Cities, Regions Respond to Foreclosure Crisis

July 6, 2009

The foreclosures contagion does not respect municipal boundaries. Some policy responses don't either.

A new report examines the ways that leaders have worked together in their metropolitan regions to respond to the foreclosures crisis over the past year.

Based on approximately 50 interviews, along with analysis of data and newspaper coverage, the study compares local responses to surging foreclosures in three pairs of regions: St. Louis/Cleveland, East Bay/Riverside in Californi, and Chicago/Atlanta Each pair has similar housing markets and foreclosure-related challenges. The authors examine the choices made by leaders and organizations both to prevent foreclosures and to reduce their negative spillovers into neighborhoods.

Regional Resilience in the Face of Foreclosures was prepared by Todd Swanstrom of the University of Missouri in St. Louis, Karen Chapple from the University of California at Berkeley and Dan Immergluck from the Georgia Institute of Technology. The study was conducted for the Building Resilient Regions Research Network, which is supported by The MacArthur Foundation. The network uses the lens of economic and demographic regional challenges to investigate what constitutes resilience in the face of these challenges and what factors help to build and sustain regional resilience.

In the network's research, "resilience" is defined as the ability - in the face of significant shocks - to alter organizational routines, garner additional resources and collaborate within and between the public, private and nonprofit sectors to address challenges.

The research shows that resilience in the face of foreclosures varied significantly across and within metropolitan areas. Factors that affected the development of collaborative regional responses included the existence of strong housing nonprofits, a history of multi-sector collaboration and leadership from elected officials. Early media coverage of the gathering foreclosure storm also promoted local action.

Many suburban areas have been hit hard by the foreclosure crisis. They may lack the rich array of housing nonprofits and public sector planning capacity that is often present in central cities. So, effective inter-local programming among central cities and suburbs can help fill that gap.

The authors report that the greatest obstacles to local resilience are the rigid and inflexible policies of lenders and loan servicers.

The report concludes that resilience requires both "horizontal" relations of trust and collaboration within regions and "vertical" policies by Federal and state actors to support and empower local collaborations. Even the most resilient metropolitan areas cannot adequately address the crisis on their own.

Federal and state policies can expand or contract the "opportunity space" for local resilience. For instance, state laws that dictate how long the foreclosure process takes directly shape the local challenge. Somewhat longer foreclosure processes give local actors more opportunity to prevent foreclosures and keep families in their homes. But if the process is too long, borrowers can be tempted to wait for the process to play out and fall too far behind to allow for any accommodation.

State and federal policies will not be effective, however, if local leaders lack the capacity to organize responses that are adapted to local conditions such as variations in the overall housing market. The authors conclude that state and federal policymakers need to address the problem of uneven capacity to respond to foreclosures both across and within metropolitan areas.

Details: The full report is available on the BRR Network website - - on the "Working Papers" page.

Bill Barnes is the director for emerging issues at NLC and he is a member of the Building Resilient Regions Research Network. Comments about this column, which will appear regularly in Nation's Cities Weekly, and ideas about emerging issue topics can be sent to

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