A Snapshot of Foreclosure In Contra Costa County

Transcription

1 A Snapshot of Foreclosure In Contra Costa County

2 Author Kristin Perkins, Center for Community Innovation Cover Photo Alex Schafran Photo, Page 4 Courtesy of Contra Costa Interfaith Supporting Community Organization Key Support I would like to thank Karen Chapple and Anne Martin from the Center for Community Innovation, David Freedman and Susan Gruber from the UC Berkeley Statistics Department, Carolina Reid from the Federal Reserve Bank of San Francisco, and Jonathan Strunin from the Association of Bay Area Governments. The Center for Community Innovation is grateful for funding from the Theodore Bo Lee and Doris Shoong Lee Chair in Environmental Design, which supported this report. This work is part of Kristin Perkins 2008 Master s thesis, The Geography of Foreclosure in Contra Costa County, California. The Center for Community Innovation (CCI) at UC-Berkeley nurtures effective solutions that expand economic opportunity, diversify housing options, and strengthen connection to place. The Center focuses on housing, community and economic development. We work in four topic areas: revitalizing neighborhoods, developing economic resilience, designing and programming for the public realm, and producing and preserving affordable housing. University of California Center for Community Innovation 316 Wurster Hall #1870 Berkeley, CA July 2008

3 Introduction In the daily reports of the worsening foreclosure problem in the United States, the media focuses on the impact of this crisis on individual households and the industries connected to mortgage finance. Federal policy, promotion of homeownership as key to the American Dream, and the increasing availability of nontraditional mortgage products have created opportunities for homeownership this past decade that did not exist previously. Financial institutions sought out risky debt, spreading the impact globally and undermining the foundations of some of the country s largest banks. Now the country finds itself in the midst of a housing and credit crisis, and both banks and at-risk households are looking to policymakers for solutions. Yet the effect of foreclosure is not limited to individual households or lenders: minority and low-income neighborhoods in particular are disproportionately affected by foreclosure and resulting vacancies. Foreclosure is affecting many of the same neighborhoods historically disadvantaged by white flight, urban renewal and other planning interventions, along with newly built exurban locales whose large houses and plentiful amenities seemed to justify inflated housing prices. A look at one of the hot spots of foreclosure, Contra Costa County in the San Francisco Bay Area, suggests that policy responses should consider foreclosure s effects on neighborhoods and specific groups of people, not simply on undifferentiated individuals and large financial institutions. 1...policy responses should consider foreclosure s effects on neighborhoods and specific groups of people, not simply on undifferentiated individuals and large financial institutions. The problem of foreclosure is especially dire in California, where 52,000 homes were lost to foreclosure in 2007, an increase of over 200 percent as compared to Among Bay Area counties, Contra Costa had the highest rate of increase in foreclosures in 2007, at 290 percent. Contra Costa County is experiencing alarmingly high rates of delinquency, with nearly 2,000 Notices of Default filed in September 2007, three times the number filed in September In the fourth quarter of 2007 over 3,800 county homeowners received Notices of Default, up from just 1,500 in the fourth quarter of In 2007, the foreclosure rate in one ZIP code in Antioch was.056, meaning that foreclosure affected approximately 1 of every 18 homes, while ZIP Codes in Richmond s Iron Triangle had a rate of.04 or approximately 1 foreclosure for every 25 homes (see Figure 1 for distribution of foreclosures across county). 4 Contra Costa County has a diverse yet somewhat segregated population, with a concentration of African- American and low-income communities in western cities, a concentration of higher income and white communities in the central area of the county, and a concentration of Latinos in both the older western cities and rapidly growing eastern communities. This diversity makes the county a good place in which to examine how foreclosure might disproportionately affect certain neighborhoods. Figure 1. Foreclosures in Contra Costa County, January-December 2007 Martinez Pleasant Hill Concord Clayton Pittsburg Antioch Brentwood Oakley 44 Hercules Pinole San Pablo Richmond El Cerrito Lafayette 4 Foreclosure s (#) 1 1 Orinda 27 Rate per Housing Unit under to to to and over Census Tracts City Limits* *Areas outside city limits are unincorporated. Moraga Walnut Creek Danville San Ramon Contra Costa County Alameda County $ Miles 4 1

