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A Snapshot of Foreclosure
In Contra Costa County
Author
Kristin Perkins, Center for Community Innovation
Cover Photo
Alex Schafran
Photo, Page 4
Courtesy of Contra Costa Interfaith Supporting Community Organization
Key Support
I would like to thank Karen Chapple and Anne Martin from the Center for Community Innovation, David Freedman and
Susan Gruber from the UC Berkeley Statistics Department, Carolina Reid from the Federal Reserve Bank of San Francisco,
and Jonathan Strunin from the Association of Bay Area Governments. The Center for Community Innovation is grateful
for funding from the Theodore Bo Lee and Doris Shoong Lee Chair in Environmental Design, which supported this
report.
This work is part of Kristin Perkins’ 2008 Master’s thesis, The Geography of Foreclosure in Contra Costa County, California.
The Center for Community Innovation (CCI) at UC-Berkeley nurtures effective solutions that expand economic
opportunity, diversify housing options, and strengthen connection to place. The Center focuses on housing, community
and economic development. We work in four topic areas: revitalizing neighborhoods, developing economic resilience,
designing and programming for the public realm, and producing and preserving affordable housing.
University of California
Center for Community Innovation
316 Wurster Hall #1870
Berkeley, CA 94720-1870
http://communityinnovation.berkeley.edu
July 2008
“...policy responses should consider foreclosure’s effects on
neighborhoods and specific groups of people, not simply on
Introduction undifferentiated individuals and large financial institutions.”
In the daily reports of the worsening foreclosure problem The problem of foreclosure is especially dire in California,
in the United States, the media focuses on the impact of where 52,000 homes were lost to foreclosure in 2007, an
this crisis on individual households and the industries increase of over 200 percent as compared to 2006.2 Among
connected to mortgage finance. Federal policy, promotion Bay Area counties, Contra Costa had the highest rate of
of homeownership as key to ‘the American Dream,’ and the increase in foreclosures in 2007, at 290 percent. Contra
increasing availability of nontraditional mortgage products Costa County is experiencing alarmingly high rates of
have created opportunities for homeownership this past delinquency, with nearly 2,000 Notices of Default filed in
decade that did not exist previously. Financial institutions September 2007, three times the number filed in September
sought out risky debt, spreading the impact globally and 2006. In the fourth quarter of 2007 over 3,800 county
undermining the foundations of some of the country’s homeowners received Notices of Default, up from just
largest banks. Now the country finds itself in the midst 1,500 in the fourth quarter of 2006.3 In 2007, the foreclosure
of a housing and credit crisis, and both banks and at-risk rate in one ZIP code in Antioch was .056, meaning that
households are looking to policymakers for solutions. foreclosure affected approximately 1 of every 18 homes,
while ZIP Codes in Richmond’s Iron Triangle had a rate of
Yet the effect of foreclosure is not limited to individual .04 or approximately 1 foreclosure for every 25 homes (see
households or lenders: minority and low-income Figure 1 for distribution of foreclosures across county). 4
neighborhoods in particular are disproportionately affected
by foreclosure and resulting vacancies. Foreclosure is Contra Costa County has a diverse yet somewhat
affecting many of the same neighborhoods historically segregated population, with a concentration of African-
disadvantaged by white flight, urban renewal and other American and low-income communities in western cities,
planning interventions, along with newly built exurban a concentration of higher income and white communities
locales whose large houses and plentiful amenities seemed in the central area of the county, and a concentration
to justify inflated housing prices. A look at one of the of Latinos in both the older western cities and rapidly
hot spots of foreclosure, Contra Costa County in the San growing eastern communities. This diversity makes the
Francisco Bay Area, suggests that policy responses should county a good place in which to examine how foreclosure
consider foreclosure’s effects on neighborhoods and might disproportionately affect certain neighborhoods.
