foreclosure crisis: A volunteer with NeighborWorks America and the Newark-Essex Foreclosure Task Force takes part in the Loan Scam Alert Campaign by tearing down a scam advertisement claiming to give cash for homes. Photo by NeighborWorks® America.
Across the country, from Arizona to New Jersey and Florida to Michigan, community-based organizations, community development organizations, businesses, clergy, and city, county, and state representatives are banding together to form foreclosure task forces in order to take a regional look at a regional problem.
At this point, the unfolding of the foreclosure crisis is a story Americans have become all too accustomed to hearing. Round 1: As adjustable rates reset and housing prices fell subprime and predatory loans that were beyond the capacity of the mortgage holders went into default. Round 2: Unemployment, which is not expected to fall lower than 9 percent in 2010, has emerged as the number 1 cause for continuing foreclosures. Foreclosure filings are anticipated on 3 million properties by year’s end, along with more than 1 million bank repossessions, according to RealtyTrac.
In many cases, the dramatic realities of these waves of foreclosures have forced organizations used to working separately to come together, share information, and coordinate both programs and advocacy.
In Michigan, for example, housing counselors were being overwhelmed by queries from homeowners facing foreclosure. The state is in the top ten in the country for foreclosure filings, and its foreclosure rate shot up 29 percent in the first half of 2010 as compared to the first half of 2009. In Wayne County alone, home to Detroit, there were nearly 112,000 foreclosure filings in June 2010. In response, 20 nonprofit housing counseling agencies have banded together to coordinate their community outreach, education, and foreclosure prevention services, and ultimately to offer up legislative strategies that address the effects of foreclosed homes on neighborhoods.
And there are similar efforts going on around the rest of the country. In Arizona, which ranked third in the nation, behind only Florida and California, for mortgage fraud, the Arizona Foreclosure Prevention Taskforce, comprising, among others, Neighborhood Housing Services of Phoenix, Comerica Bank, Desert Schools Credit Union, and the Pima County Community Development and Neighborhood Conservation Department, was formed in 2007. Scam prevention is a hallmark of its mission, and it has focused its efforts on prevention and education, offering workshops and counseling to at-risk homeowners.
In Florida, where there were over 275,000 foreclosure filings in June 2010 alone, several countywide task forces have attempted to stem the rising tide. In Washington, D.C., there’s the Capital Area Foreclosure Network, which brings together local governments, community organizations, and funders, as well as institutions like NeighborWorks America and the Federal Reserve Bank of Richmond. And in New Jersey’s Essex County, a task force that began as a way to coordinate prevention measures spawned a consortium that won a round 2 federal Neighborhood Stabilization Program grant.
Coming Together
Essex County is one of New Jersey’s oldest urban/suburban areas. Just a dozen or so miles from New York City, in 2007 it had a foreclosure rate nearly twice that of the entire New York metro area. Between 2005 and August 2008, roughly 6 percent of all Essex County homes were in foreclosure at some point, according to a 2008 analysis conducted by The New York Times. All told, as of 2008, more than $2.03 billion in housing value and tax base had been lost in Essex County just from subprime loans originating between 2005 and 2006, according to the Center for Responsible Lending.
That was bad enough, but then the floodgates opened. In the first six months of 2009, the foreclosure rate increased 31 percent as compared to the first half of 2008, according to RealtyTrac.
The office of Michael Meyer sits on the fourth floor of Newark City Hall, a massive stone Renaissance Revival building built at the turn of the 20th century that is also undergoing a restoration effort. If City Hall is a reflection of the community at large, there are layers upon layers of rich history, a beautiful structure, but, as indicated by ubiquitous scaffolding and tarp, there is a daunting level of work to be done.
On this particular day, Meyer sits before a backdrop of tax maps, architectural renderings, and topographic depictions replete with red marks indicating high foreclosure areas. Everyone’s collective interest in those neighborhoods, Meyer said, is what got the ball rolling quickly for the taskforce.
The task force was formed in 2007, after Meyer, who is director of the city’s division of Housing and Real Estate, within the department of Housing and Economic Development, sought suggestions from stakeholders around the greater Newark area as to how to best address foreclosures. In Newark alone at the time, roughly 1,400 out of 20,000-plus properties of the city’s housing stock were in foreclosure, and there was no comprehensive, regional effort to do anything about it, Meyer says.