4 Types of Neighborhoods Affected by Foreclosure in Contra Costa County Overall, evidence from Contra Costa County supports the argument that foreclosure is associated with subprime lending and that foreclosure is common in neighborhoods with high proportions of minority residents, lowincome households, and less-educated households. 5 The neighborhoods with the highest rates of foreclosure are concentrated in low-income areas and areas with higher proportions of minorities in western Contra Costa County (Richmond and San Pablo) and the new rapid growth areas of eastern Contra Costa County (Antioch, Pittsburg, Brentwood and Oakley). The typical neighborhood with a high foreclosure rate has a disproportionate share of subprime lending, African-American and Hispanic residents, and low-income and less-educated households (see Figure 2). The first column in Table 1 gives neighborhood characteristics and the second column Table 1. Neighborhoods with High Rates of Foreclosure 6 Neighborhood Characteristic Percentage of Neighborhoods with High Rates of Foreclosure High subprime lending 82 Population over 30% African-American 82 Population over 45% Hispanic 75 Median family income below $72, Under 20% of adults have a college degree 71 shows what percentage of neighborhoods with those characteristics has high rates of foreclosure. The neighborhoods with the lowest foreclosure rates are located in the central area of Contra Costa County, in the cities of Moraga, Orinda and Walnut Creek. El Cerrito, in western Contra Costa County, was home to three of the lowest foreclosure rate tracts. These cities have relatively high median incomes and include some of the more established and expensive neighborhoods and homes. Neighborhoods with low foreclosure rates typically have low rates of subprime lending, a high percentage of white residents, higher incomes and more educated households. The negative relationship between education and foreclosure rate is even stronger than the negative relationship between income and foreclosure. 7 Figure 3 shows the percent of adults without college degrees. The impact of foreclosures also differs by neighborhood age. Officials in Antioch report that foreclosure disproportionately affects neighborhoods in the southeast part of town, those developed within the last ten years. 8 In neighboring Brentwood foreclosures are spread throughout homes of all types and sizes Figure 2. Percent of Population that is African-American Martinez Pleasant Hill Concord Clayton Pittsburg Antioch Brentwood Oakley Hercules Pinole San Pablo Richmond El Cerrito Lafayette Population that is Africanunder American 5% 5% to 10% 10% to 20% 20% to 40% 40% and over Census Tracts City Limits* *Areas outside city limits are unincorporated. Orinda Moraga Walnut Creek Danville San Ramon Contra Costa County Alameda County $ Miles 2

5 built in more recent developments. This is supported by foreclosure data as southeast Antioch and Brentwood fall within the census tract with the most foreclosures in 2007 (318). Furthermore, across the county there is a statistically significant difference in the age of the housing stock in neighborhoods with low and high rates of foreclosure: median year built for housing in low foreclosure rate tracts is 1963, 12 years earlier than the median year built in tracts with high rates of foreclosure (1975). While newer neighborhoods in the eastern part of the county have high rates of foreclosure, Antioch s older neighborhoods appear to be more insulated from the foreclosure wave. It is likely the disproportionate reliance on subprime mortgage products that puts homes in newer neighborhoods, like those in Antioch, at risk of foreclosure. Households can more easily reach for a new home in a new development when they have the option of interest-only or payment-option loans. Unlike in Antioch, in Bay Point, an unincorporated area in eastern Contra Costa County, it is the older, denser, more urban areas that have had the most trouble with the effects of foreclosure. 9 The types of loans used in older neighborhoods can also contribute to foreclosure risk, but it is often subprime refinance loans, not purchase loans, taken out by existing residents that get these neighborhoods into trouble. Older, inner-city neighborhoods typically have higher shares of minority residents who are more vulnerable to predatory subprime lending. Older neighborhoods do not necessarily have a greater number, or higher rate, of foreclosure than newer neighborhoods, but the effects of even a few foreclosures are amplified in neighborhoods that are already distressed. Contra Costa County officials note that foreclosed units in Bay Point are vulnerable to squatting, vandalism, and even arson. They speculate that Bay Point s sizeable homeless population could be contributing to the squatting and vandalism problems. 