specific groups of people, not simply on undifferentiated
individuals and large financial institutions.1
Figure 1. Foreclosures in Contra Costa County, January-December 2007
Martinez Pleasant Hill Concord Clayton Pittsburg Antioch Brentwood Oakley
44
Hercules 34
16 15
31
Pinole 61 38 42 69 22
13 1 18 67 25 48
74 43 2
46 24 24 87 105
43 74 50 28
32 25 16 8 23 31 41 4
27 35 58 81 43
12 47 29
San Pablo 65 17 13 27 25 59
141 101
46 23 33 203
33 29 20 3826 7 27
3335 27 7 13 25
8 32 18 33
43 69 27 20 29
33 4 20 7 4 9
25 50 7 4 23 34 23
6 7 18 32 23 10 10 33 318 106
16 6786 551 601 7 216
4 6 2
6
26 45 5 3 6 11
1 114
5 16
9 2 21 5
102 8 3 10 4
5 1
3 5 3
Richmond El Cerrito 1
3 3
7 4
5 2 5
4 2
6 1
Lafayette
4
Foreclosures (#) 1 1
Orinda 14 12 27
Rate per Housing Unit
under 0.0025 Moraga
4 14
0.0025 to 0.005
Walnut Creek
0.005 to 0.01 9 22
ty
oun
0.01 to 0.02 4 sta C unty
8 a Co o
C ontr meda C
0.02 and over Danville 8 Ala
7
$
Census Tracts 11
City Limits*
San Ramon
*Areas outside city limits
are unincorporated. 0 5 10 Miles
1
Types of Neighborhoods Affected by
Foreclosure in Contra Costa County
Overall, evidence from Contra Costa County supports the shows what percentage of neighborhoods with those
argument that foreclosure is associated with subprime characteristics has high rates of foreclosure.
lending and that foreclosure is common in neighborhoods
with high proportions of minority residents, low- The neighborhoods with the lowest foreclosure rates are
income households, and less-educated households.5 The located in the central area of Contra Costa County, in the
neighborhoods with the highest rates of foreclosure are cities of Moraga, Orinda and Walnut Creek. El Cerrito, in
concentrated in low-income areas and areas with higher western Contra Costa County, was home to three of the
proportions of minorities in western Contra Costa County lowest foreclosure rate tracts. These cities have relatively
(Richmond and San Pablo) and the new rapid growth high median incomes and include some of the more
areas of eastern Contra Costa County (Antioch, Pittsburg, established and expensive neighborhoods and homes.
Brentwood and Oakley). The typical neighborhood
with a high foreclosure rate has a disproportionate Neighborhoods with low foreclosure rates typically
share of subprime lending, African-American and have low rates of subprime lending, a high percentage
Hispanic residents, and low-income and less-educated of white residents, higher incomes and more educated
households (see Figure 2). The first column in Table 1 households. The negative relationship between education
gives neighborhood characteristics and the second column and foreclosure rate is even stronger than the negative
relationship between income and foreclosure.7
Table 1. Neighborhoods with High Rates of Foreclosure 6 Figure 3 shows the percent of adults without
college degrees.
Percentage of Neighborhoods
Neighborhood Characteristic
with High Rates of Foreclosure
The impact of foreclosures also differs by
High subprime lending 82 neighborhood age. Officials in Antioch report
Population over 30% African-American 82 that foreclosure disproportionately affects
neighborhoods in the southeast part of town,
Population over 45% Hispanic 75
those developed within the last ten years.8
Median family income below $72,000 62 In neighboring Brentwood foreclosures are
Under 20% of adults have a college degree 71 spread throughout homes of all types and sizes
Figure 2. Percent of Population that is African-American
Martinez Pleasant Hill Concord Clayton Pittsburg Antioch Brentwood Oakley
Hercules
Pinole
San Pablo
Richmond El Cerrito
Lafayette
Population that is African-
American
Orinda
under 5%
Moraga
5% to 10%
10% to 20% Walnut Creek
20% to 40% nty
Cou
osta ounty
40% and over tra C C
Con meda
Census Tracts Danville Ala
$
City Limits* San Ramon
*Areas outside city limits
are unincorporated.
0 5 10 Miles
2
built in more recent developments. This is supported by out by existing residents that get these neighborhoods
foreclosure data as southeast Antioch and Brentwood fall into trouble. Older, inner-city neighborhoods typically
within the census tract with the most foreclosures in 2007 have higher shares of minority residents who are more
(318). Furthermore, across the county there is a statistically vulnerable to predatory subprime lending.
significant difference in the age of the housing stock in
neighborhoods with low and high rates of foreclosure: Older neighborhoods do not necessarily have a greater
median year built for housing in low foreclosure rate tracts number, or higher rate, of foreclosure than newer
is 1963, 12 years earlier than the median year built in tracts neighborhoods, but the effects of even a few foreclosures
with high rates of foreclosure (1975). are amplified in neighborhoods that are already distressed.
