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U.S Department of Housing and Urban Development U.S. Department of the Treasury Spotlight on the Housing Market Spotlight on the Housing Market in Cleveland-Elyria-Mentor, Ohio in Cleveland-Elyria-Mentor, Ohio The Obama Administration's Efforts to Stabilize the Housing Market and Help American Homeowners The Cleveland-‐Elyria-‐Mentor, Ohio Metropolitan StaAsAcal Area (Cleveland MSA) comprises Cuyahoga, Geauga, Lake, Lorain and Medina industrial Midwest, the foreclosure crisis in Cleveland developed differently and earlier than in other areas of the naAon. As early as 200 that of the naAon and rising -‐-‐ the rapid rise of distressed mortgages in the naAon did not begin unAl 2007. A substanAal share of mortg or subprime loans which typically defaulted at 8 Ames the rate of other mortgages. By 2007, Cleveland had already experienced several populaAon declines. Cleveland did not experience the rapid appreciaAon of the housing bubble; yet, home prices have fallen on a percen market in Cleveland remains fragile – with low property values, foreclosed properAes sold at deep discounts adversely affecAng neighbo the AdministraAon’s broad approach to stabilizing the housing market has been the source of real help to homeowners in Cleveland and AdministraAon’s housing scorecard provides a summary of trends and condiAons in the local economy and the impact of the AdministraA homeowners. Population Growth, Employment, and Housing Market: U.S. Department Housing and Urban | Office of Help PolicyAmerican Development and Research| September 2011 The Obama Administration’s Effoforts to Stabilize TheDevelopment Housing Market and Homeowners Population Has Decline The Cleveland MSA has experienced populaAon decline since 2000, decreasing at an annual rate of 0.3 percent over the decade. The most recent decennial Census count, at less than 2.1 million as of April 2010, represents a decline of 70,900 Cuyahoga, persons since the previous Census. this and Ame, nMedina et out-‐migraAon The Cleveland-Elyria-Mentor, Ohio Metropolitan Statistical Area (Cleveland MSA) includes Geauga, Lake, During Lorain Counties in northeastern Date Clevelan averaged 11,500 people a year, mostly due to an average annual loss of 14,500 jobs. Out-‐migraAon peaked Ohio. The foreclosure crisis in Cleveland and other parts of the industrial Midwest developed much earlier than in other areas of the nation. As early as 2003, 4/1/00 in the year ending July 2006 and has fallen by more than half that level since. As a result, the annual 4/1/10 the share of distressed mortgages in Cleveland was above the national average and hrising –the rise in distressed decline in populaAon as slowed considerably since 2006. mortgage shares did not begin until 2007 in most Source: Census Bureau (2000 and 2010 other regions. The Cleveland MSA did not see the rapid appreciation of the housing bubble; yet, local home prices fell by nearly as great a percentage as those for the rest of the nation. By the start of the national mortgage crisis in 2007, Cleveland had already experienced several years of above average unemployment and population declines, and high cost or subprime loans were defaulting at eight ftimes other mortgages. For allmof these reasons, theaccounted housing Area employment ell in 8 othe f the rate past 1of 0 years primarily due to losses in the anufacturing sector, which for market more than 40 percent of in the MSA aproperties s of July 2011 –affecting up by 0.7 percent from a year ago– while the naAon saw a severely 0.9 percent junderwater ob growth rate during the same pe in Cleveland fragile – with low property values, deeply-discounted foreclosed neighborhood values, and many light on the Housingremains Market in Cleveland-Elyria-Mentor, Ohio employed high of 1,138,200 jobs recorded in May 2000. The average unemployment rate was 7.9 percent as of July 2011, down considerably from 9.3 perc mortgages. However, the Administration’s broad approach to stabilizing the housing market has been a source of real help to homeowners in Cleveland and mainly a^ributed to a net increase in employment of 13,090. Employment gains occurred in educaAon and health services (6,800), professional surrounding cities. This addendum Administration’s provides a2011 summary of trends and conditions in the economysector andshowed the impact of of 1,700 jobs in trade sector (3,500), while offset by a decline in government services (3,500). Even local the manufacturing an increase The Obama Administration's Efforts to Stabilizeto thethe Housing Market and Helphousing American scorecard Homeowners - September rate din uring the same Ophio. eriod as ith 9.1 percent, from 9.5 percent a year ago. nd-‐Elyria-‐Mentor, Ohio Metropolitan StaAsAcal Area (Cleveland MSA) cthe omprises Cuyahoga, Geauga, Lake, Lorain aunemployment nd Mhomeowners. edina CounAes northeastern Aw s w other parts doown f the the Administration’s efforts to stabilize housing market and help local dwest, the foreclosure crisis in Cleveland developed differently and earlier than in other areas of the naAon. As e arly as 2003, the share of distressed mortgages in Cleveland was above aAon and rising -‐-‐ the rapid rise of distressed mortgages in the naAon did not begin unAl 2007. A substanAal share of mortgage loans in the Cleveland area prior to 2007 were high cost loans which typically defaulted at 8 Ames the rate of other