November 27, 2007 Detroit Free Press
BY ZACHARY GORCHOW
FREE PRESS STAFF WRITER
The foreclosure crisis is rippling far beyond threatening homeownership, now robbing the economy of consumer purchases, governments of tax revenue and workers of jobs, according to a report to be unveiled today in Detroit.
Commissioned by the U.S. Conference of Mayors, the report puts specific numbers on the broader impact and is being released as several of the nation's mayors meet at the MGM Grand Detroit to discuss what to do about the problem.
The Detroit region ranks seventh in the nation in loss of economic activity among metro areas with a hit of $3.2 billion because of the foreclosure epidemic, the report states. Economic activity is defined as the total value of goods and purchases.
And Michigan overall takes a wallop -- a 75% decline in projected housing starts in 2008 from 2005 and a loss of $124 million in tax revenue from lost property, sales and real estate transfer taxes.
"The foreclosure crisis is no longer just about mortgages," Detroit Mayor Kwame Kilpatrick, host of the conference, said in a prepared statement. "Entire neighborhoods are being negatively affected on several levels. This issue is now the No. 1 economic challenge of many major American cities."
With more of the subprime loans that in many ways triggered the crisis still to reset at higher interest rates, the problem will worsen into 2008, the report said.
"Unless institutional arrangements are made to bring mortgage holders together with buyers, 2007 will see foreclosure activity accelerate," the report said.
The report, prepared by Massachusetts-based Global Insight, will be one of the topics when mayors, lenders and borrower advocates convene at the casino to discuss how to confront the foreclosure problem.
But the meeting will take place behind closed doors, with officials citing the need for candid conversation in the decision to shut out access.
Officials initially planned to make the meetings open to the public, but the closed meeting on such a pressing national and local issue has angered one activist group, which plans to demonstrate outside the casino.
"It's our belief that the banks are the very institutions that are responsible for the foreclosure crisis that exists in Detroit and all of the other cities," said Jerry Goldberg, an organizer with Michigan Emergency Committee Against War & Injustice.
"You don't talk to the source of the problem," he said. "You talk to the people affected by the problem to find real solutions."
Goldberg, who lives in the East English Village neighborhood of Detroit, said the foreclosure crisis has left once nice homes vacant in the generally stable neighborhood.
Sam Riddle, a political consultant, said he inquired about letting Flint city officials attend, but was told the meeting was by invitation only.
He said he understands the need to keep the meeting manageable, but called the approach "a little disappointing."
Officials decided closing the meeting to the public would mean a more fruitful discussion, said James Canning, spokesman for Kilpatrick.
"It's so they can have real frank conversations with everyone in the room," he said.
The mayors will be asking for greater accountability from lenders in the maintenance of foreclosed homes, and lenders could ask pointed questions of government officials, Canning said.
Among the mayors coming to Detroit will be those from Trenton, N.J., Louisville, Ky., and Columbus, Ohio. Southfield Mayor Brenda Lawrence also will participate.
BY ZACHARY GORCHOW
FREE PRESS STAFF WRITER
The foreclosure crisis is rippling far beyond threatening homeownership, now robbing the economy of consumer purchases, governments of tax revenue and workers of jobs, according to a report to be unveiled today in Detroit.
Commissioned by the U.S. Conference of Mayors, the report puts specific numbers on the broader impact and is being released as several of the nation's mayors meet at the MGM Grand Detroit to discuss what to do about the problem.
The Detroit region ranks seventh in the nation in loss of economic activity among metro areas with a hit of $3.2 billion because of the foreclosure epidemic, the report states. Economic activity is defined as the total value of goods and purchases.
And Michigan overall takes a wallop -- a 75% decline in projected housing starts in 2008 from 2005 and a loss of $124 million in tax revenue from lost property, sales and real estate transfer taxes.
"The foreclosure crisis is no longer just about mortgages," Detroit Mayor Kwame Kilpatrick, host of the conference, said in a prepared statement. "Entire neighborhoods are being negatively affected on several levels. This issue is now the No. 1 economic challenge of many major American cities."
With more of the subprime loans that in many ways triggered the crisis still to reset at higher interest rates, the problem will worsen into 2008, the report said.
"Unless institutional arrangements are made to bring mortgage holders together with buyers, 2007 will see foreclosure activity accelerate," the report said.
The report, prepared by Massachusetts-based Global Insight, will be one of the topics when mayors, lenders and borrower advocates convene at the casino to discuss how to confront the foreclosure problem.
But the meeting will take place behind closed doors, with officials citing the need for candid conversation in the decision to shut out access.
Officials initially planned to make the meetings open to the public, but the closed meeting on such a pressing national and local issue has angered one activist group, which plans to demonstrate outside the casino.
"It's our belief that the banks are the very institutions that are responsible for the foreclosure crisis that exists in Detroit and all of the other cities," said Jerry Goldberg, an organizer with Michigan Emergency Committee Against War & Injustice.
"You don't talk to the source of the problem," he said. "You talk to the people affected by the problem to find real solutions."
Goldberg, who lives in the East English Village neighborhood of Detroit, said the foreclosure crisis has left once nice homes vacant in the generally stable neighborhood.
Sam Riddle, a political consultant, said he inquired about letting Flint city officials attend, but was told the meeting was by invitation only.
He said he understands the need to keep the meeting manageable, but called the approach "a little disappointing."
Officials decided closing the meeting to the public would mean a more fruitful discussion, said James Canning, spokesman for Kilpatrick.
"It's so they can have real frank conversations with everyone in the room," he said.
The mayors will be asking for greater accountability from lenders in the maintenance of foreclosed homes, and lenders could ask pointed questions of government officials, Canning said.
Among the mayors coming to Detroit will be those from Trenton, N.J., Louisville, Ky., and Columbus, Ohio. Southfield Mayor Brenda Lawrence also will participate.
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