Institute of Urban and Regional Development

Based on approximately fifty interviews, along with analysis of data and newspaper coverage, this report compares local responses to surging foreclosures in three pairs of regions with similar housing markets and foreclosure-related challenges (St. Louis/Cleveland, East Bay/Riverside, and Chicago/Atlanta). The authors examine the choices made by leaders and organizations both to prevent foreclosures and to reduce their negative spillovers (neighborhood stabilization). Resilience is defined as the ability to alter organizational routines, garner additional resources, and collaborate within and between the public, private, and nonprofit sectors to address the foreclosure challenge. The research shows that resilience in the face of foreclosures varied significantly across and within metropolitan areas. The most resilient metropolitan areas had strong housing nonprofits and a history of collaboration between the public, private, and nonprofit sectors. Many suburban areas have been hit hard by the foreclosure crisis, but they often lack the rich array of housing nonprofits and public sector planning capacity that is often present in central cities. The greatest obstacles to local resilience are the rigid and inflexible policies of lenders and loan servicers. The report concludes that resilience requires both “horizontal” relations of trust and collaboration with regions and “vertical” policies by higher level actors to support and empower local collaborations. Even the most resilient metropolitan areas cannot adequately address the crisis on their own. Federal and state policies can expand (or contract) the “opportunity space” for local resilience. State laws, for instance, that lengthen short foreclosures processes give local actors more opportunity to prevent foreclosures and keep families in their homes or apartments. Local actors need the right kinds of policies by higher level actors to support metropolitan resilience. Likewise, state and federal policies will not be effective if local actors lack the capacity to organize responses that are adapted to local conditions. The authors conclude that state and federal policymakers need to address the problem of uneven capacity to respond to foreclosures both across and within metro areas.