mortgages. By 2007, Cleveland had already experienced several years of unemployment above the naAonal average and declines. Cleveland did not experience the rapid appreciaAon of the housing bubble; yet, home prices have fallen on a percentage basis nearly as far as those for the naAon. The housing eveland remains fragile – with low property values, foreclosed properAes sold at deep discounts adversely affecAng neighborhoods, and many severely underwater mortgages. However, Job Market Conditions are Stabilizing traAon’s broad approach to stabilizing the housing market has been the source of real help to homeowners in Cleveland and surrounding ciAes. This bimonthly addendum to the Quarterly onfarm on’s housing scorecard provides a summary of trends and condiAons in the local economy and the impact of the AdministraAon’s efforts to stabilize the housing m arket and N help local Employment s. Population Growth, Employment, and Housing Market: The population of the Cleveland MSA has fallen at an annual rate of 0.3 percent since 2000. The most recent decennial 1,150 Census count,Market: at less than 2.1 million as of April 2010, th, Employment, and Housing represents a decline of 70,900 persons since the previous 1,100 Population Has Decline in Cleveland Over the Past Decade has experienced populaAon decline since 2000, decreasing at an annual rate of 0.3 During time, ofof 11,500 cade. The most Census. recent decennial Census this count, at less an than average 2.1 million as April 2010, people Annual Growth Rate From of 70,900 persons since the previous Census. During this year, Ame, net out-‐migraAon moved out of the area each which was driven by anDate Cleveland MSA Population Prior Date 1,050 ople a year, mostly due to an average annual loss of 14,500 jobs. Out-‐migraAon peaked average loss of 14,500 jobs each year. Population loss 4/1/00 -‐ 2,148,143 uly 2006 and has fallen by more than half that level since. As a result, the annual 4/1/10 2,077,240 -‐0.3% n has slowed considerably 2006. peakedsince in the year ending July 2006 but has slowed by more 1,000 Source: Census Bureau (2000 and 2010 Decennial) than half that level since. 12 145 135 4/1/2010 2,077,240 -0.3% NaAon (right axis) Source: Census Bureau (2000 and 2010 Decennial) Millions Area fell in 8are ofStabilizing the past 10 years primarily due to Jobemployment Market Conditions Quarterly onfarm Employment job losses in the Nmanufacturing sector, which accounted for more than 40 percent of all job losses. Slightly more than one150 million people were employed in the MSA as of July 2011 – up by 0.7 145 percent from a year ago – while the nation saw a 0.9 percent job growth rate during the same period. Local payrolls remain 140 137,600 jobs below the record high of 1,138,200 jobs recorded in May 2000. The average unemployment rate was 7.9135 percent as of July 2011, down considerably from 9.3 percent a year 130 earlier. The decline in the unemployment rate is mainly attributed to a net increase in employment of 13,090. Employment gains 125 occurred in education and health services (6,800), professional 120 trade and business services (3,900), and the wholesale and retail sector (3,500), while offset by a decline in government services (3,500). Even manufacturing sector showed an increase of Year the and Q uarter 1,700 Mjobs in the year ending JulyNaAon 2011. Cleveland SA (right The axis) national average usted Data unemployment rate during the same period was 9.1 percent, u of Labor StaAsAcs down from 9.5 percent in July 2010. Unemployment Rate Remains High, But Shows Improvement Monthly Unemployment Rate (Percent) 12 10 8 6 4 2 0 Seasonally Adjusted Data Source: Bureau of Labor StaAsAcs Cleveland MSA Spotlight on Cleveland MSA | Page 1 NaAon 8 6 130 4 125 2 120 ll in 8 of the past 10 years primarily due to losses in the manufacturing sector, which accounted for more than 40 percent of all job losses. Slightly more than one million people were MSA Growth Rate rate during the same period. Local payrolls remain 137,600 jobs below the record A as of July 2011 – up by 0.7 percent from a yCleveland ear ago– while the naAon saw Annual a 0.9 percent job growth bs recorded in May 2000. The average unemployment rate of July Prior 2011, dDate own considerably from 9.3 percent a year earlier. The decline in the unemployment ate is Date Populati onwas 7.9 percent as From Year and Qruarter a net increase in employment of 13,090. Employment gains occurred in educaAon and health services (6,800), professional and business services (3,900), and the wholesale and retail Cleveland MSA 4/1/2000 2,148,143 while offset by a decline in government services (3,500). Even the manufacturing sector showed an increase of 1,700 jobs in the yAear ending July Seasonally djusted Data 2011. The naAonal average during the same period was 9.1 percent, down from 9.5 percent a year ago. Source: Bureau of Labor StaAsAcs 10 Millions Thousands 140 950 Population Has Declined in Cleveland Over the Past Decade 150 0 Sea Sou The home sales market remains soP in the Cleveland MSA. ExisSng home sales have declined steadily since 2005, while new home sales showed a slight increase between 2009 and 2010 aPer declining since 2004. During the first six months of 2011, exisSng home sales declined by 20 percent compared with the first six months of 2010, while new home sales declined 42 percent, according to CoreLogic. Sales of distressed homes – foreclosures and