10 When residents move out of foreclosed homes lenders often fail to secure them properly or provide much maintenance, leaving them accessible to homeless and other individuals seeking shelter. Without electricity and other utilities, individuals occupying foreclosed homes may light fires to keep warm, damaging and potentially destroying these units. That older, low-income neighborhoods in Contra Costa County are struggling more in the aftermath of foreclosure supports findings from Chicago that foreclosures, and the subsequent vacant and potentially blighted properties, in low-income neighborhoods can contribute to physical disorder, crime, and disinvestment. 11 Figure 3. Percent of Adults without College Degree Martinez Pleasant Hill Concord Clayton Pittsburg Antioch Brentwood Oakley Hercules Pinole San Pablo Richmond El Cerrito Lafayette Percent without College Degree under 35% 35% to 50% 50% to 70% Orinda Moraga Walnut Creek 70% to 80% 80% and over Census Tracts City Limits* *Areas outside city limits are unincorporated. Danville San Ramon Contra Costa County Alameda County $ Miles 3

6 Along with disproportionate impact, the lasting effects of foreclosure and the resulting vacancies depend on the underlying stability and wealth of the neighborhood. Middle- to upper-income neighborhoods affected by foreclosure are less vulnerable to vandalism and distress because of the potential for vacant units to be resold quickly. 12 Antioch s experience supports this argument. Though not all of the foreclosed units in Antioch are turning over quickly, from late in 2007 through the early months of 2008 there has been an increased interest in the city s first-time homebuyer program. 13 Like many other jurisdictions across California, Antioch provides downpayment assistance to first-time homebuyers, for both affordable and market rate homes. Homes in Antioch that were selling for over $700,000 in the summer of 2007, before foreclosures increased, have been on the market in the spring of 2008 for $400,000, 14 tempting potential homeowners to take advantage of downpayment assistance and other guarantees available for mortgages from Fannie Mae and Freddie Mac. Renters across the country are being evicted from their homes by lenders because their landlords are in foreclosure... Foreclosure and Rental Housing Foreclosures have a much wider impact than just an individual housing unit and its immediate neighborhood. Increases in foreclosures are commonly associated only with owner-occupied housing, but foreclosures in Contra Costa County and other places have further restricted the number of viable housing options for low-income renter households. Though not homeowners facing foreclosure themselves, renters in Contra Costa County cannot escape the foreclosure wave. Homeowners who experience foreclosure often seek rental housing nearby to stay in their community, allow their children to keep attending the same school, and remain close to their jobs. With an increased demand for rental housing from former homeowners, landlords are able to list rental units at higher prices, which may limit accessibility for households already renting. Former homeowners may not have been able to afford an adjusting mortgage on their home, but especially those for whom foreclosure was not a result of job loss may be able to spend much more to rent an apartment or house than can low- to moderate-income households already in the rental market. A rental housing assistance agency serving Alameda and Contra Costa Counties has experienced an increase in clients seeking services as lowand moderate-income households are having more trouble finding affordable rental units in the county. 15 In addition, many renters are facing eviction due to foreclosure. Renters across the country are being evicted from their homes by lenders because their landlords are in foreclosure; this is especially troubling in Contra Costa County where there are no just cause eviction laws. In some cases landlords have not informed their tenants that the mortgages on the homes in which they are living are delinquent and facing foreclosure. Once properties are foreclosed, lenders are able to evict tenants without notice. A Snapshot of Foreclosure in Contra Costa County 4

