The U.S. Conference of Mayors convened a Forum for several of the country's Mayors, lenders, and counseling agencies to discuss the ongoing foreclosure crisis.

Foreclosure help on the way

Mayors, lenders announce hotline, database aimed at reining in crisis

Under fire for the explosion of failed mortgages that has led to a national foreclosure crisis, lenders promised U.S. mayors in Detroit on Tuesday that they will pay for credit counseling hotlines and assemble a database to help untangle who owns foreclosed properties.

The U.S. Conference of Mayors, lenders, banks and nonprofits that help people with their loans huddled behind closed doors at the MGM Grand Detroit to brainstorm how to rein in the number of people losing their homes.

The Mortgage Bankers Association committed Tuesday to donating $100 for every property in foreclosure -- about 1 million properties -- to hotlines designed to help people avoid foreclosure.

The association also launched a database of all the loans in foreclosure, accessible on its Web site. The database will allow people to find out which lender is responsible for a foreclosed house and who the loan servicer is on the house.

The association also said it would make its studio in Washington available to mayors to film a public service announcement about foreclosures, similar to one it did for Detroit Mayor Kwame Kilpatrick that hasn't aired yet.

Paul Richman, the association's senior director of government affairs, said the steps are being taken to help address the need created by some in the industry.

"We understand we need to prospectively be more careful in the future," he said after the meeting.

Kilpatrick said the database would prove useful because residents inundate city halls with complaints about foreclosed homes with overgrown lawns and broken windows.

But many often struggle to find answers because it can be difficult to figure out who's responsible for the property, he said.

"Now we'll know better who has the major responsibility for getting those houses in order," Kilpatrick said.

Both the database and money for hotlines would be a big help, said Ava Tinsley of the Boston-Edison Association in Detroit. The association is involved in helping people facing foreclosure.

It's difficult to determine which entity has seized a house when it is foreclosed -- a bank for a mortgage or a government for taxes, Tinsley said.

And the demand for counseling help is immense, she said.

"There are so many people out there who need help and don't realize they need help until it's the ninth hour," she said.

Earlier in the day about 10 demonstrators protested the meeting outside the hotel. They called for states to use laws already on the books to put a moratorium on foreclosures.

After being told by nonprofits that 72% of those in foreclosure have the wherewithal to remain in their homes if given proper help, the mayors said it's essential to convince people nearing or in foreclosure to seek help.

Officials said three-quarters of those in foreclosure are not deadbeats, but caught in poorly designed loans -- part of the subprime market where loans began with cheap initial interest rates that later ballooned to unaffordable levels.

"What we have is an unbelievable number of people in bad products," said John Taylor, president and chief executive officer of the Washington-based National Community Reinvestment Coalition.

Mayor Douglas Palmer of Trenton, N.J., the president of the National Conference of Mayors, said the problem doesn't affect just those in foreclosure.

"The foreclosure crisis has the potential to break the back of our economy as well as the back of our families if we don't do something about this soon," Palmer said.

In metro Detroit, it is the subprime collapse, coupled with a poor economy, that has fueled large numbers of foreclosures.

Earlier this month, RealtyTrac reported 1 in 33 homes in metro Detroit was subject to a foreclosure filing -- second in the nation behind Stockton, Calif.

Having the mayors team up could bring key pressure on Washington and state governments to put reforms in place to protect borrowers, Taylor said.

"A concerted effort with a team of mayors, I think, could be very effective," he said.

Charles Ballard, an economics professor at Michigan State University, said while one mayor would not be able to effect much change, a coalition of them could put considerable heat on the lending industry.

"If you're the CEO of a major company and you don't want the bad press associated with being the foreclosure king, that might have an effect on you," he said.

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