St. Louis gets low marks on foreclosure prevention
St. Louis lacks resilience in the way it has responded to mounting mortgage foreclosures, a new academic study says. The study, published by the MacArthur Foundation, says that while local non-profit groups have ramped up their efforts,
The weakness is that the resources have been lacking to scale up counseling to the needed level and area governments have contributed little to prevention.
Part of St. Louis’ problem is institutional — Missouri has one of the fastest foreclosure processes in the nation, with lenders needing as little as 38 days to seize a property. But governments, foundations and even the Post-Dispatch come in for their share of criticism. The study notes that the city of St. Louis contributed $500,000 to a foreclosure-prevention effort, but adds:
Efforts in St. Louis to persuade other governments and private foundations to contribute funds to foreclosure prevention have ended in failure. Chris Krehmeyer made a presentation at Gateway for Giving, a collaboration of local foundations, asking for $2-3 million for a rescue fund but was turned down. The Municipal League of St. Louis County proposed contributing $5,000 from each municipality to a rescue fund but nothing came of it.
The authors, including Todd Swanstrom of the University of Missouri-St. Louis, then add this very perceptive bit of analysis:
Why has St. Louis County, a county with a solid tax base that is being hit hard by foreclosures, done so little to prevent them? Part of the answer probably has to do with the geographical distribution of the problem. Large swaths of the wealthy and politically powerful parts of the region in the central corridor are not directly affected by foreclosures.
As for the newspaper’s role, the study says the Post-Dispatch has published far fewer stories about foreclosures than the Cleveland Plain Dealer. The study analyzes St. Louis and Cleveland as two “classic weak market metro areas.” It finds that Cleveland has a far higher rate of foreclosures, but also has done more to address the problem.
As compared with stronger housing markets — the authors analyze two in California, along with Chicago and Atlanta — we “weak” places have both advantages …
Preventing foreclosures is easier in weak market regions than in traditionally strong market regions. In weak markets, borrowers often need relatively small amounts of money to come current on their mortgages and the problem of negative equity is not so severe because the housing bubble was less inflated than in traditionally strong market regions.
… and disadvantages:
The situation is just the reverse for neighborhood recovery, which is generally going to be easier in strong market regions than weak market regions. … In weak markets, foreclosed homes are more likely to lie vacant and abandoned indefinitely, spreading blight to neighboring properties.
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David Nicklaus has covered St. Louis business for more than 25 years. His column appears three days a week on the Post-Dispatch business page. 
I always find in comical that these organizations put out “academic studies” like this, which they have time and money to do thanks to some dead person’s foundation. Instead of spending that money deciding what cities are weak or strong on foreclosures, why not give the money to people who are about to be foreclosed on? There’s a novel idea.
As a side note, while I am certainly not one to toot the horn of the Post, it is absolutely ridiculous for this foundation to criticize the P-D for their coverage of foreclosures in this area. You need to factor in how many other local publications (RFT, Suburban Journals which the Post owns) as well as other media (TV, radio, internet) have covered it as well. Simply comparing newspapers is like comparing third baseman and declaring one baseball team better than the other…