Report: 3,000 home loans at risk of foreclosure in SF 

Other cities in the region may have been hit much harder during the height of the five-year mortgage crisis, but San Francisco was by no means unscathed, experiencing a more than 500 percent increase in home foreclosures, a city controller's report has found.

Between 2008 and 2012, The City tallied 3,827 foreclosures, and today, thousands of borrowers remain at risk of losing their homes, according to the new report that examined the impacts of the mortgage crisis. During the five-year period prior to the start of the recession in 2008 there were just 605 foreclosures, while last year alone, there were 528, the analysis said.

Three years after the crisis, the local economy has turned around and unemployment has dwindled to 3.8 percent. But city officials and community advocates continue to debate how to help those who are struggling to hold on to their homes.

In San Francisco, 3,002 loans, or 2.4 percent of all loans with owner-occupied units, are underwater or near-underwater, the report said, a term used to describe when the market value of a home is below the mortgage amount. Nearly half of these loans are in the south and southeastern working-class family neighborhoods: Ingelside-Excelsior/Crocker-Amazon, Bayview-Hunters Point and Visitacion Valley-Sunnydale. Of all neighborhoods, Bayview-Hunters Point's rate of foreclosure at 0.62 percent is the highest — "four times the citywide foreclosure rate," the report said.

How best to help these San Francisco residents was the center of debate in October at City Hall, which prompted the report that was issued last week.

Supervisor John Avalos had proposed for The City to partner with Richmond to launch a program to use eminent domain to seize underwater properties and refinance them. But the Board of Supervisors refused to support the proposal. The report additionally recommends against using eminent domain, citing risks to The City's own borrowing costs. It also raises legal questions.

"I'm disappointed that they seem to have bought into Wall Street's scare tactics about eminent domain," Avalos said in a statement.

The supervisor said he would continue to work on the issue by focusing on programs to help those with distressed mortgages and urging banks to sell private-label securities mortgages to nonprofit housing developers. These PLS loans were targeted by the Richmond eminent domain program since they were sold to trusts and are said to be highly difficult to modify. There are 3,377 of these securitized loans in San Francisco.

In renter-dominated San Francisco, home foreclosures is an issue for a much narrower population of the housing market. Of The City's 378,186 housing units, 345,344 are occupied, with 63.4 percent by renters and 36.6 percent by owners, according to the report. Of the 126,394 owner-occupied units, 70 percent have at least one mortgage.

Grace Martinez, lead organizer for San Francisco's branch of the Alliance of Californians for Community Empowerment, supported Avalos' effort. She called the report "disheartening," adding, "The recommendations are weak compared to what needs to happen."

The report's recommendations included developing a mortgage assistance program to help reduce borrowers' principal loan amount, as well as an emergency assistance program to provide financial assistance for a homeowner who had an unexpected hardship and default, or is at risk of defaulting on a loan.

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