short sales – currently represent 27 percent of all exisSng home sales in the MSA, the same as the naSonal rate. The high proporSon of distressed sales (many of which have been sold at deep discounts according to researchers at Case Western Reserve University) has kept Cleveland home prices depressed. The CoreLogic repeat-‐sales house price index shows that home prices in Cleveland rose at one-‐fiPh the pace of the rest of the naSon between 2000 and 2005. Although home prices in Cleveland never experienced the bubble that the rest of the naSon did, prices nonetheless declined 28 percent from their peak in October 2005 to their low in February 2009 -‐-‐ similar to the naSonal average peak-‐to-‐low decline of 29 percent. While the overall market remains fragile, local home prices have shown signs of stabilizing since February 2009 and are currently higher than their 2009 | lows. The local market Development is improving with an average partment vacancy rate of 5.1 Development Office ofrental Policy and aResearch percent in the second quarter of 2011, down from 6.7 percent a year earlier and below the naSonal average of 5.9 percent according to Reis, Inc. The average rent for an apartment, at $739, is just 1 percent higher than a year ago. The average rent naSonwide increased by 2 percent to $1,053 during the same period. U.S Department of Housing and Urban Development U.S. Department of the Treasury U.S. Department Housing and Urban The Obama Administration’s Effoforts to Stabilize The Housing Market and Help American Homeowners | September 2011 Home sales remain soft in the Cleveland MSA. Existing home New and Existing Home Sales: sales have declined steadily since 2005 and new home sales Cleveland Compared to the Nation have been declining since 2004, although the market saw a Annual Home Sales (thousands) slight increase between 2009 and 2010. During the first six 45 8,000 months of 2011, existing home sales declined by 20 percent 40 7,000 compared with the first six months of 2010, while new home 35 sales declined 42 percent, according to CoreLogic. Sales of 6,000 distressed homes – foreclosures and short sales – currently 30 5,000 represent 27 percent of all existing home sales in the Cleveland 25 4,000 market, on par with the national rate. The high proportion of 20 distressed sales – which were sold at deep discounts according 3,000 15 to Case Western University researchers – has weakened 2,000 10 Cleveland home prices overall. The CoreLogic repeat-sales 1,000 5 house price index shows that home prices in Cleveland rose at one-fifth the national pace between 2000 and 2005. Although 0 0 2003 2004 2005 2006 2007 2008 2009 2010 home prices in Cleveland never experienced the bubble that NaSon: ExisSng Sales (right axis) NaSon: New Sales (right axis) was seen in the rest of the nation, prices nonetheless declined 28 Cleveland MSA: ExisSng Sales Cleveland MSA: New Sales percent from their peak in October 2005 to their low in February Sources: CoreLogic, HUD/Census Bureau, and NaSonal AssociaSon of Realtors 2009 – similar to the national average peak-to-low decline of Spotlight on the Housing Market in Cleveland-Elyria-Mentor, Ohio fragile, local 29 percent. While the Cleveland market remains on the Housing in Cleveland-Elyria-Mentor, Ohio Trends in Mortgage Delinquencies and Foreclosures: home prices have shown signsSpotlight of stabilizing sinceMarket February g home sales have declined steadily since Homeowners in Cleveland have struggled with high levels of mortgage delinquency and foreclosure. As of July 2009 and are currently above the lows seen in 2009. The local 09 and 2010 aPer declining since 004. 2011, the Cleveland MSA ranked 42nd in the naSon for the highest percentage of mortgages that were 90 or more t remains soP in the Cleveland M2SA. ExisSng home sales have declined steadily since y 0 percent compared w ith the rst ix 2009 market is salso showing of improvement days delinquent or in the process of foreclosure, according to LPS Prices Applied Declined, AnalyScs. Through the efforts of Cleveland House s2ales showed arental slight increase bfi etween and 2010 asigns Per declining since 2004. with an ding t o C oreLogic. S ales o f d istressed h omes – numerous state and local enSSes iAlthough n partnership Never with the federal government, the number of mortgages at risk of Experienced Housing Bubble, nths of 2011, exisSng home sapartment ales declined bvacancy y 20 percent compared with percent the first six average rate of 5.1 in the second Cleveland House Prices Declined, neew xisSng h ome s ales i n t he M SA, t he s ame a s foreclosure ( 90 o r m ore d ays d elinquent o r i n t he p rocess o f f oreclosure) i n the Cleveland area declined home sales declined 42 percent, according to CoreLogic. Sales of distressed homes – Market Remains Fragile Although Experienced Housing Bubble, quarter 2011, down from 6.7 percent a year earlier and from19,471 (9.6 percent of all mortgages) in July 2010 to 18,975 (8.7 percent) in July 2011, cNever ompared with a w hich –h cave been old at dof eep sales urrently rsepresent 27 d piscounts ercent of all exisSng home sales in the MSA, the same as Repeat-‐Sales Hdouse Price that Index = 100) m Market Fragile naSonal of decline from 7.5 to 6.8 percent. CoreLogic ata show the (sJan hare 2o000 f distressed ortgages Remains (90 or kept pCroporSon leveland hbelow prices The thedepressed. ofbeen 5.9sold percent to Reis Inc. high