In the greater Essex area, where the difference between rich and poor in the densely packed suburbs can be a matter of a block or two, the necessity of a regional response was stark. Gathering a pool of the region’s talent into one room could help solve problems that could not necessarily be addressed neighborhood by neighborhood, thought Meyer.
“Honestly, the first challenge was to get people into one room,” he says, saying simple logistics made that process difficult. But once things started to fall into place, “people began to embrace the process, not only because they want to see this problem addressed and the neighborhoods improved, but also because Newark hadn’t been doing a lot of work on that end.”
The Newark-Essex Foreclosure Task Force is composed of myriad groups that had been working on their own pieces of the foreclosure puzzle. The cities of East Orange, Irvington, and Newark are all represented, as is HUD, New Jersey HMFA, Rutgers and Seton Hall universities, ACORN, LISC, NeighborWorks, Enterprise, Legal Services of New Jersey, and the New Jersey Department of Banking and Insurance, as well as a host of prominent CDCs and advocacy organizations.
“The task force has assembled a group of talented, ambitious people who were already working on this in their own neighborhoods — now, they’re just thinking bigger,” says Kathe Newman of Rutgers University’s Bloustein School of Planning and Public Policy, who has supplied the task force with data.
The Michigan Foreclosure Task Force, a statewide effort, was also formed in the summer of 2007. “Many of the CDCs in Michigan were doing foreclosure work, but it wasn’t their primary, secondary, or even tertiary work,” says Lisa Nuszkowski, who co-directs the task force with Steve Tobocman. The atmosphere in Michigan was similar to so many other areas where foreclosures have hit hard: despite a lot of work being done by individual agencies and groups, there was no coordinated response. Community groups began to recognize that they needed to work together.
The task force was born out of the legislative office of Tobocman, then a member of the Michigan House of Representatives; Nuszkowski was his chief of staff. Tobocman had made foreclosure response one of his legislative priorities, and he reached out directly to groups involved in the issue. Those initial meetings consisted of groups feeling each other out and sharing information, Nuszkowski said. “It was a interesting environment, because you had people competing for funding, but a climate where everyone very much wanted to collaborate.”
In 2009, Tobocman was facing term limits and knew he wouldn’t be in public office as of 2010, so at this point, the task force had to transition to an independent project. In winter 2009 Tobocman and Nuszkowski were officially hired by the Community Economic Development Association of Michigan (CEDAM) to be staff for the task force, which would now be a CEDAM project. Funding for the task force and their position, which is shared, was in part provided by NeighborWorks, the Ford Foundation, Bank of America, and smaller bank grants.
Getting to Work
The Michigan task force, composed of 20 nonprofit agencies (many of them housing counselors) identified three focus areas: foreclosure prevention and housing counseling, policy and advocacy work, and post-foreclosure neighborhood impact.
Nuszkowski points to changes the basic counseling culture as one of the task force’s earliest achievements. “In the west side of the state, for example, you have four different counseling agencies doing a joint-intake process,” she explains. “When a homeowner calls, they get put into one line and their call is answered by whichever counselor is available, regardless of the agency.”
The task force also advocated for a 90-day preforeclosure law that passed in July 2009. The law requires lenders to work with distressed homeowners and gives a homeowner time to contact a certified nonprofit housing counselor, mediate with the lender, “and just talk about options,” before foreclosure moves forward. Nuszkowski, fresh off a run for the Michigan state senate, where she came in second in the Democratic primary in August, notes that all legislative triumphs are uphill battles. “We didn’t get everything we wanted,” she says, “but there’s a net benefit and it provides an opportunity [for distressed homeowners] to connect with a trusted resource who can [help them] navigate the process.”
The task force also has its eye on reforming the foreclosure process. In Michigan, foreclosures currently proceed non-judicially, meaning there is no court intervention: a default letter is mailed to a homeowner and if the default is not resolved, a notice of sale is publicly posted. Nuszkowski says the task force plans to make a concerted push for judicial foreclosures, which are processed by the courts, beginning with the lender filing a complaint.