Contra Costa County officials note that foreclosed units
While newer neighborhoods in the eastern part of the in Bay Point are vulnerable to squatting, vandalism,
county have high rates of foreclosure, Antioch’s older and even arson. They speculate that Bay Point’s sizeable
neighborhoods appear to be more insulated from the homeless population could be contributing to the squatting
foreclosure wave. It is likely the disproportionate reliance and vandalism problems.10 When residents move out
on subprime mortgage products that puts homes in newer of foreclosed homes lenders often fail to secure them
neighborhoods, like those in Antioch, at risk of foreclosure. properly or provide much maintenance, leaving them
Households can more easily reach for a new home in a new accessible to homeless and other individuals seeking
development when they have the option of interest-only or shelter. Without electricity and other utilities, individuals
payment-option loans. occupying foreclosed homes may light fires to keep
warm, damaging and potentially destroying these units.
Unlike in Antioch, in Bay Point, an unincorporated area That older, low-income neighborhoods in Contra Costa
in eastern Contra Costa County, it is the older, denser, County are struggling more in the aftermath of foreclosure
more urban areas that have had the most trouble with the supports findings from Chicago that foreclosures, and the
effects of foreclosure.9 The types of loans used in older subsequent vacant and potentially blighted properties,
neighborhoods can also contribute to foreclosure risk, but it in low-income neighborhoods can contribute to physical
is often subprime refinance loans, not purchase loans, taken disorder, crime, and disinvestment.11
Figure 3. Percent of Adults without College Degree
Martinez Pleasant Hill Concord Clayton Pittsburg Antioch Brentwood Oakley
Hercules
Pinole
San Pablo
Richmond El Cerrito
Lafayette
Percent without College Degree Orinda
under 35%
Moraga
35% to 50%
50% to 70% Walnut Creek
70% to 80%
nty
Cou
80% and over osta ounty
tra C C
Con meda
Census Tracts Danville A la
$
City Limits*
San Ramon
*Areas outside city limits
are unincorporated.
0 5 10 Miles
3
Foreclosure and Rental Housing
Along with disproportionate impact, the lasting effects Foreclosures have a much wider impact than just an
of foreclosure and the resulting vacancies depend on the individual housing unit and its immediate neighborhood.
underlying stability and wealth of the neighborhood. Increases in foreclosures are commonly associated only
Middle- to upper-income neighborhoods affected by with owner-occupied housing, but foreclosures in Contra
foreclosure are less vulnerable to vandalism and distress Costa County and other places have further restricted
because of the potential for vacant units to be resold the number of viable housing options for low-income
quickly.12 Antioch’s experience supports this argument. renter households. Though not homeowners facing
Though not all of the foreclosed units in Antioch are foreclosure themselves, renters in Contra Costa County
turning over quickly, from late in 2007 through the early cannot escape the foreclosure wave. Homeowners who
months of 2008 there has been an increased interest in experience foreclosure often seek rental housing nearby
the city’s first-time homebuyer program.13 Like many to stay in their community, allow their children to keep
other jurisdictions across California, Antioch provides attending the same school, and remain close to their jobs.
downpayment assistance to first-time homebuyers, for With an increased demand for rental housing from former
both affordable and market rate homes. Homes in Antioch homeowners, landlords are able to list rental units at higher
that were selling for over $700,000 in the summer of 2007, prices, which may limit accessibility for households already
before foreclosures increased, have been on the market renting. Former homeowners may not have been able to
in the spring of 2008 for $400,000,14 tempting potential afford an adjusting mortgage on their home, but especially
homeowners to take advantage of downpayment assistance those for whom foreclosure was not a result of job loss
and other guarantees available for mortgages from Fannie may be able to spend much more to rent an apartment
Mae and Freddie Mac. or house than can low- to moderate-income households
already in the rental market. A rental housing assistance
agency serving Alameda and Contra Costa Counties has
experienced an increase in clients seeking services as low-
and moderate-income households are having more trouble
finding affordable rental units in the county. 15
“Renters across the country are being
evicted from their homes by lenders In addition, many renters are facing eviction due to
foreclosure. Renters across the country are being evicted
because their landlords are in from their homes by lenders because their landlords are
foreclosure...” in foreclosure; this is especially troubling in Contra Costa
County where there are no just cause eviction laws. In
some cases landlords have not informed their tenants that
the mortgages on the homes in which they are living are
delinquent and facing foreclosure. Once properties are
foreclosed, lenders are able to evict tenants without notice.
