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Addressing the Foreclosure Crisis:Action Oriented Research in the Greater Atlanta Area
Michael J. RichEmory University
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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
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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
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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
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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
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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
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Percent of Home Mortgage Loans Made by Subprime Lenders, 2003-2005
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Foreclosure filings, June – August 2008Number of filings Foreclosures per square mile
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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)
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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
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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
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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
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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
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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
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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
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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