July 7, 2008
LOW-INCOME RENTERS FEEL FORECLOSURE BURN
By David Handelman, Medill News Service

WASHINGTON (Medill News Service) -- As the mortgage foreclosure crisis ripples through the economy, some experts say it's increasingly difficult for low-income renters forced out of foreclosed apartment buildings to find other affordable places to live.

If the situation continues to worsen, it could lead to an increase in homelessness, according to urban-housing experts.

Jeremy Rosen, executive director of the National Policy and Advocacy Council on Homelessness, thinks the effect of foreclosures on low-income renters has been under-reported.

"The foreclosure crisis is hitting two groups," Rosen said. "The owners of houses and buildings, and the renters that are occupying them."

The main issue for Rosen pertains to time: Renters can be forced to leave a foreclosed property at a faster pace than a homeowner, who typically gets earlier notice that a crisis is looming. If the renter has limited income, that compounds the problem.

Each state has its own rules concerning tenants' legal rights. This means that some states say tenants have to vacate a foreclosed property within weeks and in some instances, even days. The lack of notice often doesn't give occupants enough time to find an affordable place to live, according to Rosen. For people on a tight budget, this can be devastating, Rosen said.

"There are moving expenses and first month's rent," Rosen said. "Sometimes people just don't have the money for it."

The extent and severity of the impact of the mortgage foreclosures on renters is unclear since no firm data is available, says Brian Sullivan, a spokesman for the Department of Housing and Urban Development.

Sullivan pointed to the variety of services that HUD offers to inform renters of their rights and possible housing options as stopgaps to potential housing woes.

Peter Tatian, senior research associate for the Urban Institute, has heard anecdotes about the problems that renters are facing, but he said he does not have a good fix on whether or not they are widespread. "Renters might not even be aware that their building has foreclosed," Tatian said.

Tatian said so many foreclosures are occurring daily that there isn't any way to help everyone, especially with the current lack of affordable-housing resources.

Bills have been introduced in the House and the Senate that would give more rights to both renters and homeowners. One proposal would give tenants up to 90 days to vacate a property, or at least until the end of their lease. This would alleviate pressure for the renters that have to quickly search for an affordable place to live.

The doomsday scenario for low-income renters is homelessness and homeless advocacy groups believe it's a problem that will soon have to be dealt with.

"Foreclosures are driving rental prices up and supply is not keeping up with demand," said Greg White, a policy analyst for the National Low Income Housing Coalition. "You are going to start to see a flood into homeless shelters."

July 2, 2008
CONSUMER DELINQUENCIES UP IN FIRST QUARTER
Housing weakness adds to woes with equity lines
By Ruth Mantell, MarketWatch

*This update includes corrected data from the American Bankers Association regarding the home-equity-line-of-credit delinquency numbers.

WASHINGTON (MarketWatch) -- Delinquency rates for home-equity lines of credit and bank cards rose during the first quarter, the American Bankers Association reported Wednesday, citing ongoing stress in the nation's housing market as well as general economic weakness.

On a seasonally adjusted basis, the percentage of HELOC accounts more than 30 days past due rose to 1.1%, up 0.14 of a percentage point, reaching the highest rate since 1997.

Delinquencies for bank cards -- credit cards provided by a bank -- rose 0.13 point to 4.51% in the first quarter, compared with the five-year average delinquency rate of 4.40%.

Higher prices for food and energy, combined with weak growth in personal incomes and declining home-equity and stock values, are making it difficult for a greater number of consumers to meet their obligations, said James Chessen, ABA's chief economist. The group defines delinquency as late payments that are 30 days or more overdue.

"It was a tough quarter for some people," Chessen said. "Faced with rising food and gas prices and little income growth, fewer resources have been available to manage debt."

He added that delinquencies will, in all likelihood, remain elevated.

"The tax stimulus is helping to boost personal income, but persistently high gas and food prices will eat away at overall resources," Chessen said.

Among closed-end loans in the first quarter, home-equity delinquencies fell to 2.34% from 2.39% in the prior quarter, on a seasonally adjusted basis, while indirect auto delinquencies dropped to 3.09% from 3.13% and property improvement delinquencies dipped to 1.78% from 1.81%.

Other closed-end loan delinquencies rose.

Marine delinquencies gained to 1.75% from 1.57%, the ABA's data showed.

Delinquencies on loans for recreational vehicles increased to 1.11% from 1.08%, while mobile-home delinquencies reached 3.22% from 2.92%.

Direct auto delinquencies increased to 1.92% from 1.9%. And personal delinquencies climbed to 2.55% from 2.48%.

Elsewhere Wednesday, the ADP employment index showed that private-sector firms in the U.S. lost 79,000 jobs in June, the biggest loss since November 2002. Employment in the services sector fell by 3,000, the first decline since November 2002.

Meanwhile, outplacement firm Challenger Gray & Christmas Heavy reported that cost-cutting in the financial services pushed corporate-layoff announcements up 21% in the first half of 2008 compared with last year.

Ruth Mantell is a MarketWatch reporter based in Washington.