oome f distressed snational ales (many oaverage f which have at deep daccording iscounts n Cleveland rose at one-‐fiPh the pace of the more days delinquent) has been high in Cleveland for a considerable length of Sme. Since peaking n February Repeat-‐Sales Hiouse Price Index (Jan 2000 = 100) rs at Case Western eserve University) hfor as kan ept Capartment, leveland home at prices depressed. The 1 percent 220 TheeRxperienced average rent $739, is only n Cleveland never the bubble 2010 at 8.7 percent, 90-‐plus-‐day delinquency rates have fallen to 7.8 percent. This compares with a naSonal house price index shows that home prices in Cleveland rose at one-‐fiPh the pace of the 220 ent from their phigher eak in October 2a 005 to their decline f rom 8 .5 p ercent t o 7 .2 p ercent o ver t he s ame p eriod. R ealty T rac d ata s how t hat c ompleted f oreclosures than year ago. The average rent nationwide increased 200 ween 2000 and 2005. Although home prices in Cleveland never experienced the bubble w decline of 29 percent. While the overall have also declined in Cleveland over the past year, dropping from 1,840 in the second quarter of 2010 to 690 in the Son did, prices nby onetheless declined 8 percent from their pthe eak isame n October 2005 to their 2 percent to2$1,053 during period. second quarter of 2011, although lender process r200 eviews conSnue to affect foreclosure compleSons locally and 180 bilizing since February 2009 and are currently -‐ similar to the naSonal average peak-‐to-‐low decline of 29 percent. While the overall with an average apartment vacancy rate of 5.1 , local home prices have shown signs of stabilizing since February 2009 and are currently ear earlier and below the naSonal average of lows. The local rental market is improving with an average apartment vacancy rate of 5.1 ent, at $739, is just 1 percent higher than a quarter of 2011, down from 6.7 percent a year earlier and below the naSonal average of 1,053 during the same period. to Reis, Inc. The average rent for an apartment, at $739, is just 1 percent higher than a rent naSonwide increased by 2 percent to $1,053 during the same period. Trends in Mortgage Home Sales:Delinquencies and Foreclosures: d to the Nation New and Existing Home Sales: (thousands) Homeowners in Cleveland are still struggling with high levels Cleveland Compared to the Nation 8.5 8.0 7.5 7.0 6.5 6.0 5.5 5.0 Sou naSonally. Currently, 27 percent of mortgages in 180 the Cleveland MSA have negaSve equity compared with 23 160 naSonally according to CoreLogic -‐-‐ represenSng more homeowners and loans potenSally at risk. percent 160 140 120 140 100 120 100 Foreclosure Completion Rates in the Cleveland MSA 80 Second Quarter 2011 Since April 1, 2009 Area Foreclosure Foreclosure Foreclosure Rate Foreclosure Rate Completions Completions Cleveland MSA NaSon Cleveland MSA 690 0.1% 16,200 1.7% Cleveland MSA Source: CoreLogic Nation 203,876 0.2% 2,203,386 1.7% Note: Foreclosure Rates as Percent of All Housing Units; Source: CoreLogic Data through July 2011 for Foreclosures since 2009 Source: Realty Trac and Census Bureau 10 80 Annual Home Sales (thousands) of mortgage delinquency and foreclosure. As of July 2011, 8,000 LPS Applied Analytics ranked the Cleveland MSA 42nd 8,000 out 7,000 of 367 metropolitan areas for the percentage of mortgages 7,000 6,000 that were 90 or more days delinquent or in the process of foreclosure. Through5,000 the efforts of numerous state 6,000 and 5,000 local entities in partnership with the federal government, 4,000 the number of mortgages at risk of foreclosure (90 or4,000 more 3,000 days delinquent or in the process of foreclosure) in theRental Vacancy Rates Consistently Lower Than Nation Rates Vacancy (Percent) Rates Consistently Lower Than Nation 3,000 Quarterly Apartment Rental Vacancy Rental 2,000 Cleveland area declined from 19,471 (9.6 percent of all Quarterly Apartment Rental Vacancy Rates (Percent) 8.5 percent) in July 2,000 mortgages) in July 2010 to 18,975 (8.7 1,000 8.5 2011, compared with a national decline 6.8 8.0 from 7.5 to1,000 0 percent. CoreLogic data since 2000 show that the share 2007 2008 2009 2010 8.0 0 7.5 of2005 distressed mortgages (902008 or more2009 days delinquent) has 2004 2006 2010 NaSon: New Sales (right axis) 2007 7.5 been consistently than inaxis) the nation. 7.0 Cleveland MSA: New Sales higher in Cleveland Son: ExisSng Sales (right axis) NaSon: New Sales (right Since at M8.7 percent, 90-plus-day 7.0 veland MSA: ExisSng Sales peaking in February 2010 Cleveland SA: New Sales of Realtors 6.5 delinquency rates have fallen to 7.8 percent. This compares HUD/Census Bureau, and NaSonal AssociaSon of Realtors 6.5 with a national decline from 8.5 percent6.0 to 7.2 percent res: 6.0 over the same period. Realty Trac data show that completed age delinquency and foreclosure. As of July 5.5 age Delinquencies and Foreclosures: percentage of m ortgages that were 0 oortgage r also more delinquency foreclosures have declinedand inforeclosure. Cleveland and have struggled with high levels of 9m As of over July the past 5.5 Applied AnalyScs. Through the efforts of SA ranked 42nd in the naSon for the highest percentage of mortgages that 5.0 were 90 or more overnment, the year, number dropping of mortgages afrom t risk of 1,840 in the second quarter of 2010 he process of foreclosure, according to LPS Applied AnalyScs. Through the efforts of 5.0 osure) in the Cleveland area declined to 690 