Ohio, Nevada Grapple With Foreclosures Crisis

Today attorneys generals from 40 states are expected to announce a joint investigation into bank foreclosure practices. This comes after a number of banks have halted their foreclosure process after allegations that shoddy documenting procedures led to some homeowners to be foreclosed upon that shouldn't have. Host Michel Martin talks with Lisa Morris Hibbler, deputy director of Neighborhood Services for the city of Las Vegas from member station KNPR, and Paul Bellamy, director of the Foreclosure Prevention Program for Ohio's Cuyahoga County from member station KCPN.

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MICHEL MARTIN, host:

I'm Michel Martin, and this is TELL ME MORE, from NPR News.

Later in the program, we go to Europe to examine the treatment of the Roma. The Roma, commonly referred to as gypsies - although that is not the preferred term anymore - are being expelled from their encampments in both Italy and France. We'll talk about why that might be in just a few minutes.

But first, a look at this nation and its lingering foreclosure fiasco. Today, a group of attorneys general from 49 states have announced a joint investigation that will probe the foreclosure process among companies in the financial services industry. The coalition hopes this move will persuade the industry to rewrite many of the loans responsible for the crisis in the first place.

The announcement comes on the heels of major financial institutions in recent weeks, like JP Morgan Chase, PNC and Ally Financial, who have, for now, halted foreclosures in nearly two dozen states. And I should mention that Ally Financial is a major underwriter for NPR.

The nation's biggest lender by assets, Bank of America, has extended its temporary halt on foreclosures to all 50 states.

The metropolitan areas of Las Vegas, Nevada, and Cleveland, Ohio have been among the hardest hit by the foreclosure crisis, and we wanted to know how homeowners in these troubled markets are being affected by the latest developments. So we've called Lisa Morris Hibbler, who is the deputy director of neighborhood services for the City of Las Vegas. Also with us is Paul Bellamy, who is the director of the Foreclosure Prevention Program in Ohio's Cuyahoga County, and that includes the greater Cleveland area and the suburbs, including Shaker Heights.

And I welcome you both, and thank you so much for joining us.

Ms. LISA MORRIS HIBBLER (Deputy Director of Neighborhood Services, City of Las Vegas): Glad to be here.

Mr. PAUL BELLAMY (Director, Foreclosure Prevention Program, Cuyahoga County): Thanks for having me.

MARTIN: Lisa, if I could start with you, because Nevada's been called ground zero of the nation's foreclosure crisis. It has one of the highest unemployment rates in the country, hovering around the 15 percent mark, according to the Department of Labor. Why is Nevada called ground zero? Do you agree with that?

Ms. HIBBLER: Absolutely. We really feel as though we've been the epicenter of this country essentially because we have so many people that have been affected, even prior to the unemployment rate escalating to the 15 percent. So...

MARTIN: The California-based RealtyTrac reported that some 53,525 Las Vegas homes received foreclosure filings in the first half of this year. That represents one in 15 homes, or 6.6 percent of homes. That's five times the national average. Can you just describe, you know, what's that like? Is this visible? If you drive around, are you seeing abandoned homes, for sale signs, foreclosure signs?

Ms. HIBBLER: Yes, it's very visible. You know, in 2008, what we had were a lot of the speculator investors that were going into foreclosure, and that landscape has since changed. And now what we have are families that are being evicted every day.

Either it's due to unemployment, the significant reduction in the equity of the home, which prevents refinancing. A lot of the programs that are offered don't apply here in Las Vegas when you have 150 percent to 200 percent negative equity. And so you do see a lot of foreclosure signs, short-sale signs, those types of things in our neighborhood.

MARTIN: Paul, I haven't forgotten about you, but I did want to ask Lisa, before we turn to you, whether you have a sense of whether your attorney general in Nevada has the sense that this latest issue, the processing, apparently the paperwork for the foreclosures are being processed without apparently any review or without the review that was expected. Do you think that has played a role? Or do you think it's primarily the underlying economic factors?

Ms. HIBBLER: Oh, no. I think it's definitely both. And our attorney general has been very, very proactive, and also is a part of that joint effort.

Certainly, we had a lot of bad products that were floated back in beginning, probably, 2005 - stating income, different types of mortgage mechanisms to get people in homes that may not have should have had a home.

MARTIN: Paul, let's bring you into the conversation. The Cleveland metro area was one of the first nationally to register a foreclosure crisis and is also very hard-hit. Does it continue to see - do you see the pace of foreclosures continuing there?

Mr. BELLAMY: It's essentially the same as it has been. Before this crisis, excuse me, we were expecting the rate to increase perhaps just a little bit. It'll be interesting to see how much the moratoriums, self-declared, are going to affect that. But the overall problem has kind of reached a stasis, and that's not good.

MARTIN: Do you have any sense of whether, again, this processing scandal has affected foreclosures in your area? Or is it just impossible to tell?