7 How Cities and Counties Can Respond Evidence from Contra Costa County shows that foreclosure disproportionately affects neighborhoods with certain demographic and socioeconomic characteristics, but the policy recommendations suggested by the federal government and private sector focus on macro (national and industry-wide) and micro (household), not intermediate (neighborhood), scales. Multiple local government officials in Contra Costa County report that while the foreclosure problem is bigger than their individual jurisdictions, it is local governments that are forced to contend with the consequences of foreclosure on a daily basis. 16 City employees in Antioch suggest that lenders should take the lead in solving the foreclosure problem by working with borrowers in distress. To help keep neighborhoods stable, lenders should allow tenants renting foreclosed units to remain in their homes while the banks try to sell the homes. Contra Costa County Supervisors passed a resolution in January 2008 calling for lenders and servicers to voluntarily agree to a sixmonth foreclosure moratorium: local government officials concede, however, that a city or county ordinance has no legal power over lenders, and cannot really compel the private sector to change its practices. 17 Though cities and counties may not be able to individually effect industry change, local jurisdictions are forced to respond to the crisis, and will continue to be involved. Local officials recognize the necessity of foreclosure awareness and are informing residents where they can go for help. Cities across Contra Costa County are using their websites to direct homeowners in distress to a national foreclosure prevention hotline and to local HUD-certified housing counseling agencies. 18 Some cities and regions hit particularly hard are hosting foreclosure fairs where housing counselors, elected officials, consumer advocates, and sometimes even loan servicers advise homeowners on the foreclosure process and their options. City housing departments do not have the staff or budget to provide foreclosure counseling or other services themselves; they instead refer concerned homeowners, and provide limited funding, to local nonprofits for counseling. The other major component of local response, indicative of concern over the destabilizing effect foreclosures could have on neighborhoods, has been increased attention to code enforcement issues. The code enforcement department in Antioch has been receiving many more complaint calls since foreclosures started increasing. As a result, the department is working especially hard to establish relationships with lenders and realtors responsible for foreclosed properties and asking lenders in particular to identify a local contact responsible for maintaining vacant properties. 19 If these relationships had been in place before foreclosures occurred there very likely could have been a more coordinated and comprehensive response to vacant and vulnerable units. In response to foreclosures, cities could coordinate with lenders, requiring lenders to create a fund for the maintenance of vacant foreclosed units that city governments would control. Cities could perhaps collect a property maintenance fee from lenders when the title is transferred from borrower to lender. The lender s contribution to a maintenance fund will enable a city to secure abandoned properties and repair and prevent vandalism to the buildings and lots. City councils must first pass resolutions instituting maintenance fee assessments upon transfer; Contra Costa County Supervisors support of a foreclosure moratorium suggests that local government in the county would be willing to address foreclosures by requiring more lender cooperation. Research has established a nexus between foreclosure and neighborhood decline, justifying a municipal role in the maintenance of vacant units. Contra Costa County and city officials have also suggested that once foreclosed homes are vacant, redevelopment agencies could buy foreclosed units and resell them to low-income or first-time homebuyers, potentially rehabilitating blighted properties and adding to the affordable housing stock. 20 A 2008 report by the Brookings Institution suggests that state governments should pursue many of these same policies to mitigate the effects of foreclosure on individual households and neighborhoods. Most notably, states should ensure fair foreclosure proceedings that allow homeowners to stay in their homes as tenants until an owner-occupant purchases the property; states should also make lenders responsible for maintenance of vacant properties (this is already happening in Chula Vista, CA). 21 There are a variety of ways for planners to address foreclosure constructively in their communities. 