second quarter 2011, although cal enSSes in partnership win ith the the federal government, the of number of mortgages at risk lender of .7 percent) in July 2011, compared with a e days delinquent or in the process of foreclosure) in tto he Caffect leveland foreclosure area declined completions process Year and Quarter at the share of d istressed mreviews ortgages (90 continue or nt of all mortgages) in July 2010 to 18,975 (8.7 percent) in July 2011, compared with a locally anddiata nationally. reports that le 7length me. Since peaking n February Year and Quarter m .5 to 6o .8 f pSercent. CoreLogic show that the sCoreLogic hare of distressed mortgages (90 27 or percent of Cleveland M SA NaSon Source: R eis, I nc. .8 percent. This compares with a naSonal mortgages the Cleveland MSA are currently in negative has been high in Cleveland for ain considerable length of Sme. Since peaking in February ty Trac data show that completed foreclosures Cleveland MSA NaSon Source: Reis, Inc. -‐plus-‐day delinquency rates have fallen to 7.8 percent. This compares with a naSonal equity compared 1,840 in the second quarter of 2010 to 690 with in the 23 percent nationally– representing nt to 7.2 percent over the same period. Realty Trac data show that completed foreclosures to affect foreclosure compleSons locally and even more homeowners and loans potentially at risk. eveland over the past year, dropping from 1,840 in the second quarter of 2010 to 690 in the SA ahlthough ave negaSve compared ith 23 to affect foreclosure compleSons locally and 1, lender epquity rocess reviews w conSnue meowners and loans potenSally at risk. 27 percent of mortgages in the Cleveland MSA have negaSve equity compared with 23 rding to CoreLogic -‐-‐ represenSng more homeowners and loans potenSally at risk. Share of Distressed Mortgages Rose Earlier Than in the Nation and Now Declining Share of Distressed Mortgages Rose Earlier Than in the Nation Mortgages 90+ Days on Delinquent (Percent MSA of all Mortgages) Spotlight Cleveland | Page 2 Now Declining and 9 8 7 6 NaSon 5 4 3 2 1 0 Source: CoreL s: CoreLogic, HUD/Census Bureau, and NaSonal AssociaSon of Realtors 6.5 6.0 n Mortgage Delinquenciesofand Foreclosures: U.S Department Housing and Urban Development rs in Cleveland ave struggled with of high levels of mortgage delinquency and foreclosure. As of July U.S.hDepartment the Treasury eveland MSA ranked 42nd in the naSon for the highest percentage of mortgages that were 90 or more uent or in the process of foreclosure, according to LPS Applied AnalyScs. Through the efforts of tate and local enSSes in partnership with the federal government, the number of mortgages at risk of (90 or more days delinquent or in the process of foreclosure) in the Cleveland area declined (9.6 percent of all mortgages) in July 2010 to 18,975 (8.7 percent) in July 2011, compared with a decline from 7.5 to 6.8 percent. CoreLogic data show that the share of distressed mortgages (90 or delinquent) has been high in Cleveland for a considerable length of Sme. Since peaking in February percent, 90-‐plus-‐day delinquency rates have fallen to 7.8 percent. This compares with a naSonal U.S.Realty Department of cHousing and Urban m 8.5 percent to 7.2 percent over the same period. Trac data show that ompleted foreclosures eclined in Cleveland over the past year, dropping from 1,840 in the second quarter of 2010 to 690 in the rter of 2011, although lender process reviews conSnue to affect foreclosure compleSons locally and Currently, 27 percent of mortgages in the Cleveland MSA have negaSve equity compared with 23 onally according to CoreLogic -‐-‐ represenSng more homeowners and loans potenSally at risk. 5.5 5.0 Year and Quarter Cleveland MSA Source: Reis, Inc. NaSon | Office of Help PolicyAmerican Development and Research| September 2011 The Obama Administration’s Efforts to Stabilize TheDevelopment Housing Market and Homeowners Foreclosure Completion Rates in the Cleveland MSA Second Quarter 2011 Area Cleveland Foreclosure Completions 690 Foreclosure Rate Share of Distressed Mortgages Rose Earlier Than in the Nation and Now Declining Since April 1, 2009 Foreclosure Completions 0.1% 16,200 Foreclosure Rate Mortgages 90+ Days Delinquent (Percent of all Mortgages) 10 1.7% Foreclosure MSA Completion Rates in the Cleveland MSA Second Quarter 2011 Since April 1, 2009 Foreclosure Foreclosure Nation Foreclosure 203,876 0.2% Foreclosure 2,203,386 1.7% Rate Rate Completions Completions SA 690 0.1% 16,200 1.7% 2Note: 03,876 Foreclosure 0.2% Rates as Percent 2,203,386 1.7%Units; Data through July of All Housing ure Rates as Percent o f A ll H ousing U nits; 2011 for Foreclosures since 2009 rough July 2011 for Source: Foreclosures since 2009and Census Bureau Realty Trac Trac and Census Bureau 9 8 7 6 5 4 3 2 1 The Administration’s Efforts to Stabilize the Cleveland Housing Market: The Administration’s Efforts to Stabilize the Cleveland Housing Market: 0 Spotlight on the Housing Market in Cleveland-Elyria-Mentor, Ohio From the launch ofassistance the Administration’s From the launch of the AdministraDon’s programs through the assistance end of July 2011, approximately 32,300 mortgage assistance intervenDons have bthe een oend ffered of to hJuly omeowners in the programs in April 2009 through 2011, Cleveland metropolitan area. Nearly 17,700 intervenDons were offered through the Home Affordable approximately 32,300 mortgage assistance interventions ModificaDon