A Snapshot of Foreclosure in Contra Costa County 4
How Cities and Counties Can Respond
Evidence from Contra Costa County shows that could coordinate with lenders, requiring lenders to create
foreclosure disproportionately affects neighborhoods with a fund for the maintenance of vacant foreclosed units that
certain demographic and socioeconomic characteristics, city governments would control. Cities could perhaps
but the policy recommendations suggested by the collect a property maintenance fee from lenders when the
federal government and private sector focus on macro title is transferred from borrower to lender. The lender’s
(national and industry-wide) and micro (household), contribution to a maintenance fund will enable a city
not intermediate (neighborhood), scales. Multiple local to secure abandoned properties and repair and prevent
government officials in Contra Costa County report vandalism to the buildings and lots. City councils must first
that while the foreclosure problem is bigger than their pass resolutions instituting maintenance fee assessments
individual jurisdictions, it is local governments that are upon transfer; Contra Costa County Supervisors’ support
forced to contend with the consequences of foreclosure of a foreclosure moratorium suggests that local government
on a daily basis.16 City employees in Antioch suggest that in the county would be willing to address foreclosures by
lenders should take the lead in solving the foreclosure requiring more lender cooperation. Research has
problem by working with borrowers in distress. To help established a nexus between foreclosure and neighborhood
keep neighborhoods stable, lenders should allow tenants decline, justifying a municipal role in the maintenance of
renting foreclosed units to remain in their homes while vacant units. Contra Costa County and city officials have
the banks try to sell the homes. Contra Costa County also suggested that once foreclosed homes are vacant,
Supervisors passed a resolution in January 2008 calling redevelopment agencies could buy foreclosed units and
for lenders and servicers to voluntarily agree to a six- resell them to low-income or first-time homebuyers,
month foreclosure moratorium: local government officials potentially rehabilitating blighted properties and adding
concede, however, that a city or county ordinance has no to the affordable housing stock.20 A 2008 report by the
legal power over lenders, and cannot really compel the Brookings Institution suggests that state governments
private sector to change its practices.17 should pursue many of these same policies to mitigate
the effects of foreclosure on individual households and
Though cities and counties may not be able to individually neighborhoods. Most notably, states should ensure fair
effect industry change, local jurisdictions are forced to foreclosure proceedings that allow homeowners to stay in
respond to the crisis, and will continue to be involved. their homes as tenants until an owner-occupant purchases
Local officials recognize the necessity of foreclosure the property; states should also make lenders responsible
awareness and are informing residents where they can go for maintenance of vacant properties (this is already
for help. Cities across Contra Costa County are using their happening in Chula Vista, CA). 21
websites to direct homeowners in distress to a national
foreclosure prevention hotline and to local HUD-certified There are a variety of ways for planners to address
housing counseling agencies.18 Some cities and regions foreclosure constructively in their communities.22 These
hit particularly hard are hosting “foreclosure fairs” where include tracking local predatory lending and foreclosure
housing counselors, elected officials, consumer advocates, patterns using data from the Home Mortgage Disclosure
and sometimes even loan servicers advise homeowners Act, funding targeted foreclosure prevention counseling
on the foreclosure process and their options. City housing and first-time homebuyer programs, developing
departments do not have the staff or budget to provide refinancing programs using mortgage revenue bonds
foreclosure counseling or other services themselves; they and federal housing funds, ensuring that foreclosed
instead refer concerned homeowners, and provide limited properties are reoccupied quickly, and recognizing the
funding, to local nonprofits for counseling. effects of foreclosure on local rental markets. While these
are creative responses that would in many cases mitigate
The other major component of local response, indicative negative effects of foreclosure, evidence from Contra Costa
of concern over the destabilizing effect foreclosures could County suggests that when faced with rapid increases
have on neighborhoods, has been increased attention to in foreclosure it is unlikely that local governments could
code enforcement issues. The code enforcement department quickly devote funding and staff time to developing new
in Antioch has been receiving many more complaint programs and tracking foreclosure data. What may be
calls since foreclosures started increasing. As a result, more realistic in the short run is for local jurisdictions
the department is working especially hard to establish to collaborate with community-based organizations to
relationships with lenders and realtors responsible for provide some of these services, utilizing Community
foreclosed properties and asking lenders in particular to Development Block Grants or other discretionary funds. A