22 These include tracking local predatory lending and foreclosure patterns using data from the Home Mortgage Disclosure Act, funding targeted foreclosure prevention counseling and first-time homebuyer programs, developing refinancing programs using mortgage revenue bonds and federal housing funds, ensuring that foreclosed properties are reoccupied quickly, and recognizing the effects of foreclosure on local rental markets. While these are creative responses that would in many cases mitigate negative effects of foreclosure, evidence from Contra Costa County suggests that when faced with rapid increases in foreclosure it is unlikely that local governments could quickly devote funding and staff time to developing new programs and tracking foreclosure data. What may be more realistic in the short run is for local jurisdictions to collaborate with community-based organizations to provide some of these services, utilizing Community Development Block Grants or other discretionary funds. A housing official from the city of Brentwood remarked that many cities affected by foreclosure are necessarily waiting until the next fiscal year to set aside money for foreclosurerelated services. 23 A Snapshot of Foreclosure in Contra Costa County 5

8 A Community-Based Response Neighborhood-based and other local organizations see the effects of foreclosure on communities first hand and could be the first line of defense against foreclosure and neighborhood decline. By offering alternative mortgage products to low-income and minority households frequently targeted by subprime and predatory lenders, community-based organizations (CBOs) can help prevent delinquencies and foreclosures. Though it is uncommon for CBOs to have access to enough capital to support an expansive alternative mortgage program, a more manageable task for CBOs is to provide homeownership counseling for borrowers in delinquency and facing foreclosure. This is necessarily an ameliorative rather than preventative role, and its success depends on the willingness of troubled borrowers to reach out for help. 24 Both empirical evidence - for example, the association between low educational attainment and foreclosures - and qualitative findings in Contra Costa County suggest that providing counseling for troubled borrowers could potentially be a very effective tool to reduce foreclosure and a useful role for CBOs. Research shows that postpurchase counseling increases the probability that moderate mortgage delinquencies are cured. 26 The counseling is most effective when it addresses an active delinquency; post-purchase counseling during delinquency is more effective at fixing delinquency than pre-purchase counseling is effective at preventing delinquency. Early intervention, however, is important: once a loan is more than 60 days delinquent it may be impossible to bring current. 27 Homeowners in Contra Costa County are seeking foreclosure counseling, both independently and upon referral from city officials. Before the increase in foreclosures, housing counseling agencies in Contra Costa County focused almost exclusively on pre-purchase homebuyer counseling. One counselor at an agency in Richmond recalled that before 2005 her office received no more than six calls per year related to foreclosure. Once the organization devoted a full-time staff person to foreclosure counseling they received six calls per month. In early 2008 the office was receiving 30 calls per day. 25 Many of these calls come from homeowners who have already received Notices of Default, at which point the counseling agency can do little to help besides explaining the foreclosure process. Some homeowners, however, realize that they will not be able to keep up with payments once their interest rates adjust and seek counseling in advance of the adjustment. Though they work primarily on a local city and neighborhood level, counseling agencies in Contra Costa County are also partnering with local jurisdictions and coordinating efforts to fundraise for additional counseling and foreclosure workshops. As more agencies and cities realize that they have to address foreclosure in their communities they have started to work together to apply for Community Development Block Grant funding for foreclosure-related services. The Housing Equity Preservation Alliance includes the City of Richmond working alongside the Community Housing Development Corporation of North Richmond, Bay Area Legal Aid, Housing Rights, Inc., and others. Counseling agencies are often the impetus behind city- and county-wide foreclosure workshops, an attempt to reach more homeowners than they can meet individually in their offices. An alternative tool to combat these risky nontraditional mortgage products is pre-purchase counseling that informs potential borrowers of the risks associated with these loans. CBOs could play an extensive role in promoting financial literacy among borrowers through homeownership counseling and education. They could provide secondopinion counseling for potential buyers who want more information on the loans they are considering. 