Program (HAMP) and the Federal Housing AdministraDon (FHA) loss miDgaDon and early delinquency have intervenDon programs. An eto sDmated addiDonal 14,600 roprietary modificaDons have been offered homeowners in pthe Cleveland been offered through Hope Now Alliance servicers. While some homeowners may have received help metropolitan area. Nearly 17,700 interventions were from more than one program, the number of Dmes assistance has been offered is nearly double the offered through the tHome number of foreclosures completed during his period Affordable (16,200) in the CModifi leveland Mcation SA. Program (HAMP) and the Federal Housing Administration In addiDon to offers of mortgage aid to homeowners, the AdministraDon’s Neighborhood StabilizaDon (FHA) loss Hmitigation and early delinquency intervention Program (NSP) and Hardest it Fund (HHF) have been helping to stabilize the Cleveland housing market. programs. An estimated additional 14,600 proprietary Eight jurisdicDons in the Cleveland MSA have received NSP grants: the ciDes of Cleveland, East cations have been offered through Hope Cleveland, Emodifi lyria, Euclid, and Lorain and the counDes of Cuyahoga, Lake, and Lorain. TNow he Cuyahoga County Land Alliance ReuDlizaDon servicers. CorporaDon, a While consorDum between the City of Cleveland and Chave uyahoga some homeowners may County, has also received an NSP grant. received help from more than one program, the number of times assistance has been offered is nearly double the number of foreclosures completed during this period (16,200) in the Cleveland MSA. In addition to offers of mortgage aid to homeowners, the Administration’s Neighborhood Stabilization Program (NSP) and Hardest Hit Fund have been helping to theUCleveland housing market. Projected Completed Cleveland MSA Nstabilize SP Activity (Housing nits) NSP1 Total Clearance and demolition Homeownership assistance to low-‐ and moderate-‐income Rehabilitation/reconstruction of residential structures Cleveland MSA NSP Activity (Housing Units) NSP2 Total Clearance and demolition NSP1 Total Rehabilitation/reconstruction of residential structures NSP3 Total Clearance and demolition Clearance and demolition Homeownership assistance to low-‐ and moderate-‐income Homeownership assistance to low- and Rehabilitation/reconstruction of residential structures moderate-income Rehabilitation/reconstruction of residential structures 4012 1682 1457 1122 32 14 2523 546 Projected2225Completed4 605 0 4012 1407 1620 4 900 0 1457505 847 0 56 32339 14 0 2523 546 Overall, $38.8 million in NSP1, $40.8 million in NSP2, and $13.1 million in NSP3 funds have been awarded NSP2 Total 2225 4 to these nine grantees in the Cleveland MSA. Local authoriDes in Cleveland devised a sophisDcated mapping system of foreclosures ith the aid of Case on Western Rehabilitatiwon/reconstructi of Reserve University, which provides crucial 605 detail about every property in fal ocus areas and enables the jurisdicDons in the MSA to act strategically 0in residenti structures their efforts to revitalize neighborhoods. Approximately 1,686 households have already benefited from NSP3 Total NSP, and acDviDes funded by the program are expected to provide assistance to 1620 an addiDonal 5,451 4 owner and renter households. Here are some examples of how these funds have been put to use: Clearance and demolition 875 0 • The City of Cleveland, in partnership ith Chousing uyahoga County, developed an innovaDve Constructi on of wnew 432 NSP1 program 0to improve neighborhoods by removing or rehabilitaDng foreclosed properDes in communiDes through Homeownership assistance to lowand concentrated investments and the leveraging of private funds. The program was implemented through 56 moderate-income nonprofit partnerships with proven performance records and builds on exisDng neighborhood plans. The City of Cleveland had roughly 18,000 vacant lots, about 5,000 of which were land banked. The vacant lots Rehabilitation/reconstruction of had the effect of decreasing property values and the quality of neighborhoods for 387 residents. One of t0 he residential structures city’s NSP1 programs supports a pilot land reuse iniDaDve. Once vacant properDes were acquired, the program provided grants to grassroots neighborhood groups, churches, schools and individuals to carry out reclamaDon projects. The projects will be maintained by the community groups once completed. The city selected 47 environmentally sustainable land reuse projects that are being conducted on 125 vacant parcels of land held by Cleveland’s Land ReuDlizaDon Program. Twenty-‐five projects focus on urban agriculture and are coordinated by The Ohio State University Extension. ParkWorks Inc. coordinates twenty-‐two groups that focus on urban greening. AddiDonal funding for this pilot program was received from the Surdna FoundaDon and in-‐kind services were received from the USEPA Brownfield Program, among others. Cleveland MSA NaSon Source: CoreLogic Mortgage Aid Extended More Than 32,000 Times to Mitigate Rising Foreclosures Cleveland MSA: CumulaDve Offers of Aid by Source Compared with Foreclosures Since April 1, 2009 (Thousands) 35 Mortgage Aid Offers in Cleveland MSA from April 2009 through July 2011: 32,300 Foreclosure CompleDons Over Same Period: 16,200 30 25 20 15 10 5 0 FHA Loss MiDgaDon Hamp ModificaDons EsDmated Hope Now ModificaDons Foreclosure CompleDons Note: Data on Hope Now proprietary mortgage modificaDons