identify a local contact responsible for maintaining vacant housing official from the city of Brentwood remarked that
properties.19 If these relationships had been in place before many cities affected by foreclosure are necessarily waiting
foreclosures occurred there very likely could have been a until the next fiscal year to set aside money for foreclosure-
more coordinated and comprehensive response to vacant related services.23
and vulnerable units. In response to foreclosures, cities
A Snapshot of Foreclosure in Contra Costa County 5
A Community-Based Response
Neighborhood-based and other local organizations see Both empirical evidence - for example, the association
the effects of foreclosure on communities first hand and between low educational attainment and foreclosures -
could be the first line of defense against foreclosure and and qualitative findings in Contra Costa County suggest
neighborhood decline. By offering alternative mortgage that providing counseling for troubled borrowers could
products to low-income and minority households potentially be a very effective tool to reduce foreclosure
frequently targeted by subprime and predatory lenders, and a useful role for CBOs. Research shows that post-
community-based organizations (CBOs) can help prevent purchase counseling increases the probability that
delinquencies and foreclosures. Though it is uncommon moderate mortgage delinquencies are cured.26 The
for CBOs to have access to enough capital to support counseling is most effective when it addresses an active
an expansive alternative mortgage program, a more delinquency; post-purchase counseling during delinquency
manageable task for CBOs is to provide homeownership is more effective at fixing delinquency than pre-purchase
counseling for borrowers in delinquency and facing counseling is effective at preventing delinquency. Early
foreclosure. This is necessarily an ameliorative rather intervention, however, is important: once a loan is more
than preventative role, and its success depends on the than 60 days delinquent it may be impossible to bring
willingness of troubled borrowers to reach out for help.24 current.27
Homeowners in Contra Costa County are seeking An alternative tool to combat these risky nontraditional
foreclosure counseling, both independently and upon mortgage products is pre-purchase counseling that informs
referral from city officials. Before the increase in potential borrowers of the risks associated with these loans.
foreclosures, housing counseling agencies in Contra CBOs could play an extensive role in promoting financial
Costa County focused almost exclusively on pre-purchase literacy among borrowers through homeownership
homebuyer counseling. One counselor at an agency in counseling and education. They could provide second-
Richmond recalled that before 2005 her office received no opinion counseling for potential buyers who want more
more than six calls per year related to foreclosure. Once the information on the loans they are considering.28 This
organization devoted a full-time staff person to foreclosure is an important, yet challenging and expensive, task.
counseling they received six calls per month. In early 2008 Many homeowners do not understand the details of
the office was receiving 30 calls per day.25 Many of these their mortgages, are unable to accurately describe details
calls come from homeowners who have already received of their adjustable-rate mortgages such as the terms of
Notices of Default, at which point the counseling agency their contracts and interest rate index, and should be
can do little to help besides explaining the foreclosure recommended and/or required to obtain loan counseling
process. Some homeowners, however, realize that they prior to purchase.29 Potential homeowners could be
will not be able to keep up with payments once their required to show proof of counseling, or pass a financial
interest rates adjust and seek counseling in advance of the literacy test, before taking title to a home. Furthermore,
adjustment. low-income, less-educated and minority households, those
targeted by subprime lenders, are less likely to know their
Though they work primarily on a local city and mortgage terms than high-income, better educated and
neighborhood level, counseling agencies in Contra Costa non-minority households.30 This empirical evidence of the
County are also partnering with local jurisdictions and benefits of pre-purchase counseling is supported by the
coordinating efforts to fundraise for additional counseling results of an informal survey at foreclosure workshops
and foreclosure workshops. As more agencies and cities in Oakland (October 2007) and Fairfield (January 2008),
realize that they have to address foreclosure in their California. Over 100 individuals attended each of these two
communities they have started to work together to apply workshops, many of whom were likely homeowners at risk
for Community Development Block Grant funding of foreclosure. Workshop presenters asked the attendees
for foreclosure-related services. The Housing Equity if they had participated in pre-purchase homebuyer
Preservation Alliance includes the City of Richmond education or homeownership counseling and at each
working alongside the Community Housing Development workshop only one attendee, (less than five percent) had
Corporation of North Richmond, Bay Area Legal Aid, pre-purchase counseling of any sort.
