Five Questions With: Nicole Lagace

"Increased foreclosures in our coastal communities could be due to a number of different factors."

Nicole Lagace is director of HousingWorks RI at Roger Williams University, which conducts data analysis on housing information in Rhode Island. Prior to taking on the leadership role in July 2014, Lagace was the organization’s communications director for five years. She previously served as public relations director for the Rhode Island Coalition against Domestic Violence.

PBN: The filing of foreclosure deeds in Rhode Island has decreased from 502 in first quarter of 2012 to 395 in first quarter of 2015, but remains high compared to other states. What is the back story here? Are more property owners seeing the cumulative effect of job losses or stagnant wages?
LAGACE:
In terms of foreclosure starts, it’s true that Rhode Island is among the nation’s leaders in foreclosures. In the first quarter of this year, .6 percent of all loans started foreclosure, which is the fifth highest in the nation and highest in New England. We also have a comparatively high share of mortgages in negative equity and high rates of seriously delinquent loans, which both signal to us that homeowners are struggling.
We know that median incomes for homeowners have been stagnant for over a decade, making households vulnerable to rising housing costs. In fact, our latest analysis of Census data shows that 36 percent of homeowner households with a mortgage are cost burdened and 21 percent of homeowner households without a mortgage are cost burdened, meaning they spend more than 30 percent of their income on housing. This ranks the state fourth-highest in the country for cost burdens among homeowner households.
This is symptomatic of the state’s economy overall and until policy makers can address both our state’s unemployment rate along with housing cost burdens, Rhode Island will continue to be vulnerable to the negative effects of residential foreclosures.

PBN: Rhode Island has had high rates of multi-family foreclosures. What happens to the tenants when a building falls into foreclosure?
LAGACE:
HousingWorks RI has been working to understand the ripple effect of multi-family foreclosures, especially since Rhode Island saw such high rates of multi-family foreclosures in our urban core. Looking back to 2009, there were 3,501 multi-family, foreclosure deeds filed through the first quarter of 2015, about 29 percent of foreclosure deeds statewide. When we dig deeper in to the number of apartments those multi-family foreclosure deeds represent, we find that over 9,300 rental homes were affected.
The good news is that since the passing of the 2014 Just Cause law, tenants of foreclosed properties can no longer be evicted by new ownership of a multi-family without cause. Before the law passed, tenants could be evicted arbitrarily. This was obviously bad for tenants, but it also increased blight in neighborhoods because these properties might become vacant. Now, foreclosing lenders are also subject to the RI Landlord-Tenant Act, which requires that they keep properties healthy and safe.

PBN: Which communities seem to be making a rebound, in terms of having seen the worst of the crisis?
LAGACE:
Rebound is a relative term. Overall foreclosure rates are on the decline throughout the state. Periodically we have seen foreclosure rates grow in our suburban and rural communities and while not on the scale as what we experienced in the urban core, these foreclosures have been symptomatic of the state’s lagging economy overall. We are still concerned by what we’re seeing in our urban communities. For example, in 2009 — at the height of the crisis — Providence, Warwick, Cranston, and Pawtucket recorded the most foreclosures of all cities and towns. In our most recent count, these four cities were still leading the state.
While we cannot directly link individual foreclosure deeds to vacant properties, we know that neighborhoods with higher rates of foreclosures also have higher rates of properties vacant for a year or more. This is troublesome and tempers our usage of the term rebound.

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PBN: Several communities on the coast had an increase in the first quarter, including Charlestown, South Kingstown and Middletown. Is the foreclosure problem playing out differently in these communities than the cities, in terms of what kinds of properties are being lost or the reason?
LAGACE:
Increased foreclosures in our coastal communities could be due to a number of different factors. One possible explanation is the sharp hikes in flood insurance premiums as a result of flood map re-drawings in 2012, which changed how insurance companies determine premiums. The maps were redrawn to give more accurate assessments of risk, however many homes that previously were not in at-risk areas are now considered at-risk and must be covered by costly flood insurance.
Another explanation point is that seasonal properties throughout the coastal regions of the state may have been bought as secondary homes in the lead up to the foreclosure crisis, but then grew to be too expensive. It is plausible that increased flood insurance premiums and affordability are a factor in these communities, but we don’t have the data to link to an actual cause.

PBN: Can property owners experiencing trouble with payments access financial counseling in Rhode Island?
LAGACE:
Yes there are financial counseling services available. Homeowners who are struggling with their mortgage payments and need these services can reach out to the Rhode Island Housing Help Center by calling (401) 457-1130. Also, the state’s 211 helpline will direct folks to other community resources available throughout the state.

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