President-elect Barack Obama, as part of the urban agenda that he proposed during his campaign, promises to create a White House Office of Urban Policy, and it can’t come too soon.
We have written often about the neglect, no longer benign, that has characterized the federal governments’ relationship with American cities. Routinely ignored although they remain the engine for the U.S. economy, there’s hope that cities will return prominently to the agenda of this nation, and that new federal policies will be defined by seeing cities as places of opportunities rather than problems. More importantly, we hope that there is a greater understanding of the realities of our national economy – so goes our cities, so goes our country.
We were reminded again of the need for more leadership by the federal government – in areas like land banking – about three weeks ago in a briefing about foreclosures in City Hall. It was sobering. From 2000 until now, there were 58,000 foreclosures in Memphis.
The Main Points
The first point: we were already in trouble before the Wall Street meltdown so unless something fundamental is done, things could get even worse.
The second point to keep in mind: national data indicate that the public cost of each foreclosure is $20,000. In other words, the cost of the foreclosure crisis in Memphis has been about a $1.2 billion problem since 2000.
Memphis Mayor Willie W. Herenton said that Memphis is in the top 10 of U.S. cities in foreclosures, and Shelby County Mayor AC Wharton described the situation as the “perfect storm” and said if there is an issue that should unite city, county and state governments, it should be attacking the sources of predatory lending.
A Biblical Struggle
“It’s a David and Goliath struggle,” the county mayor added, calling strongly for a class action lawsuit against the most egregious subprime lenders. “It’s about making a social statement, not just a legal statement.”
Mayor Herenton called for actions to “freeze” foreclosure actions until homeowners are given more time to work out the financial problems caused by the “current un-level playing field.”
The “to do list” developed by local government and housing organizations as a result of this crisis includes the coordination of databases that are now disparate, development of a response team that targets geographic areas, recycling foreclosed properties, stronger code enforcement for vacant properties, counseling and foreclosure mitigation, mortgage assistance and developing a model intervention program with the $12-14 million received by city and county governments from the federal government.
The epidemic of foreclosures could not have come at a worse time for local governments. Already faced with predictions of a reduction in the assessed value of property, the local tax base is further eroded by the lost property tax revenues from the foreclosures.
Government public services are also affected, because foreclosures tend to cluster, and high subprime lending in a neighborhood predicts high foreclosure in about eight out of 10 neighborhoods. We’ve mentioned previously that in more than a dozen Memphis city schools, 50% of the students move during the year, yet another effect of the foreclosures.
In Shelby County, one-third of all zip codes had subprime lending rates of at least 50% in 2006, and for zip codes within Memphis, it was one out of two.
And if you think things are improving, in the past two weeks, The Daily News reported that there have been 542 foreclosure notices.
Since 2000, Frayser has led Memphis in the number of foreclosures – 5,743, followed by Westwood with 5,107 and Parkway Village with 4,305. However, no area of Memphis is immune although downtown was at the bottom of the list with 179 foreclosures.
Foreclosures By Zip Code
Here’s the zip codes and the number of foreclosures:
Zip code 38127 – 5,743 foreclosures
38109 – 5,107
38118 – 4,305
38128 – 4,209
38141 – 3,560
38111 – 3,367
38106 – 3,282
38116 – 3,281
38115 – 3,239
38114 – 2,753
38125 – 2,514
38108 – 2,097
38122 – 2,031
38107 – 1,883
38134 – 1,674
38018 – 1,394
38112 – 1,373
38016 – 1,361
38133 – 1,034
38135 – 1,001
38117 – 998
38104 – 928
38119 – 683
38126 – 295
38105 – 284
38120 – 253
38103 – 179
38131 – 1
The Deadly Count
As for the trend line, it’s moving up. With a bullet.
In 2000, there were 4,425 foreclosures. In 2001, 4,753 foreclosures. In 2002, 6,272 foreclosures.
In 2003, 6,854 foreclosures. In 2004, 7,115 foreclosures. In 2005, 7,746 foreclosures. In 2006, 9,837 foreclosures
In 2007, there have been 8,046 foreclosures; and this year, more than 4,000 foreclosures so far.