Housing Rights, Inc., and others. Counseling agencies are
often the impetus behind city- and county-wide foreclosure
workshops, an attempt to reach more homeowners than
they can meet individually in their offices.
“...providing counseling for troubled borrowers could potentially be a
very effective tool to reduce foreclosure and a useful role for CBOs.”
A Snapshot of Foreclosure in Contra Costa County 6
Concluding Recommendations
Federal, state and local government agencies are reacting high housing appreciation, in eastern Contra Costa County,
to the foreclosure crisis and struggling to develop policies where lenders may have more to gain. Increasing the bond
that will both mitigate the negative effects of foreclosures allocations of housing finance agencies would enable these
and prevent future loans from entering foreclosure. The agencies to purchase foreclosed units or provide grants to
mortgage industry, along with broader financial networks, households in foreclosure. Allowing borrowers to stay in
and local CBOs are also addressing the foreclosure crisis, their homes as renters will mitigate neighborhood distress,
but in very different ways. Table 2 connects potential especially in the form of vacant and blighted units in low-
policy responses to the populations and neighborhoods income neighborhoods.
affected by foreclosure. The first column presents policy
recommendations made by government agencies, housing Should all of the high likelihood policies be implemented,
advocates and industry officials, from both the popular most of the affected areas in Contra Costa County will
press and academic research. The second column draws benefit. Verification of income and ability to pay, and
on the subprime lending and foreclosure literature to lowering interest rates, will be beneficial countywide. The
describe the population likely affected by the policy other likely responses may have disproportionate benefits
mechanisms. The third column suggests areas in Contra in East county or West county, but the overall effects will
Costa County that are most likely to be affected by the be fairly balanced. Regulating predatory tactics will be
proposed policy recommendations. And the final column of particular help in Richmond and Central Contra Costa
shows the likelihood of these policies to be implemented. County while relaxing restrictions for the FHA, Fannie Mae
Those with high likelihood are already being implemented and Freddie Mac will mitigate distress in East county.
(e.g., lower interest rates) or are thought necessary by
policymakers and industry officials alike (e.g., regulating Mitigating the current foreclosure crisis will surely require
predatory tactics). Those with medium and low likelihoods federal adoption of a stricter regulatory and supervisory
would require either significant industry cooperation or structure that puts greater responsibility on all lending
dedication of large amounts of federal funding and are thus institutions to ensure that they are providing appropriate
less likely to be implemented. mortgage products and disclosing risks to consumers.
This will limit the number of risky loans originated and
Many of these policy recommendations will affect most will potentially reduce future foreclosures. The federal
borrowers, but a few in particular could be targeted government must also provide direct help to homeowners
to specific populations. Requiring income verification, currently in delinquency by creating other financing
lowering interest rates, and freezing teaser interest options and funding CBOs that provide counseling to these
rates on ARMs will be helpful to all borrowers, and all vulnerable households. But it would be a critical mistake
neighborhoods in Contra Costa County. Restricting to ignore the local impacts of foreclosure, or to pretend
subprime lending, regulating predatory lending and that this crisis affects all households equally, regardless of
encouraging mortgage counseling will be especially helpful race, class and education. Recognizing this intermediate
to low-income and minority borrowers seeking mortgages, level means policymakers must consider the role of
populations shown to be more vulnerable to these risky cities in addressing the foreclosure crisis, and promote
loans. In Contra Costa County these policies would have policy responses that address inequities in the types of
notable influence in Richmond, Pittsburg and Bay Point, neighborhoods and individuals susceptible to high rates of
communities that on average have lower incomes and foreclosure.
higher shares of minority residents.
The remaining proposals will likely help low-income
borrowers and neighborhoods. Shared appreciation
mortgages allow lenders to gain from increases in housing
value, but also force lenders to take on some of the risk,
providing access to homeownership similar to a limited
equity cooperative or community land trust. Shared
appreciation mortgages could also be useful in areas of
“Should all of the high likelihood policies be implemented, most
of the affected areas in Contra Costa County will benefit.”