28 This is an important, yet challenging and expensive, task. Many homeowners do not understand the details of their mortgages, are unable to accurately describe details of their adjustable-rate mortgages such as the terms of their contracts and interest rate index, and should be recommended and/or required to obtain loan counseling prior to purchase. 29 Potential homeowners could be required to show proof of counseling, or pass a financial literacy test, before taking title to a home. Furthermore, low-income, less-educated and minority households, those targeted by subprime lenders, are less likely to know their mortgage terms than high-income, better educated and non-minority households. 30 This empirical evidence of the benefits of pre-purchase counseling is supported by the results of an informal survey at foreclosure workshops in Oakland (October 2007) and Fairfield (January 2008), California. Over 100 individuals attended each of these two workshops, many of whom were likely homeowners at risk of foreclosure. Workshop presenters asked the attendees if they had participated in pre-purchase homebuyer education or homeownership counseling and at each workshop only one attendee, (less than five percent) had pre-purchase counseling of any sort....providing counseling for troubled borrowers could potentially be a very effective tool to reduce foreclosure and a useful role for CBOs. A Snapshot of Foreclosure in Contra Costa County 6

9 Concluding Recommendations Federal, state and local government agencies are reacting to the foreclosure crisis and struggling to develop policies that will both mitigate the negative effects of foreclosures and prevent future loans from entering foreclosure. The mortgage industry, along with broader financial networks, and local CBOs are also addressing the foreclosure crisis, but in very different ways. Table 2 connects potential policy responses to the populations and neighborhoods affected by foreclosure. The first column presents policy recommendations made by government agencies, housing advocates and industry officials, from both the popular press and academic research. The second column draws on the subprime lending and foreclosure literature to describe the population likely affected by the policy mechanisms. The third column suggests areas in Contra Costa County that are most likely to be affected by the proposed policy recommendations. And the final column shows the likelihood of these policies to be implemented. Those with high likelihood are already being implemented (e.g., lower interest rates) or are thought necessary by policymakers and industry officials alike (e.g., regulating predatory tactics). Those with medium and low likelihoods would require either significant industry cooperation or dedication of large amounts of federal funding and are thus less likely to be implemented. Many of these policy recommendations will affect most borrowers, but a few in particular could be targeted to specific populations. Requiring income verification, lowering interest rates, and freezing teaser interest rates on ARMs will be helpful to all borrowers, and all neighborhoods in Contra Costa County. Restricting subprime lending, regulating predatory lending and encouraging mortgage counseling will be especially helpful to low-income and minority borrowers seeking mortgages, populations shown to be more vulnerable to these risky loans. In Contra Costa County these policies would have notable influence in Richmond, Pittsburg and Bay Point, communities that on average have lower incomes and higher shares of minority residents. The remaining proposals will likely help low-income borrowers and neighborhoods. Shared appreciation mortgages allow lenders to gain from increases in housing value, but also force lenders to take on some of the risk, providing access to homeownership similar to a limited equity cooperative or community land trust. Shared appreciation mortgages could also be useful in areas of high housing appreciation, in eastern Contra Costa County, where lenders may have more to gain. Increasing the bond allocations of housing finance agencies would enable these agencies to purchase foreclosed units or provide grants to households in foreclosure. Allowing borrowers to stay in their homes as renters will mitigate neighborhood distress, especially in the form of vacant and blighted units in lowincome neighborhoods. Should all of the high likelihood policies be implemented, most of the affected areas in Contra Costa County will benefit. Verification of income and ability to pay, and lowering interest rates, will be beneficial countywide. The other likely responses may have disproportionate benefits in East county or West county, but the overall effects will be fairly balanced. Regulating predatory tactics will be of particular help in Richmond and Central Contra Costa County while relaxing