to reset.

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Impact of Foreclosures on States

Top States Facing Declines in House Values and Local Tax Bases Due to Subprime Foreclosures

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Number of Neighboring Homes Experiencing Devaluation

Decrease in House Values/Tax Base from Foreclosure Effect ($ in millions)

United States 40,621,895 201,533 California 7,505,584 60,631 New York 3,552,642 36,841 Florida 3,667,230 20,281 Illinois 2,536,938 15,440 New Jersey 1,781,424 11,070 Maryland 1,220,574 6,863

Source: Keith Ernst, Wei Li, and Ellen Schloemer, Subprime Spillover (Washington, DC: Center for Responsible Lending, 2007).

NCLR Home Rescue Campaign

NCLR launched the Home Rescue Campaign to help

community-based organizations and Affiliates address

the rising rates of foreclosures. The campaign

features:

Grant funding for foreclosure prevention counseling A Home Rescue fair pilot program An NCLR Toolkit—Community Responses to the

Foreclosure Crisis

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Community Responses to the Foreclosure Crisis: An NCLR Tool Kit

NCLR hosted a working meeting with national

organizations, service providers, industry

professionals, and funders.

Participants identified gaps in services and tools that community groups needed to better serve their clients.

Innovative outreach and service strategies were reviewed.

Recommendations were formulated.

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Community Responses to the Foreclosure Crisis: An NCLR Tool Kit

Community Responses to the Foreclosure Crisis was created to provide community organizations with tools and strategies that could be implemented immediately and without new funding.

Any local organization, church, or district office can use this tool kit to develop its own response to foreclosures in your area.

Tool Kit Contents

Getting Started

First Responder

Community Collaborator

Direct Service Provider

Advocacy

Getting StartedKnow Your Community

Identify community leaders, service providers, and existing community responses.

Understand the experiences and needs of foreclosure victims.

Identify gaps in service.

Build Community Awareness

Contact reporters from local media that cover housing or community programs

Create a Public Service Announcement (PSA). Talk to your community leaders. 13

First Responder

Know Your Strengths

Understand the needs of clients, list and prioritize them. Decide what you can contribute.

Create Your Network

Get involved in a local coalition, working group, or task force.

Ensure that the local network meets your clients’ needs. Offer your services. Identify who is missing. Develop a referral network.

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Community CollaboratorWho is a Community Collaborator?

A community collaborator is a community leader, community-based organization, local government agency, public official, or community partnership that can organize outreach events for the community.

What is a Home Rescue fair?

A Home Rescue fair is an outreach event that provides pro bono legal advice, housing counseling, and loan negotiation to assist families who are struggling with their mortgage payments identify resources and assistance.

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Direct Service Provider

Foreclosure Prevention Counseling—Housing Counselor Will:

Review financial information Discuss foreclosure prevention options Work with family to submit a budget, hardship letter, and

a request for a loan modification, deed-in-lieu, or forbearance to the lender

Follow up with lender and family

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Advocacy

Types of Advocacy

Administrative Service Legislative

Examples of Advocacy Activities

Contact elected officials Testify at public hearings Write a letter to the editor Organize a rally

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Case Study: Ohio Foreclosure Prevention Task Force

Homes on the Hill Community Development

Corporation, an NHN member, participated in the task

force that helped Ohio develop and enhance its

foreclosure prevention programs by:

Demanding more flexible underwriting requirements so that more families can qualify for state refinancing programs and avoid foreclosure

Conducting Borrower Outreach Days to facilitate communication between borrowers and lenders

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Case Study: Ohio Foreclosure Prevention Task Force

(continued)

Recruiting more than 1,000 attorneys to provide free legal assistance to families

Establishing a state hotline that families can call to connect with a pro bono attorney

Creating a new public awareness campaign, Save the Dream, to link Ohioans with local, state, and federal foreclosure prevention resources

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Case Study: Ohio Foreclosure Prevention Task Force

The task force included representation from local,

state, and federal governments; lenders; and nonprofit

organizations. The task force offered 27

recommendations grouped into the following

categories:

Encouraging borrowers to get help early Expanding housing counseling and intervention services Working with lenders and servicers to maximize

alternatives to foreclosure

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RecommendationsPriorities for the Latino community

Require loan servicers to provide loss mitigation to struggling homeowners.

Defer foreclosures while families are in the loss mitigation process.

Provide protections for renters and victims of predatory lending.

Offer assistance to families facing homelessness due to foreclosure.

Increase resources for local foreclosure programs and funding to develop and return abandoned homes to the affordable rental and sale markets.

Case Study: Ohio Foreclosure Prevention Task Force

(continued)

Provide options for homeowners to refinance or restructure their mortgages.

Improve Ohio's foreclosure process. Strengthen protections for homeowners. Help communities recover from the aftermath of

foreclosures.

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NCLR Publications Community Responses to the Foreclosure Crisis: An

NCLR Tool Kit Saving Homes, Saving Communities: Latino Brokers

Speak Out on Hispanic Homeownership American Dream to American Reality: Creating a Fair

Housing System that Works for Latinos Jeopardizing Hispanic Homeownership: Predatory

Practices in the Homebuying Market Increasing Hispanic Homeownership: Strategies for

Programs and Public Policy

For a complete list of publications, congressional testimony, andregulatory commentary, visit www.nclr.org/wealthbuilding.