A Snapshot of Foreclosure in Contra Costa County 7
Table 2. Populations and Neighborhoods affected by Foreclosure Prevention and Mitigation Policies
Likelihood of
Policy Population Affected Neighborhood Affected
Implementation
Require income verification and All All High
confirmation of ability to pay
Foreclosure fairs All, but particularly Richmond, Pittsburg, Bay Point (low-income); High
low-income and minority Richmond and Pittsburg (African-American);
households Richmond, Concord, Brentwood, Pittsburg
(Latino)
Regulate predatory sales tactics Elderly, Central and western region- High
of brokers low-income minority Moraga, Walnut Creek, El Cerrito (elderly);
(implement disclosure neighborhoods, Richmond, Pittsburg, Bay Point (low-income);
requirements and/or rural areas Richmond and Pittsburg (African-American);
nationwide licensing system) Richmond, Concord, Brentwood, Pittsburg
(Latino)
Lower interest rates All, especially minorities, Richmond and Pittsburg (African-American); High
low-income households, Richmond, Concord, Brentwood, Pittsburg
women, borrowers whose (Latino)
loans have not yet reset,
first-time homebuyers
Relax restrictions for FHA, Recent borrowers Antioch, east Contra Costa, where housing High
Fannie Mae and Freddie Mac anticipating rate reset, prices are higher and jumbo loans common
borrowers with low
downpayments
Restrict subprime lending Low-income, Richmond, Pittsburg, Bay Point (low-income); Medium
African-American Richmond (African-American homeowners)
homeowners
Restrict alternative mortgage Moderate- to Richmond and Pittsburg (African-American); Medium
products middle-income borrowers, Richmond, Concord, Brentwood, Pittsburg
minority households (Latino); Hercules, Concord, Walnut Creek
(middle-income)
Mortgage counseling Borrowers prone to Richmond and Pittsburg (African-American); Low
aggressive subprime Richmond, Concord, Brentwood, Pittsburg
lending tactics, (Latino)
African-Americans and
Latinos more likely to
receive subprime loans
Shared appreciation mortgages Low-income households; Richmond, Pittsburg, Bay Point (low-income); Low
areas with high housing Pittsburg, Antioch, Brentwood, Oakley (high
price appreciation appreciation)
Freeze teaser rates on ARMs, All borrowers, especially All areas; Richmond and Pittsburg (African- Low
place moratorium on foreclo- low-income and American); Richmond, Concord, Brentwood,
sures minority households Pittsburg (Latino); Richmond, Pittsburg, Bay
Point (low-income)
Allow delinquent homeowners Low-income Richmond, Pittsburg, Bay Point (low-income) Low
to stay as renters neighborhoods
(reducing blight, opportu-
nity for vandalism)
Increase housing finance and Low-income borrowers Richmond, Pittsburg, Bay Point (low-income) Low
redevelopment agency bond and neighborhoods
allocation
City/lender partnership for All neighborhoods, Richmond, Pittsburg, Bay Point (low-income) Low
code enforcement particularly low-income
neighborhoods
A Snapshot of Foreclosure in Contra Costa County 8
Notes
1 Perkins, Kristin. “The Geography of Foreclosure in Contra Costa County, California.” MCP Thesis. U. of California, Berkeley, 2008.
The thesis on which this piece is based used data from the U.S. Census and Home Mortgage Disclosure Act and Notice of Trustee Sale
listings from www.foreclosures.com to examine the relationship between foreclosures and neighborhood characteristics. The study used
census tracts to proxy for neighborhoods, and looked at the characteristics of neighborhoods with high and low rates of foreclosure to
see if they differed from the rest of Contra Costa County. The author compared the mean values of demographic and socioeconomic
characteristics in tracts with high rates of foreclosure versus tracts with low rates to see if there was any noticeable pattern in the variables
expected to be related to foreclosure. The study also examined the association between a few of the most significant neighborhood
characteristics and rate of foreclosure.
2 California State Senate. Senate Bill No. 926. Amended in Senate January 18, 2008.
3 “California Mortgage Defaults Hit 20-Year High.” ABC7 News. ABC. KGO, San Francisco. 22 Jan. 2008.
4 The data displayed in Figures 1, 2, and 3 was drawn from www.foreclosures.com, the 2000 Census, and the 2006 American Community
Survey.
5 Newman, Kathe and Elvin K. Wyly. “Geographies of Mortgage Market Segmentation: The Case of Essex County, New Jersey.” Housing
Studies 19.1 (2004): 53 – 83; Schloemer, Ellen, Wei Li, Keith Ernst, and Kathleen Keest. Losing Ground: Foreclosures in the Subprime
Market and Their Cost to Homeowners. Durham: Center for Responsible Lending, 2006.
