Lansing (WWJ) -- ACORN this week released "Foreclosure Exposure 2: The Cost to our Cities and Neighborhoods." The report is a follow-up to ACORN's September report revealing the racial disparities in high-cost sub-prime lending, this latest installment analyzes data from private and federal sources to predict the real economic impact of foreclosures on 96 metro areas, if financial institutions and governments do not act immediately to minimize the damage.
As the foreclosure crisis widens, property owners, local governments, lenders and investors alike stand to lose billions of dollars; estimated losses for four Michigan cities alone exceed $350 million.
The four Michigan cities highlighted by the report include:
• Detroit, which is expected to loose $250 million
• Flint, which is expected to loose $33 million
• Grand Rapids, which is expected to loose $45 million
• Lansing, which is expected to loose $28 million
Using data available under the Home Mortgage Disclosure Act and estimates provided by the U.S. Senate Joint Economic Committee and other sources, ACORN's study shows the real costs communities incur when high foreclosure rates spawn derelict buildings and depress residential and commercial property values.
Neighborhoods with concentrated foreclosures experience higher rates of violent crime and artificially decreased property values, placing additional costs and maintenance burdens on local governments and devaluing the assets of neighbors – even those in good financial standing.
"Many urban and minority communities are suffering a tremendous loss of wealth due to foreclosures," said ACORN National President Maude Hurd. "Lenders and investors must modify exploding adjustable rate mortgages [ARMs] into affordable, fixed-rate loans to prevent neighborhoods from being ruined by foreclosures and their consequences."
The report was released the same day the Michigan House of Representatives' Banking and Financial Services Committee held its third hearing on proposed legislation. The legislation takes action against predatory lending and protects consumers from abusive practices. On Oct. 24, the state's Senate Banking and Financial Institutions Committee is expected to discuss legislation licensing the mortgage broker industry—legislation ACORN is calling a good first-step in regulating an industry that has gone unchecked, but warns the House legislation must also pass to address the growing crisis.
ACORN (Association of Community Organizations for Reform Now) is a community organization of low- and moderate-income families, with over 350,000 member families organized into 800 neighborhood chapters in 103 cities across the country. For information, visit www.acorn.org.
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