not available at metropolitan area level. However, Hope Now Alliance reports 66,600 non-‐HAMP modificaDons since April 1, 2009 in the state of OH of which 22 percent are esDmated by HUD to have occurred in the Cleveland MSA. Sources: Departments of HUD and Treasury, Hope Now Alliance, and Realty Trac. Given over three rounds, the Neighborhood Stabilization Program has invested $7 billion nationwide to help localities work with non-profits and community development corporations to turn tens of thousands of abandoned and foreclosed homes that drag down property values into homeownership opportunities and the affordable rental housing communities need. This approach has yielded significant results. For example, in one Cleveland Census block group, the vacancy rate dropped by nearly 40 percent between 2008 and 2010. So far, Cleveland has used NSP1 funds to remove the destabilizing influence of 86 in properDes and to rehabilitate 13 hhave omes. received NSP grants: the cities of Eight jurisdictions the Cleveland MSA Cleveland, East Cleveland, Elyria, Euclid, and Lorain and the counties of Cuyahoga, • Building on the success of their partnership using NSP1 funds, Cleveland and Cuyahoga County are collaboraDng on Lake, Lorain. The CCuyahoga CountyCorporaKon, Land Reutilization Corporation, a an NSP2 pand rogram. The Cuyahoga ounty Land ReuKlizaKon a consorDum between the two jurisdicDons, is using more than $40 million in funds to implement a comprehensive revitalizaDon program designed consortium between the City of Cleveland and Cuyahoga County, has also received to stabilize 20 target areas hit by the foreclosure crisis. One of the key components of this innovaDve NSP2 program an grant. is the NSP eliminaDon of vacant and vandalized properDes in an environmentally sustainable manner. With funding from the City of Cleveland, the program includes a deconstrucDon project developed by Urban Lumberjacks of Cleveland. Blighted homes are removed in an environmentally sustainable manner through the careful disassembly of Overall, $38.8 million in NSP1, $40.8 million in NSP2, and $13.1 million in NSP3 structures so that parts can be salvaged and reused. The NSP programs are also providing jobs for Cleveland funds have been awarded to these nine grantees in the Cleveland MSA. Local residents. authorities in Cleveland devised a sophisticated mapping system of foreclosures • The City of Lakewood recently received $250,000 in NSP3 funds from the Cuyahoga County Department of with the aid CaseDepartment Western whicha provides crucial detail Development. The Lof akewood of PReserve lanning and University, Development submiged proposal through a compeDDve process was awarded the largest dollar amount possible this round funding. The NSP min oney along with to act aboutand every property in focus areas andin helps theof jurisdictions the MSA other investments by the city will be targeted to a core part of Lakewood. The area bounded by Ridgewood and strategically inMtheir revitalize neighborhoods. Approximately 1,411 Clarence, Detroit and adison, efforts has been to hard hit in the housing crisis and this money will go a long way toward acquiring homes that have already been abandoned . The city’s proposal includes obtaining vacant hfunded omes for rehabilitaDon households have benefi ted from NSP, and activities by the program on Clarence Avenue and also invesDng in properDes on Alameda and Lakewood Avenues. are expected to provide assistance to an additional 5,701 owner and renter households. Here are some examples of how these funds have been put to use: Spotlight on Cleveland MSA | Page 3 1.636935 U.S Department of Housing and Urban Development U.S. Department of the Treasury U.S. Department Housing and Urban | Office of Help PolicyAmerican Development and Research| September 2011 The Obama Administration’s Effoforts to Stabilize TheDevelopment Housing Market and Homeowners The City of Cleveland, in partnership with Cuyahoga County, developed an innovative NSP1 program to improve neighborhoods by removing or rehabilitating foreclosed properties in communities through concentrated investments and the leveraging of private funds. The program was implemented through nonprofit partnerships with proven performance records and builds on existing neighborhood plans. The City of Cleveland had roughly 18,000 vacant lots, about 5,000 of which were land banked. The vacant lots had the effect of decreasing property values and the quality of neighborhoods for residents. One of the city’s NSP1 programs supports a pilot land reuse initiative. Once vacant properties were acquired, the program provided grants to grassroots neighborhood groups, churches, schools and individuals to carry out reclamation projects. The projects will be maintained by the community groups once completed. The city selected 47 environmentally sustainable land reuse projects that are being conducted on 125 vacant parcels of land held by Cleveland’s Land Reutilization Program. Twenty-five projects focus on urban agriculture and are coordinated by The Ohio State University Extension. ParkWorks Inc. coordinates twenty-two groups that focus on urban greening. Additional funding for this pilot program was received from the Surdna Foundation and in-kind services were received from the USEPA Brownfield Program, among others. This approach has yielded significant results. For example, in one Cleveland Census block group, the vacancy