6 Subprime lending, income, and college graduate data points were divided into categories based on the 33rd and 67th percentiles (low,
medium, high). High subprime lending corresponds to over 31% of loans are subprime (67th percentile). Median family income under
$72,000 corresponds to low income, the 33rd percentile. Under 20% of adults with college degree is also the 33rd percentile. For percent
African-American and Hispanic the data was divided into categories based on the distribution histogram. Population over 30% African-
American or over 45% Hispanic is considered high.
7 This is consistent with the research on the importance of financial literacy to mortgage outcomes; Bucks, Brian, and Karen Pence. Do
Homeowners Know Their House Values and Mortgage Terms? Washington, D.C.: The Federal Reserve Board of Governors, 2006.
8 Kennedy, Janet, Housing Coordinator, and Denise Skaggs, NIS/NIP Code Enforcement, City of Antioch. Personal Communication.
17 Jan. 2008.
9 Toms, Maureen. Redevelopment Agency, Contra Costa County Community Development Department. Personal Communication. 25 Jan.
2008.
10 Ibid.; Douglas, Kara. Affordable Housing Program Manager, Contra Costa County Community Development Department. Personal
Communication. 16 Jan. 2008.
11 Immergluck, Dan and Geoff Smith. There Goes the Neighborhood: The Effect of Single-Family Mortgage Foreclosures on Property Values.
Chicago: The Woodstock Institute, 2005.
12 Ibid.
13 Kennedy, Janet, Housing Coordinator, and Denise Skaggs, NIS/NIP Code Enforcement, City of Antioch. Personal Communication.
17 Jan. 2008.
14 Mann, Jim. Realtor, Mann & Associates, Better Homes Realty. Personal Communication. 25 Jan. 2008.
15 Remmers, Wanda. Executive Director, Housing Rights Inc. Personal Communication. 1 Feb. 2008.
16 Kennedy and Skaggs, op.cit; Reed, Kwame. Senior Housing Analyst, Housing Division, City of Brentwood. Personal Communication. 28
Jan. 2008; Douglas, op.cit.
17 Kennedy and Skaggs, op.cit.
18 The Contra Costa County deputy district attorney sends letters to residents receiving notices of default referring them to counselors and
warning them of foreclosure counseling scams.
19 Kennedy and Skaggs, op.cit.
20 Ibid; Douglas, op.cit.
21 Mallach, Alan. Tackling the Mortgage Crisis: 10 Action Steps for State Government. Washington, D.C.: Brookings Institution, 2008.
This article provides detailed information on 10 potential ways in which state governments can address the effects of foreclosure on
households, the impacts of foreclosure on neighborhoods, and limit future foreclosures. The article complements Table 2 of this report,
titled “Populations and Neighborhoods affected by Foreclosure Prevention and Mitigation Policies.”
For information on Chula Vista’s Abandoned Residential Property Registration Program, see http://www.chulavistaca.gov/City_
Services/Development_Services/Planning_Building/Building/Code_Enforcement/AbanResPropertyProg.asp
22 These suggestions based on Immergluck, Dan. “From the Subprime to the Exotic: Excessive Mortgage Market Risk and Foreclosures.”
Journal of the American Planning Association. 74.1 (2008): 1-18.
23 Reed, op.cit.
24 Gramlich, Edward M. Subprime Mortgages: America’s Latest Boom and Bust. Washington, D.C.: The Urban Institute Press, 2007.
25 Benjamin, Maria. Program Director, Community Housing Development Corporation of North Richmond. Personal Communication. 18
Jan. 2008.
26 Ding, Lei, Roberto G. Quercia, and Janneke Ratcliffe. Post-purchase Counseling and Default Resolutions among Low- and Moderate-
Income Borrowers. Chapel Hill: Center for Community Capitalism, University of North Carolina, 2007.
27 Ibid.
28 Essene, Ren S. and William Apgar. Understanding Mortgage Market Behavior: Creating Good Mortgage Options for All Americans.
Cambridge: Joint Center for Housing Studies, Harvard University, 2007.
29 Bucks and Pence, op.cit.
30 Ibid.
A Snapshot of Foreclosure in Contra Costa County 9
