Foreclosure Debacle May Lead To New Bank Regulations

May 9th, 2008

With no end of the crisis being in sight this foreclosure debacle may lead to new banking regulations. It will require the lending bodies to work together with the borrowers.

The leaders of Working in Neighborhoods or WIN proposed this piece of legislation. Sister Barbara Busch is the executive director of WIN. She stressed that the changes are necessary because voluntary appeal is just not working. WIN recently released a report – A Faded Dream Leads To Vacant Neighborhoods. It addresses the problem of foreclosures in Hamilton County. The problem is no longer confined to individual families and houses but spilling over to include entire localities and neighbourhoods. Sister Busch comments – “for all of us in this business, it’s pretty scary”.

As per the report the number of foreclosures have gone up in Hamilton County by 132% since WIN made its debut keeping track of the situation in 2002. In the county 5,182 units had been foreclosed in 2007. The number includes all the stages of the foreclosure process – default and auction notice as well as repossession. Of this 3,183 units were sold.

During the first years of tracking, Cincinnati City had the highest foreclosure numbers. From 2007 Hamilton took over that dubious distinction with 52% of all the foreclosing units coming from there – that is outside the precincts of the city. The worst pockets of foreclosure houses were in Cincinnati (1,514), Colerain Township (267) and Springfield Township (197). It is tough battle for survival in this region. Within the city limits the worst affected localities are West Price Hill (169) and East Price Hill (127). According to the WIN report the primary lenders behind these foreclosures are Wells Fargo, Deutsche Bank and US Bank.

Talking about who are facing foreclosures, Sister Busch said as per the survey, a third of the victims are from the low income group. Many took the floating interest category of loans – the ARM. These hard working people are now facing eviction. She wants a law that will postpone foreclosure proceedings for 60 days. This pause is to be utilized by the lenders to sit with the borrowers and work out a solution that will ultimately lead to the people continuing to stay in the houses that are their homes. Vacant house lead to crime and health related problems. The entire region gets infected. It is known to all – better neighbourhoods mean better communities.