Rokakis: Foreclosures will slow in 2007
In a comment on this post last week, County Treasurer Jim Rokakis made a prediction about the county’s foreclosure situation. Here it is for the record, with a little reformatting and a few links added:
The disastrously high rate of foreclosures will slow down in 2007 for a variety of reasons including
1) SB 185 which will be aggressively enforced by Attorney General (Elect) Mark Dann;
2) A Department of Commerce under Governor (Elect) Ted Strickland that will use that Department to police mortgage brokers – something Bob Taft failed to do;
3) A Democratic Congress with a Barney Frank in charge of the Financial Services Committee that will make predatory lending it’s number one priority;
4) Litigation that I expect to be brought by Ohio cities, including Cleveland, that will target companies like Argent Mortgage for their outrageous lending practices;
5) Wall Street finally waking up to the fact that the mortgages being dumped into the massive pool of collateralized mortgages are going bad at an unacceptably high rate,
and yes – the County’s Mortgage Foreclosure Prevention Program, which has served to raise the awareness level of the problem locally , in Columbus and in Washington.
The year-old Foreclosure Prevention Program operates out of Rokakis’ office. There’s a new Cleveland State report just posted on the county’s website that describes the FPP, and other efforts by county officials to deal with the foreclosure crisis, in considerable detail.
Rokakis doesn’t mention the City of Cleveland’s anti-predatory-lending law as a factor, which is fortuitous because the Ohio Supreme Court struck it down yesterday. He apparently believes that the General Assembly’s solution, Senate Bill 185, can be effective in the hands of an aggressive Attorney General and Commerce Director.
What neither measure addresses is the issue highlighted by the PD story I praised in the main post — the withdrawal of big Cleveland banks from conventional home purchase mortgage lending in Cleveland, leaving a credit vacuum that predators like Argent have filled.
What Rokakis is describing — and has championed for years — is the effort to clean up the huge mess created in large part by this disinvestment. I hope he’s right that this effort will start showing results in the next year.
But if the vacuum remains — if conventional disinvestment in the city continues — that vacuum is going to be filled by somebody.
November 21st, 2006 at 2:24 pm
First of all, I’m really excited about Rokakis’ efforts. I hope that his predictions regarding the Ohio legislature and Congress prove accurate.
It’s not clear to me to what extent the high foreclosure rate is attributable to industry malpractice (as opposed to sheer poverty). Are people really getting fleeced that much?
–Steve
November 21st, 2006 at 5:31 pm
I’ve done a ton of foreclosure work (at least 400-500 plus cases) over the last six months. The majority of the cases I’ve seen come through have been due to the poverty afflicting the area as opposed to predatory lending. While there are some instances of predatory lending being the culprit, in my estimation, these have been few and far between.
November 22nd, 2006 at 7:36 am
Bill, as you know this foreclosure mess is one of our pet issues, and we encourage all to focus more on the “predatory” loan servicing that drives people prematurely into foreclosure and the execution by lenders and their agents of the “loop” theory of complaint handling that either forces people to give up and walk away or go mad at the intransigence of the “loop” process. Lenders and their agents disavow any responsibility in the handling of what is the biggest investment in most peoples’ lives, and we need to hold them to strict fiduciary standards and demand they be accountable for the payments they take and the money they handle. The change must start at the federal level to make them responsible and accountable once again, just like in the old days when the bank was the friend of the community, not its parasite. We can fight a delaying action here in Cuyahoga County until help arrives from Washington, but the reinforcements need to get here soon.
November 22nd, 2006 at 11:16 am
As one of the counseling agencies participating in the countywide foreclosure prevention program (Neighborhood Housing Services of Greater Cleveland), what we have seen is that it many of our clients have been involved in refinancing through aggressive measures of predatory lenders, up to the point of refinancing out of 0% loans to consolidate debt/repair home/take equity out of homes. Those of lower incomes, or those who have had trigger events such as loss of job, medical crisis, divorce, etc. tend to become easy targets for direct mail, targetted campaigning and other marketing ploys aimed at poverty stricken areas (though this does not exclude inner ring or outter ring suburbs as well as rural areas).
Educating those most vulnerable to predatory lenders about the options available, the consequences, and the path to financial stability will provide some self-directed avoidance to foreclosures.
I could post for days on this issue, but stemming the tide of this crisis will take forward thinkers like Treasurer Jim Rokakis, Commissioner Tim Hagan, Cuyahoga County Department of Development Director Paul Oyaski and many others from the private, public and non-profit sectors, as well as individual resolve to slow this train wreck.
November 23rd, 2006 at 12:24 pm
I am a social worker who counsels many people in the throws of foreclosure. It is a devastating event in my clients’ lives, but it is usually the ultimate conclusion to a series of personal catastrophes. There is no question in my mind that the cause for foreclosures, as well as many other personal economic crises, is a complex mix of the results of poverty, lack of knowledge/understanding of financial options, poor choices by individuals, and a lack of laws protecting the rights of the individual living in a Capitalistic, laissez-faire market place environment.
I have always felt that the reason the current political leadership in Ohio has never put any substantial reins on financial institutions is because of their fundamental belief in the strength of a free marketplace. The problem with this reasoning is that a free marketplace does not treat all people equally. Basically, it has no morals, and functions best for the most educated and wealthiest individuals in society. Without guidelines and rules in place, unfettered financial institutions will run roughshod over the poor and uneducated, because they can.
I personally support a government that recognizes that there are inequities within its populace. It doesn’t mean that the goal isn’t to continually strive for greater equity, but in the meanwhile the government has a moral duty to protect those least likely to protect themselves. One way the current government can do this is by providing rules and guidelines for financial institutions. As citizens, it is our duty to support the current movement in Cuyahoga County that is trying to achieve this. It’s important to recognize legislators, but it is also important to recognize the grassroots efforts of all of the other individuals and non-profits like Neighborhood Housing Services, Policy Matters, and Sisters of Charity (to name a few) that have always supported a fairer more moral form of governing. We must all work together towards this common goal to make it a reality.