- Foreclosures rip at the heart of communities
- They worsen existing socio-economic nightmares
- To close the loop, these must be addressed as well
Federal Reserve Bank of Boston, Massachusetts Chairperson Eric Rosengren has come out in favor of what some commentators have been saying for over a year now. Mass foreclosures in a single neighborhood are far more than just a series of isolated events – in fact; they rip holes in a community, and even in its soul. This requires addressing broader socio-economic issues too.
Repossession rates in communities like these reflect equally profound areas of concern that include crime, failing schools and ingrained poverty, the Reserve Bank Chairperson said. He strongly suggested that the nation’s foreclosure efforts should involve subsiding local governments and non-profit agencies in their efforts to tackle these.
“Too little focus has been on community problems because the focus has been targeted to housing and foreclosures,’’ Rosengren warned. “Rather than treating the symptom — the high [foreclosure] problem — we need to better understand how to resolve the more general problems in communities that lead to higher concentrations of [foreclosed properties] and exacerbate the effects.’’
His remarks formed part of his address made at a recent Boston conference where local government and community members met to hammer out solutions for neighborhoods left staggering in the wake of America’s current economic woes – and with more deteriorating buildings added every day as well. In Massachusetts foreclosures are 80% worse year-on-year (although the entry rate for new foreclosure suits is down). The Reserve Bank Chairperson went on to add that viewing the crisis in terms of housing issues only was short-sighted, and that a broader holistic approach was needed that could include financial training.
The Boston Fed recently issued its own report on foreclosures by zip code that included the following findings:
- There is a strong link between foreclosures and deeper socio-economic issues
- Areas hardest hit by repossessions also had higher rates of property-related crime, unemployment, school-dropouts, small business failures and babies underweight at birth. These realities were entrenched before the bubble burst.
This is proof, as if we needed it, Rosengren said, that treating symptoms of deeper social problems like repossessions is simply not good enough. He proposed a federal revenue-sharing program that would target high repression-rate communities through providing funds for policing, code-enforcement, failing schools and other areas of concern.
“If these are community problems, we may need to search for community solutions,’’ Rosengren summarized. “If a more holistic approach is needed, states and the federal government may need to examine the most effective and efficient ways to address the broader problems in these communities.’’
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Written by Alex Rolim.
