...Signs of Trouble in Foreclosures

February 22, 2006 By VIKAS BAJAJ and RON NIXON ... The housing boom of the last decade helped push minority home ownership rates above 50 percent for the first time in 2004 and the overall foreclosure rate below 1 percent. But hidden behind such success stories lies a disturbing trend: in the last several years, neighborhoods with large poor and minority populations in places like Cleveland, Chicago, Philadelphia and Atlanta have experienced a sharp rise in foreclosures, in some cases more than a doubling, according to an analysis of court filings and other housing data by The New York Times and academic researchers. The increase in foreclosures could be the first of a wave of financial distress for many minority homeowners, experts say, because they are twice as likely as whites to have taken out expensive subprime mortgages, most of which will jump to higher interest rates in the next two years, according to an analysis of data that lenders disclose under the federal Home Mortgage Disclosure Act. ...Some housing experts worry that the minority foreclosure rate could worsen if the economy or the housing market, nationally or regionally, hits a rough patch as it has in industrial Midwestern states like Ohio. ...The Mortgage Bankers Association of America plays down the severity of foreclosures, noting that most new minority homeowners are doing well and that the Midwest is facing unique economic challenges. ...In Cuyahoga County, court filings by lenders seeking to foreclose on delinquent borrowers totaled more than 11,000 in 2005, more than triple the number in 1995. ...A similar pattern can be seen in Chicago, where foreclosure filings tripled, to 7,576, from 1993 to 2005. ... The same trends have been documented in Atlanta and Philadelphia, according to researchers from Harvard and the Reinvestment Fund. ...Almost 70 percent of subprime loans issued since 2001 will shift from low, fixed introductory rates to higher adjustable rates in the next two years, according to an analysis by Fannie Mae. ...Mr. Douglas G. Duncan, the chief economist, Mortgage Bankers Association and others in the industry say that higher foreclosure levels in the Midwest should not be seen as worrying signals for the nation because the region's economic problems are unique. Ohio lost 215,000 jobs from 2001 to 2005, with 63,800 of them coming from the Cleveland metropolitan area. The state unemployment rate was 5.6 percent in December, up from 4 percent in 2000. The jobless rate in Cleveland was 5.5 percent in December, up from 3.8 percent. The Cuyahoga County treasurer James Rokakis, his county's 17 percent foreclosure rate is creating blight in many neighborhoods. ...In Slavic Village, about 500 homes, or 5 percent of its properties, are vacant, Mr. Rokakis said. "Who pays for the damage done to these communities?" http://www.nytimes.com/2006/02/22/business/22home.html?_r=1&oref=slogin