restrictions for the FHA, Fannie Mae and Freddie Mac will mitigate distress in East county. Mitigating the current foreclosure crisis will surely require federal adoption of a stricter regulatory and supervisory structure that puts greater responsibility on all lending institutions to ensure that they are providing appropriate mortgage products and disclosing risks to consumers. This will limit the number of risky loans originated and will potentially reduce future foreclosures. The federal government must also provide direct help to homeowners currently in delinquency by creating other financing options and funding CBOs that provide counseling to these vulnerable households. But it would be a critical mistake to ignore the local impacts of foreclosure, or to pretend that this crisis affects all households equally, regardless of race, class and education. Recognizing this intermediate level means policymakers must consider the role of cities in addressing the foreclosure crisis, and promote policy responses that address inequities in the types of neighborhoods and individuals susceptible to high rates of foreclosure. Should all of the high likelihood policies be implemented, most of the affected areas in Contra Costa County will benefit. A Snapshot of Foreclosure in Contra Costa County 7

10 Table 2. Populations and Neighborhoods affected by Foreclosure Prevention and Mitigation Policies Policy Population Affected Neighborhood Affected Require income verification and confirmation of ability to pay Foreclosure fairs Regulate predatory sales tactics of brokers (implement disclosure requirements and/or nationwide licensing system) Lower interest rates Relax restrictions for FHA, Fannie Mae and Freddie Mac Restrict subprime lending Restrict alternative mortgage products Mortgage counseling Shared appreciation mortgages Freeze teaser rates on ARMs, place moratorium on foreclosures Allow delinquent homeowners to stay as renters Increase housing finance and redevelopment agency bond allocation City/lender partnership for code enforcement All All High All, but particularly low-income and minority households Elderly, low-income minority neighborhoods, rural areas All, especially minorities, low-income households, women, borrowers whose loans have not yet reset, first-time homebuyers Recent borrowers anticipating rate reset, borrowers with low downpayments Low-income, African-American homeowners Moderate- to middle-income borrowers, minority households Borrowers prone to aggressive subprime lending tactics, African-Americans and Latinos more likely to receive subprime loans Low-income households; areas with high housing price appreciation All borrowers, especially low-income and minority households Low-income neighborhoods (reducing blight, opportunity for vandalism) Low-income borrowers and neighborhoods All neighborhoods, particularly low-income neighborhoods Richmond, Pittsburg, Bay Point (low-income); Richmond and Pittsburg (African-American); Richmond, Concord, Brentwood, Pittsburg (Latino) Central and western region- Moraga, Walnut Creek, El Cerrito (elderly); Richmond, Pittsburg, Bay Point (low-income); Richmond and Pittsburg (African-American); Richmond, Concord, Brentwood, Pittsburg (Latino) Richmond and Pittsburg (African-American); Richmond, Concord, Brentwood, Pittsburg (Latino) Antioch, east Contra Costa, where housing prices are higher and jumbo loans common Richmond, Pittsburg, Bay Point (low-income); Richmond (African-American homeowners) Richmond and Pittsburg (African-American); Richmond, Concord, Brentwood, Pittsburg (Latino); Hercules, Concord, Walnut Creek (middle-income) Richmond and Pittsburg (African-American); Richmond, Concord, Brentwood, Pittsburg (Latino) Richmond, Pittsburg, Bay Point (low-income); Pittsburg, Antioch, Brentwood, Oakley (high appreciation) All areas; Richmond and Pittsburg (African- American); Richmond, Concord, Brentwood, Pittsburg (Latino); Richmond, Pittsburg, Bay Point (low-income) Richmond, Pittsburg, Bay Point (low-income) Richmond, Pittsburg, Bay Point (low-income) Richmond, Pittsburg, Bay Point (low-income) Likelihood of Implementation High High High High Medium Medium Low Low Low Low Low Low A Snapshot of Foreclosure in Contra Costa County 8

