Spotlight on Cleveland

Spotlight on Cleveland

Skyline of Cleveland.

Since June 2010, HUD and the U.S. Department of the Treasury have been tracking the administration’s efforts to stabilize the housing market and help American homeowners. They began presenting their data as a monthly scorecard on the housing market nationally; in May 2011 they began publishing a bimonthly spotlight on a chosen metropolitan statistical area. The most recent, the Spotlight on the Housing Market in Cleveland-Elyria-Mentor, Ohio, summarizes the local economy, the area’s demographics and their bearing on the housing market; trends in mortgage delinquencies and foreclosures; and efforts to stabilize Cleveland’s housing market.

The administration’s efforts to help the national housing market recover began in February 2009 and have included support for the Fannie Mae and Freddie Mac, as well as assistance to neighborhoods with the successive iterations of the Neighborhood Stabilization Programs (NSP), and direct aid to homeowners in the form of mortgage modifications, tax credits, housing counseling, and stronger consumer protections. The Federal Reserve and the Treasury have acted to keep interest rates low by purchasing mortgage backed securities.

The October national scorecard, based on September data, reports a still fragile national housing market with home sales up in comparison to the previous month but down from the previous year. Fewer defaults and foreclosure sales took place; however foreclosure completions increased as more cases were pushed through the system. The administration’s effort to help homeowners with mortgage modifications, initiated in April 2009, resulted in more than 5.3 million mortgage modifications begun nationally by September 2011. These modifications included 1.7 million Home Affordable Modification Program (HAMP) trial modification starts, nearly 1 million Federal Housing Administration (FHA) loss mitigation and early delinquency interventions, and 2.5 million proprietary modifications under HOPE Now. The sum of these agreements is more than double the 2.3 million foreclosures completed during the period.

In Cleveland economic hard times with high unemployment and population declines began earlier than in the rest of the nation. According to the spotlight data Cleveland’s population began declining at an annual rate of 0.3 percent in 2000, largely because of the disappearance of roughly 14,500 jobs annually. In 2003 Cleveland’s number of distressed mortgages (those 90 or more days delinquent) was above the national average. Many cities of the country did not begin to see a rise in distressed mortgages until 2007. And while house prices did not soar in Cleveland area as in the rest of the nation during the housing bubble, the value of Cleveland’s housing declined at roughly the same rate as the areas that had experienced the bubble. Although employment is now increasing and the job market is stabilizing, property values remain low and many homeowners remain in danger of default.

Approximately 32,300 mortgage assistance interventions have been offered to homeowners in the Cleveland metropolitan area from April 2009 through July 2011. Nearly 17,700 interventions were through HAMP and the FHA loss mitigation and early delinquency intervention programs. An estimated additional 14,600 proprietary modifications have been offered through Hope Now Alliance servicers. The number of times assistance has been offered is nearly double the number of foreclosures completed during the same 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 stabilize the Cleveland housing market. Federal money from the Hardest Hit Fund is available as grants to states like Ohio which used the funds to establish its Restoring Stability: A Save the Dream Ohio Initiative. The Restoring Stability programs include:

• Rescue Payment Assistance
• Partial Mortgage Payment Assistance
• Modification with Principal Reduction
• Transitional Assistance

Previous spotlights featured Riverside-San Bernardino, California, and Phoenix, Arizona. The Spotlight on the Housing Market in Atlanta, Georgia, will be posted next week.