Pitching the upside of foreclosures
by Charles Hallman
Minnesota Spokesman-Recorder
Originally posted 11/25/2009
One person’s loss is another’s opportunity
St. Paul has seen a 16-percent increase in foreclosures over a nine-month period this year. While speaking to an all-White group November 18 at a meeting at the Edgcumbe Community Center in St. Paul, sponsored by the St. Paul League of Women Voters, Sheryl Pemberton-Holby said that the City wants people to look seriously into buying up vacant and foreclosed housing properties.
Pemberton-Holby, a project manager with the city’s Planning and Economic Development Department, told the audience, “We already are spending on buying properties and rehabbing [them].” She said that the bulk of these foreclosed homes are found in four neighborhoods: Dayton’s Bluff, North End, East Side, and Summit-University.
Dayton’s Bluff Neighborhood Housing Services Executive Director Jim Erchul added that the 55106 zip code, which includes the Dayton’s Bluff area, “is the second-worst-hit zip code in the state of Minnesota” for foreclosures. “The first-worst being in North Minneapolis,” he added.
Dakota County is second only to Hennepin County in the number of foreclosures in 2006, according to Minnesota Homeownership Center (MHC). Although Whites make up 55 percent of those foreclosed on, nearly 30 percent are people of color, who are classified as “emerging markets.”
“‘Emerging market’ means Hispanics and Latinos, Black/African American, American Indian/Alaskan Native, Asian, Native Hawaiian or Pacific Islander,” explained MHC Executive Director Julie Gugin. “It’s non-White.”
Although racial and ethnic data breakdowns on St. Paul foreclosures aren’t readily available, Gugin noted that people of color “were 29 percent of the consumers seeking counseling from our network.”
There was no mention during Pemberton-Holby’s presentation if the City is encouraging more Blacks and people of color to pursue homeownership, especially in those areas of St. Paul hit hardest by foreclosures. When asked afterwards, Pemberton-Holby said that at least half of the residents who now live in these neighborhoods are people of color.
“The East Side of St. Paul is a high mixture of Latinos, African Americans, Hmong and some Whites,” she pointed out. “So is Thomas-Dale, North End and the Dayton’s Bluff area.”
The growing number of foreclosures isn’t simply due to people living beyond their means, Gugin pointed out. “It’s true that both borrowing and lending decisions contributed to this crisis, [but] actually the primary reason that we see for people entering foreclosure or mortgage crisis is loss of income, or reduction in income. People lose their jobs, their hours get cut, or their overtime gets taken away.”
Erchul pointed to three “waves” that led to the current foreclosure crisis, including a large number of investor-owned rental properties, residents taking out sub-prime loans (“Over half of the mortgages made in our neighborhoods were sub-prime,” he said), and a growing number of people losing their jobs.
“If the times were better,” said Erchul, “they could sell their house and try to break even. Now the only option is try to negotiate with the bank. But if they lost their job, they won’t be able to negotiate their mortgage because they don’t have a job.”
Formerly all-White areas such as Dayton’s Bluff have changed over the last couple of decades, added Erchul. Over half of new homeownership in the last 10 years was by people of color: “Whether people want it or not, that is the reality of the marketplace.”
Despite the bad times, Erchul said this might be the best time for first-time home buyers, regardless of race and color. “It’s terrible that people lost their homes, but if people have a job and never owned a home, the prices have gone down. It’s actually an opportunity, and especially an opportunity for people with modest means [to purchase a home],” he points out.
Nonetheless, in the meantime Gugin predicts foreclosures will continue to get far worse before they begin to decrease, judging from their present growth rate. “We worked with 12,000 consumers in 2008,” he said. “In 2009, those numbers most likely exceed 15,000. [And] given the state of the economy, we do not anticipate much in foreclosure relief in 2010.”
Pemberton-Holby said her office has at least a half-million dollars in available funds through its mortgage foreclosure program to help residents facing such situations. “We can make a payment of the delinquency to bring you current,” she explained. “It goes on the [mortgage] loan that helps bring a person current, so we can bring their mortgage current.”
Also, thanks to the federal stimulus package, St. Paul received an additional $10.2 million dollars in neighborhood stabilization funds, said Pemberton-Holby. Without it, the City would have been more financially strapped than it is currently, in light of state budget cuts.
Gugin offered the following advice to homeowners possibly facing foreclosure:
“Our best advice is if you have concerns or questions about your mortgage, act now by calling our foreclosure counseling network (toll-free at 866-462-6466).
“Number two, be very aware of for-profit scams that indicate they want to help you save your house. Nobody should pay for foreclosure counseling services — they are available free through our network around the state.
“There is help. It takes persistence and patience, but it is possible for people to resolve their mortgage crisis,” Gugin said.
Charles Hallman welcomes reader responses to challman@spokesman-recorder.com.
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