14 May 2008

Denver's Foreclosure Report

The City and County of Denver has an eighty page report on foreclosures, which is full of detailed pertinent data. The data show that widespread availability of non-traditional mortgages, rather than general economic weakness was behind a rapid rise in foreclosures.

The recommendations of the report follow. I emphasize the recommendations that go beyond additional education, training and planning.

1. Reduce the incidence of foreclosure by mitigating the impacts of subprime loans:
* Combine downpayment assistance with interest-rate buy-down for qualified low- and moderate-income homebuyers
* Target the single family Mortgage Revenue Bond (MRB) program to areas with a high incidence of subprime loans
* Work with HUD and non-profit agencies to promote the use of FHA programs

2. Balance the goal of homeownership with the need for neighborhood stability and housing preservation:
* Improve the effectiveness of homebuyer education and counseling
* De-emphasize the widespread view of homeownership as a risk-free investment, especially for low-income households

3. Enhance the ability of homeowners to make informed refinancing decisions:
* Conduct intensive information campaigns or seminars about mortgage products and refinancing
* Provide up-to-date training for housing counselors
* Augment housing counseling services to include post-homebuyer counseling

4. Minimize the consequences of concentrated foreclosures:
* Stabilize housing prices through purchase of distressed properties
* Create a loan pool to assist homeowners who have survived temporary economic dislocations
* Step up enforcement of housing code violations

5. Develop a long-term foreclosure avoidance strategy:
* Data collection and analysis on a regular basis
* Create a Citywide Foreclosure Taskforce
* Intensify enforcement of consumer protection laws and disclosure requirements

The full report is worth reading.

In related news, rental vacancy rates are low in Denver, but rents are increasing only slightly and are about 25% below the levels needed to encourage new rental property construction at a time when construction material costs have soared.

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