To address postforeclosure impact, the Michigan group is starting to look at getting into targeted acquisition, similar to the work of New Jersey’s Community Asset Preservation Corporation, a nonprofit working to stabilize fragile neighborhoods through the bulk purchase of mortgage notes or property, with mixed-market disposition, from market-rate sale to rehab to demolition.
“It was, and still is, clear that we weren’t going to solve the problem wholesale, but what we could do is pick the areas we can impact, and make sure we do those really well,” Nuszkowski says.
Many locations hard hit by foreclosure have struggled to get access to good data to use in planning their responses. “It’s one of the biggest challenges we have,” Nuszkowski says, and what they do get is “much more anecdotal than I’d like it to be.” Mining data is generally beyond the resources of a single community group or even local government agency, but this is another area where a regional or statewide task force can help.
Kathe Newman at Rutgers worked directly with New Jersey’s Newark-Essex Foreclosure Task Force. She and a handful of students were able to gain access to property histories, as well as other data from local governments, banks, and court records that allowed them to paint a comprehensive picture of the foreclosure impact in northern Jersey.
“When we started looking at the problem, towns had no ability to track foreclosures, even though here was a wealth of data that was accessible, though not easily,” Newman says. In addition to culling data from some of the harder-to-reach resources, Newman and her group brought in statistics from the Federal Reserve Bank of New York, the Congressional Joint Economic Committee, the Office of the Comptroller of the Currency, and the Treasury, as well as CoreLogic and Center for Responsible Lending. “We are trying to increase the capacity of towns, but it’s hard to stay ahead of the curve. There’s no master list of REOs or the shadow REO inventory,” says Newman, referring to the untold number of distressed properties not yet foreclosed upon or on the market. Task force members use the data Newman and her students gathered to be more strategic and proactive about targeting and reclaiming vacant properties.
One of the most important functions of these task forces is to serve as a platform for the member groups to work with one another. “Success here is contingent upon the decisive leadership in each of the partners’ respective communities, as well as a willingness for participants to share and forfeit information, rather than be suspicious of one another,” says Meyer.
But they have done so, and thanks to the work of the task force, says Meyer, homeowners now have better, more consistent access to outreach and education, loan crisis counseling, and scam prevention. Members worked together on an awareness-raising event to tear foreclosure rescue scam signs off telephone poles, and there has been a broader coordinated effort on tenants’ rights outreach, says Stephanie Greenwood, Newark’s principal planner, who facilitates the task force with Audrey Washington, the task force coordinator. In Newark alone, the task force distributed 14,000 brochures about tenants’ rights and scam prevention, held workshops at 15 schools citywide, conducted municipal training on tenants rights, and worked with 75 faith leaders to educate congregations about tenants’ rights and foreclosure.
The endeavor not only changed the way task force participants approach outreach and targeted communications efforts, encouraging them to do it in a more comprehensive and coordinated fashion, says Greenwood, it will likely lead to more direct funding for similar efforts as well. Putting heads together not only provides perspective, she says, it is also instrumental in going after available funding that addresses the problem.
The tenant outreach campaign was the result of a $25,000 grant from Local Initiatives Support Corporation, but there has also been a significant indirect funding benefit of the task force: Earlier this year, HUD announced that the Newark/Essex NSP2 Consortium, composed of Essex County, Newark, East Orange, Irvington, Montclair, and Orange and a host of CDCs, had been awarded $20.8 million in NSP2 funds. The consortium was born directly out of the relationships built on the task force.
Still, success is not easily defined or claimed in this work, particularly following the devastation of the foreclosure crisis. For now, the task forces are largely focused on expanding the base of awareness and available resources, increasing mortgage modifications, and building relationships.
There will likely be an increased role for foreclosure task forces throughout the country to address “the reality on the ground,” as Michigan’s Nuszkowski says. “When programs like Making Home Affordable are voluntary for the lenders, we have to make it part of our mission to continue to focus on the things where we can produce results. We’ve made progress since we formed — agencies aren’t competing for clients anymore and instead are focusing on the outcome and working together to get that done. They’re moving the needle on this crisis.”
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