Nearly two-thirds of cities report that foreclosures have increased in their communities during the past year, with one-third seeing declines in city revenues as a result, according to a poll released by the National League of Cities (NLC). The poll also found that more than half of cities saw increases in the need for temporary assistance for services such as counseling, food banks and other non-housing related issues.

"Mortgage foreclosures are causing havoc in many of our communities," said Cynthia McCollum, president of the National League of Cities and council member from Madison, Ala. "Cities are already seeing reductions in their revenues at the same time that more services are needed to address the many related problems caused by the foreclosures. Unfortunately we also know that the problems will continue for many years before they get better. That's a tough situation for all of us."

The results of the online/email poll represent responses from more than 200 cities. Of particular note is the ripple effect the housing crisis seems to be having on city finances. One out of three report that funding for programs and projects has declined in the past year.

Also significant is the increase in abandoned and/or vacant properties and other forms of blight, reported by one-third of the cities. "In one new community in Charlotte, NC, 115 out of 123 homes were boarded up," said McCollum. "Where there are widespread foreclosures, cities must ensure the safety of the residents still living in the community, must keep the grass mowed, and stop vandalism."

The NLC poll shows that the housing crisis is disproportionately impacting certain residents, with half reporting the crisis is affecting lower-income families; one-third seeing problems for families headed by single parents; and one in five seeing impacts on seniors and people of color.

"We know that homeownership strengthens our communities -- but the housing crisis is making it more difficult to achieve this goal. Overall, financial stability of millions of Americans is in jeopardy," McCollum said.

The poll also shows that in more than half of the cities, the lending community has not reached out to local officials to offer help or support in dealing with foreclosures and housing finance-related impacts. The groups working most closely with cities are non-profit and civic organizations, followed by state governments and other local governments.

Housing Finance and Foreclosures Insta-Poll Fact Sheet (Questions)

How have the following conditions changed in your community in the past year?

  -- Increase in foreclosures 62%
  -- Increase in need for temporary assistance, other than housing 53%
  -- Decrease in funding for other programs and projects 35%
  -- Decrease in city revenues and/or revenue estimates 33%
  -- Increase in abandoned/vacant properties/other forms of blight 33%
  -- Increase in cost/risk of bond and capital financing 26%
  -- Increase in predatory lending practices 23%
  -- Increase in homelessness/need for temporary/emergency housing 22%
  -- Increase in out-migration of residents 17%

Please list the three conditions that have impacted your community most severely.

  -- Declining funding for other programs and projects 62%
  -- Declining city revenues and/or revenue estimates 60%
  -- Increasing foreclosures 42%

In the past year, to the best of your knowledge, has it become more difficult for low-income families to become homeowners in your community?

62% Yes 24% No 14% Don't know

Is the housing finance crisis disproportionately impacting certain residents in your community?

  51% Lower-income families and individuals
  31% Single-parent/headed households
  25% Seniors
  21% People of color (African-American/Black, Hispanic/Latino, etc.)
  9% Other
  21% No
  19% Don't know

What groups/organizations has your city been working with most closely in responding to this crisis?

  59% Non-profit/civic organizations
  35% State government
  34% Other local governments
  32% Banks/mortgage lenders
  29% Churches
  26% Neighborhood associations/groups
  26% Federal government
  18% Other private sector/business
  7% Other
  15% None

Has the lending community reached out to your city to offer help/support in dealing with foreclosures and housing finance-related impacts?

17% Yes 57% No 26% Don't know

Methodology

The results reported here are from a poll conducted online and via email of 1,240 local elected officials. A total of 211 responses were received for a response rate of 17 percent. The distribution of responses across municipalities of different populations is consistent with the national distribution. However, a low percentage of responses from municipalities in the Northeast region of the country means that the poll may not be completely representative of the municipalities from that area. Response rates by population size: municipalities under 50,000 (78%), from 50,000-99,999 (12%), 100,000 and above (10%). Response rates by region: Midwest (29%), South (41%), West (29%), Northeast (1%).

Source: National League of Cities