rate dropped by nearly 40 percent between 2008 and 2010. So far, Cleveland has used NSP1 funds to remove the destabilizing influence of 86 properties and to rehabilitate 13 homes. As part of the State of Ohio’s housing recovery efforts, the Restoring Stability: A Save the Dream Ohio Initiative helps Ohio homeowners struggling to make their monthly house payments or those who have already fallen behind on their mortgage. Through the program, the Ohio Housing Finance Agency (OHFA) is administering $570 million from the Administration’s Hardest Hit Fund to help families avoid foreclosure. • Building on the success of their partnership using NSP1 funds, Cleveland and Cuyahoga County are collaborating on an NSP2 program. The Cuyahoga County Land Reutilization Corporation is using more than $40 million in funds to implement a comprehensive revitalization program designed to stabilize 20 target areas hit by the foreclosure crisis. One of the key components of this innovative NSP2 program is the elimination of vacant and vandalized properties in an environmentally sustainable manner. With funding from the City of Cleveland, the program includes a deconstruction project developed by Urban Lumberjacks of Cleveland. Blighted homes are removed in an environmentally sustainable manner through the careful disassembly of structures so that parts can be salvaged and reused. The NSP programs are also providing jobs for Cleveland residents. Modification Assistance with Principal Reduction: The program provides a payment incentive to mortgage servicers to reduce a participating homeowner’s mortgage principal to the level necessary to achieve a loan modification for an affordable monthly mortgage payment -- ideally down to a 115% loan-to-value ratio or less. The mortgage servicer will need to agree to provide principal forbearance or forgiveness equal to or greater than the Restoring Stability payment. As a result of this assistance, the homeowner should be able to qualify for a loan modification through the Administration’s Home Affordable Modification Program (HAMP) or other programs that can make the monthly mortgage payment even more affordable. The principal reduction provided by Restoring Stability is structured as a zero-interest, deferred payment loan that is forgiven over five years, or repaid if the home is sold or the loan is refinanced sooner. • The City of Lakewood recently received $250,000 in NSP3 funds from the Cuyahoga County Department of Development. The Lakewood Department of Planning and Development submitted a proposal through a competitive process and was awarded the largest dollar amount possible in this round of funding. The NSP money along with other investments by the city will be targeted to a core part of Lakewood. The area bounded by Ridgewood and Clarence, Detroit and Madison, has been hard hit in the housing crisis and this money will go a long way toward acquiring homes that have been abandoned. The city’s proposal includes obtaining vacant homes for rehabilitation on Clarence Avenue and also investing in properties on Alameda and Lakewood Avenues. Transitional Assistance: The Transitional Assistance program provides homeowners who cannot sustain homeownership with an alternative to foreclosure by offering an incentive to mortgage servicers to complete short sales or deed-in-lieu of foreclosure agreements. Transitional Assistance allows homeowners to exit their homes if they have exhausted all other options for maintaining homeownership or if they need to relocate to gain meaningful employment. If necessary, the plan may also make an incentive payment to a second lien holder to release other liens on the property. • The Restoring Stability programs include: Rescue Payment Assistance: The Rescue Payment Assistance program provides payments to mortgage servicers to help delinquent homeowners who can demonstrate a financial hardship become current on their mortgages. The payments can cover principal, interest, fees, delinquent taxes or escrow shortage and homeowners insurance. Homeowners need to demonstrate the ability to make future mortgage payments for at least six months. Rescue Payment Assistance is structured as a zero-interest, deferred payment loan that is forgiven over five years, or repaid from sales proceeds if the home is sold sooner. Partial Mortgage Payment Assistance: This program provides partial mortgage payments while unemployed homeowners search for a job or participate in job training. Through the program, homeowners are required to make affordable monthly payments of no less than 25% of their current total monthly payment. Restoring Stability covers the remainder of the payment. Partial Mortgage Payment Assistance is structured as a zero-interest, deferred payment loan that is forgiven over five years, or repaid if the home is sold or the loan is refinanced sooner. To date, over 150 mortgage servicers have agreed to participate in at least one of the Restoring Stability programs. The programs make extensive use of local HUD-approved housing counseling agencies to help homeowners access the program and apply for assistance. Ohio homeowners who believe they may be eligible can visit www. savethedream.ohio.gov. Ohio has these funds available until 2017 (or until all funds are utilized to assist struggling homeowners) to prevent avoidable foreclosures. Spotlight on Cleveland MSA | Page 4
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