Mr. BELLAMY: It's too early. We're a judicial state, and so to say that there's a moratorium on foreclosures, it would take time for that to show up. One of the issues will be, if a foreclosure is pending, and a magistrate wants to have a hearing, do you say, well, we're not attending hearings because we're on hold? Probably a bad move, and so we're just going to see how the courts deal with it.

The hope is that this won't take too long because, in the long run, we're finally beginning to get some coordination. We're learning some things about how to cope with foreclosures, how to sort out those that can be saved and those that can't. And we're afraid that if this goes on for too long, it will, in fact, harm people because they'll be sitting in homes, not making payments. It'll be much more difficult to help them when the industry cranks back up again.

MARTIN: If you're just joining us, this is TELL ME MORE, from NPR News. We're talking about the foreclosure crisis. Just today, officials in 49 states have launched a joint investigation into allegations that mortgage companies mishandled documents in foreclosing on hundreds of thousands of homeowners. Alabama was the only state not to join the investigation.

We're checking in on - with officials in two states who have been particularly hard hit, Nevada and Ohio. We're checking in with officials in Las Vegas and Cuyahoga County.

So Lisa, President Obama was in Las Vegas back in February when he announced -in the company of Nevada Senator Harry Reid, the majority leader - this $1.5 billion rescue plan to help hard-hit states exactly like Nevada, and Nevada was expected to receive something like $100 million.

Have these funds been received, and do you see any impact?

Ms. HIBBLER: You know, the funds have been received. It's - I think we it's a little too early right now to tell how the funds are going to impact the situation. I think what we're dealing with down here is a $3 billion problem.

And so when you put that in perspective, it kind of sheds light that you may not see the greatest impact when you have a $3 billion problem, and you're talking about $100 million. Although...

MARTIN: But what's the money supposed to do, to provide bridge loans, incentives to rewrite the loans? So what's the issue? Is it just simply not the scale, or can people just not figure out how to get access to these funds? Is it too hard? What's the problem?

Ms. HIBBLER: Well, I think you have a combination of problems. I mean, the program is written to help a certain segment of people, but I think out here, our problem is so vast. I mean, there's not one size fits all, as far as what the issue is. So when you try to bring about a solution, sometimes that's more difficult.

MARTIN: And Paul, what about you? As I understand it, Ohio is due to get about $172 million from this hardest-hit fund. Have you seen any of that money, and what's it for? And somebody's hammering back there. Maybe he's fixing up a home. I don't know. Let's hope so.

Mr. BELLAMY: Yeah, there's someone apparently the next studio over.

MARTIN: Okay.

Mr. BELLAMY: But we are actually scheduled to get $570 million. There have been three dollops. The one you referred to is just the first one.

MARTIN: Just the first one. Okay. Mm-hmm.

Mr. BELLAMY: Yeah. And so it's about a half-billion dollars. And we're very hopeful that this is going to be able to help folks who we've not been able to help in the past.

MARTIN: How will it help them?

Mr. BELLAMY: The employment situation was such that most of the servicers would simply say: No employment, we can't help you, and proceed with the foreclosure.

Now, the bulk of the money is going to be designed to essentially bridge people over to a point in time where they do have a job. And so we're very hopeful that this is going to actually have an impact on the statewide foreclosure rate.

MARTIN: I wanted to ask you both just for a final word here in the couple of minutes that we have left. You can see, though, the political debate shifting. We're here in Washington, D.C., and you can see a lot more sort of focused concern, you know, about the deficit.

Initially, a lot of people were very concerned about the economic crisis and the effect on people, but now you see a lot more discussion directed toward can the country, can the government continue to afford to provide assistance, however needed? And from where you two sit, I want to ask you how you respond to that. And Lisa, I gave you the first word, so I'll give Paul the last word. So Lisa, if you'd go first, and then Paul.

Ms. HIBBLER: Well, I think that the shift is well-needed. I think that in order for us to bring this crisis to a closure, we're going to have to do something to help the masses. It's going to have to be something bold, and it is going to have to involve rewriting loans and keeping people in their homes.

MARTIN: And Paul, what about you? How do you respond to this kind of shift in debate from concern over stopping the foreclosure crisis to more sort of focus and concern on the deficit and kind of cutting off federal spending? How do you respond to that from where you sit?

Mr. BELLAMY: I see it as tragic, simply because the industry has demonstrated ongoing inability to cope with this. They have not put the money into servicing. They created the problem in the first place with that, so no thought about what was going to happen if the bubble popped. So we've been incredibly frustrated trying to use private systems to deal with this. The market's not coming in to help.

So the idea that the government should now stop spending money with some sort of, I don't know, idealized notion that markets are going to take over and fix this, is I think horribly ill-advised. And it's going to come back to bite us. That's my personal feeling.

MARTIN: Right, well just keep us posted if you would. Paul Bellamy is the director of the Foreclosure Prevention Program in Ohio's Cuyahoga County and he was kind enough to join us from member station WCPN in Cleveland. Also with us, Lisa Morris Hibbler, deputy director of the city of Las Vegas Neighborhood Services and she was kind enough to join us from member station KNPR in Las Vegas. Thank you both so much.

Mr. BELLAMY: Thank you.

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