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Foreclosure Intervention and Neighborhood

Alliance for Economic Inclusion

Executive Summary

Southeast Michigan Regional
Foreclosure Intervention and Neighborhood
Stabilization Collaborative


EXECUTIVE SUMMARY

The Problem

Homeowners across Southeast Michigan are losing their homes to the mortgage foreclosure epidemic at an alarming rate. There were 103,000 homes affected by mortgage delinquency or foreclosure in Wayne, Oakland, Macomb and Washtenaw counties in 2008. The resulting economic impact to the region was $4.28 billion. The projected number of homes affected by foreclosure or delinquency in 2009 is expected to exceed 150,000. Currently there are only 65 counselors available to assist 150,000 homeowners facing delinquency or foreclosure this year – a ratio of 1 counselor per 2,308 homeowners. Not only are individual residents suffering, but also entire neighborhoods are struggling to deal with the increasing number of abandoned vacant and foreclosed homes and the resulting decrease in property values with a direct increase in crime.

Currently the approach to addressing the foreclosure crisis is sporadic and inconsistent from one county to the next. The result is duplication of effort, lack of measurable outcomes, and thousands of homeowners left unserved. Clearly more can and must be done to assist homeowners in Southeast Michigan.

A Collaborative Approach

In August 2008, 40 organizations came together to discuss how they could work together at a regional level to stem the tide of mortgage foreclosures, assist homeowners at every stage of the foreclosure cycle, and provide an infrastructure to help stabilize neighborhoods. The outcome was the formation of the Southeast Michigan Regional Foreclosure Intervention and Neighborhood Stabilization Collaborative.

The Collaborative is comprised of nonprofits, government agencies, attorneys and legal advisers, and other concerned organizations from Wayne, Oakland, Macomb and Washtenaw counties. United Way for Southeastern Michigan is the regional coordinator. The Collaborative is focused on developing and executing a comprehensive plan that addresses the depth and breadth of the foreclosure crisis. Collaboration minimizes duplication of efforts thus reducing the cost per client for service and reaching more affected residents. Working together ensures access to a broad range of knowledge and expertise to develop the best solutions to address this crisis. A comprehensive, collaborative approach is the best way to ensure that there are adequate resources available to serve the struggling homeowners in Southeast Michigan facing mortgage foreclosure. The benefits of collaboration include:

·         Enlarged talent and resource pool

·         One entity to fund for entire region 

·         One monitoring and reporting entity with uniform and standardized process

·         Regional system for hiring, training and placing counselors

·         Central resource for education events and materials

·         One entity to track measurable outcomes and ensure accountability

The main goals of the Collaborative are to:

·         Increase the number of counselors in Southeast Michigan in order to reach more people who are at risk of, or currently in, foreclosure. (Currently homeowners are being turned away because not enough counselors are available.)

·         Provide a one-stop resource for homeowners in southeast Michigan in order to obtain counseling, education and resources.

·         Deliver counseling and foreclosure assistance using a standardized approach to provide consistent service throughout Southeast Michigan.

·         Provide resources to help stabilize neighborhoods by addressing the issue of vacant properties that result in loss of property value and increased crime.

The Strategy

Adding additional counselors will have a direct impact on reducing the number of mortgage foreclosures in Southeast Michigan. With counseling, 30 percent of homes are saved. This means in 2009, 45,000 homes would avoid foreclosure, a savings to the community of $4.12 billion.

Strategies related to counseling include:

·         Training and certifying an additional 200 foreclosure counselors in 2009

·         Implementing a regional, standardized system for hiring, training and placing counselors 

·         Matching supply of counselors with demand for counseling

·         Delivering standardized services in which one entity monitors, manages and reports for entire region.

Additional strategies to address the foreclosure crisis include:

·         Establishing a regional online system that will serve as a one-stop portal for residents seeking assistance to prevent mortgage foreclosure. This online counseling application would result in:

o        A reduction in counseling time by one third

o        The ability to drill down to monitor individual counselors for transparency and accountability

o        The ability to illustrate regional outcome through GIS mapping capability

§         Home retained

§         Dignified exit

§         Other

·         Implementing Best Fit to individualize service delivery and ensure that homeowners are matched with the right resources to address their circumstances.

·         Hiring 40 additional attorneys to provide free or low-cost legal services

·         Distributing best practice information to communities in each county.

FUNDING

Southeast Michigan is the hardest hit region in the state when it comes to mortgage foreclosure. Yet, current funding and resources are insufficient to address this issue. Securing adequate funding will be key to the Collaborative’s ability to have a measurable impact on the foreclosure crisis in Southeast Michigan.

The Collaborative seeks funding to:

·         Increase counseling capacity by hiring and training 200 counselors in 2009, reaching a minimum of 150,000 homeowners

·         Increase the number of attorneys by hiring 40 attorneys to provide free or low-cost legal assistance

·         Expand Wayne County MFPP’s web-based program to Macomb, Oakland and Washtenaw counties

·         Assist in regional outreach and education efforts

·         Reduce the number of mortgage foreclosures in Southeast Michigan by at least 30 percent

The only way to address the foreclosure epidemic is through a comprehensive plan where goals and objectives are clearly outlined and measurable. The Collaborative has developed a plan that avoids duplication of efforts and uses a hub and spoke model to secure and distribute counselors and other resources where they are most needed. Instead of funding individual agencies throughout the region, providing funding through the Collaborative will result in a standardized delivery of foreclosure prevention services that is monitored by one group to ensure accountability and results.

The Results

As a result of obtaining funding to execute a regional plan to address the foreclosure crisis, the following outcomes will be achieved:

  • Thirty percent (30%) of homes in mortgage foreclosure will be saved with proper mortgage foreclosure counseling. In Southeastern Michigan, that translates into a minimum of 45,000 homes. The net savings to the region by retaining home ownership for 45,000 homeowners is estimated to be $4.12 billion (calculated using $91,507 per home).
  • A minimum of 200 additional counselors (about a 230% increase over current numbers) will be trained and certified, increasing the number of qualified mortgage foreclosure counselors who will be available to provide in person and phone mortgage foreclosure counseling to 150,000 homeowners facing mortgage delinquency or foreclosure. 
  • A regional one-stop online portal that includes Best Fit will be in place that connects homeowners with the appropriate resources, reduces counseling time and tracks outcomes.
  • A minimum of 40 additional attorneys will be available to provide free or low-cost legal services to homeowners
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