11 Notes 1 Perkins, Kristin. The Geography of Foreclosure in Contra Costa County, California. MCP Thesis. U. of California, Berkeley, The thesis on which this piece is based used data from the U.S. Census and Home Mortgage Disclosure Act and Notice of Trustee Sale listings from to examine the relationship between foreclosures and neighborhood characteristics. The study used census tracts to proxy for neighborhoods, and looked at the characteristics of neighborhoods with high and low rates of foreclosure to see if they differed from the rest of Contra Costa County. The author compared the mean values of demographic and socioeconomic characteristics in tracts with high rates of foreclosure versus tracts with low rates to see if there was any noticeable pattern in the variables expected to be related to foreclosure. The study also examined the association between a few of the most significant neighborhood characteristics and rate of foreclosure. 2 California State Senate. Senate Bill No Amended in Senate January 18, California Mortgage Defaults Hit 20-Year High. ABC7 News. ABC. KGO, San Francisco. 22 Jan The data displayed in Figures 1, 2, and 3 was drawn from the 2000 Census, and the 2006 American Community Survey. 5 Newman, Kathe and Elvin K. Wyly. Geographies of Mortgage Market Segmentation: The Case of Essex County, New Jersey. Housing Studies 19.1 (2004): 53 83; Schloemer, Ellen, Wei Li, Keith Ernst, and Kathleen Keest. Losing Ground: Foreclosures in the Subprime Market and Their Cost to Homeowners. Durham: Center for Responsible Lending, Subprime lending, income, and college graduate data points were divided into categories based on the 33rd and 67th percentiles (low, medium, high). High subprime lending corresponds to over 31% of loans are subprime (67th percentile). Median family income under $72,000 corresponds to low income, the 33rd percentile. Under 20% of adults with college degree is also the 33rd percentile. For percent African-American and Hispanic the data was divided into categories based on the distribution histogram. Population over 30% African- American or over 45% Hispanic is considered high. 7 This is consistent with the research on the importance of financial literacy to mortgage outcomes; Bucks, Brian, and Karen Pence. Do Homeowners Know Their House Values and Mortgage Terms? Washington, D.C.: The Federal Reserve Board of Governors, Kennedy, Janet, Housing Coordinator, and Denise Skaggs, NIS/NIP Code Enforcement, City of Antioch. Personal Communication. 17 Jan Toms, Maureen. Redevelopment Agency, Contra Costa County Community Development Department. Personal Communication. 25 Jan Ibid.; Douglas, Kara. Affordable Housing Program Manager, Contra Costa County Community Development Department. Personal Communication. 16 Jan Immergluck, Dan and Geoff Smith. There Goes the Neighborhood: The Effect of Single-Family Mortgage Foreclosures on Property Values. Chicago: The Woodstock Institute, Ibid. 13 Kennedy, Janet, Housing Coordinator, and Denise Skaggs, NIS/NIP Code Enforcement, City of Antioch. Personal Communication. 17 Jan Mann, Jim. Realtor, Mann & Associates, Better Homes Realty. Personal Communication. 25 Jan Remmers, Wanda. Executive Director, Housing Rights Inc. Personal Communication. 1 Feb Kennedy and Skaggs, op.cit; Reed, Kwame. Senior Housing Analyst, Housing Division, City of Brentwood. Personal Communication. 28 Jan. 2008; Douglas, op.cit. 17 Kennedy and Skaggs, op.cit. 18 The Contra Costa County deputy district attorney sends letters to residents receiving notices of default referring them to counselors and warning them of foreclosure counseling scams. 19 Kennedy and Skaggs, op.cit. 20 Ibid; Douglas, op.cit. 21 Mallach, Alan. Tackling the Mortgage Crisis: 10 Action Steps for State Government. Washington, D.C.: Brookings Institution, This article provides detailed information on 10 potential ways in which state governments can address the effects of foreclosure on households, the impacts of foreclosure on neighborhoods, and limit future foreclosures. The article complements Table 2 of this report, titled Populations and Neighborhoods affected by Foreclosure Prevention and Mitigation Policies. For information on Chula Vista s Abandoned Residential Property Registration Program, see Services/Development_Services/Planning_Building/Building/Code_Enforcement/AbanResPropertyProg.asp 22 These suggestions based on Immergluck, Dan. From the Subprime to the Exotic: Excessive Mortgage Market Risk and Foreclosures. Journal of the American Planning Association (2008): Reed, op.cit. 24 Gramlich, Edward M. Subprime Mortgages: America s Latest Boom and Bust. Washington, D.C.: The Urban Institute Press, Benjamin, Maria. Program Director, Community Housing Development Corporation of North Richmond. Personal Communication. 18 Jan Ding, Lei, Roberto G. Quercia, and Janneke Ratcliffe. Post-purchase Counseling and Default Resolutions among Low- and Moderate- Income Borrowers. Chapel Hill: Center for Community Capitalism, University of North Carolina, Ibid. 28 Essene, Ren S. and William Apgar. Understanding Mortgage Market Behavior: Creating Good Mortgage Options for All Americans. Cambridge: Joint Center for Housing Studies, Harvard University, Bucks and Pence, op.cit. 30 Ibid. A Snapshot of Foreclosure in Contra Costa County 9

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