Using GIS in Foreclosure Analysis: A Look at Forsyth County, NC

Presented by:

Jason Clodfelter,

CMS, GISP

Carlo Frate,

CMS, GISP

Forsyth County Tax Administration GIS/Mapping Division NC Department of Revenue 2011 Advanced Seminar Greensboro, NC September 14, 2011

Discussion Items

 Foreclosure terminology  Foreclosure process  Tax office analysis  Changes to office procedures

Foreclosure Terminology

Source of Mass Confusion

Triad sets record for foreclosure filings in 2010

By: Richard Craver, Journal Reporter Published: January 7, 2011 North Carolina and most of the Triad set a record for

foreclosure filings

in 2010, a state agency reported Thursday.

There were 67,854 had a record 2,396 the Courts…

foreclosures

in North Carolina in 2010, an increase of 7 percent over 2009. Forsyth County

foreclosure filings

last year, up 6 percent, according to the N.C. Administrative Office of Of the 14 counties in the Triad and Northwest North Carolina, just two — Alleghany and Rockingham — did not set a record in 2010. Although Forsyth has seen a 29 percent increase in

foreclosure filings

since 2006, some counties in Northwest N.C. have had

filings

that at least doubled. For example, filings have risen in Watauga County from 107 in 2006 to 356 in 2010, along with going from 75 in 2006 to 160 in 2010 in Ashe County… "North Carolina will have more than a 30 percent increase in

completed foreclosures

in 2010 compared with 2009," Blomquist said. "I don't believe

foreclosures

are necessarily going to get a lot worse in 2011, but they're not likely to get much better."

Foreclosure Terminology

Source of Mass Confusion

 Foreclosure – is a legal process    Multiple steps Multiple variables Variety of outcomes  Notice of Hearing on Foreclosure of Deed of Trust    Civil papers filed with Clerk of Court that begin the foreclosure process Delivered or posted by the Sheriff's department Often referred to as Foreclosure Filing, Foreclosure Start, Foreclosure Notice or Sheriff’s Notice (terms used by the media)

Foreclosure Terminology

Source of Mass Confusion

 Notice of Foreclosure     Legal document filed after completion of a foreclosure Mandated by NC GS 45-38 Filed with the Register of Deeds Sometimes referred to as a Completed Foreclosure

Foreclosure Process

Banks/Credit Unions Savings & Loans Mortgage Companies Government Entities Home Owners Associations File Notice of Hearing on Foreclosure of Deed of Trust Owner Financing Deed In Lieu Of Foreclosure Past Due Payments Are Paid Up Foreclosure Related Activities Distressed Sale Short Sale Bankruptcy Foreclosure Occurs

OK, So Why Do We Care?

Reality

 The Tax office is being asked, “What are you doing about all of these foreclosures?”  In order to be able to answer this, we must:      Know where the foreclosures are Be able to track those properties Follow subsequent sales of those properties Determine what, if any, affect the foreclosures have on the market area (neighborhoods) IAAO Standard on Verification and Adjustment of Sales: 

Sales in which a financial institution is the seller typically should be considered as potentially valid for model calibration and ratio studies if they comprise more than 20% of sales in a specific market area.

OK, So Why Do We Care?

Reality

 Housing department - participation in the Neighborhood Stabilization Program (NSP)  Federal grant money used to help purchase and rehab foreclosed properties  NSP requires that the grant money be focused on census tracts most affected by foreclosures  Can use foreclosure data to target population segments to educate about home ownership and the services offered by Housing  Others   Public Safety/Crime Prevention Code Enforcement

Forsyth County Foreclosure Data: 2007-2010

3,000 2,500 2,000 1,500 1,000 500 0

1,981 851 844 2,221 1,085 992 2,252 1,374 819 2,396 1,456 1,222

2007 2008 Notices of Hearing on Foreclosure Parcels Affected 2009 2010 Notices of Foreclosure (GS45-38)

Source: NC Administrative Office of the Courts, Forsyth County Housing Department, Forsyth County Register of Deeds, Forsyth County Tax Administration

60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%

Completed Foreclosures as Percentage of Foreclosure Starts: 2007-2010 42.60% 44.66% 36.37% 51.00%

2007 2008 2009 2010

Select Neighborhoods Summary

Southwestern Forsyth County

Neighborhood

All sales and foreclosure numbers are for 2007 - 2010

Number of Parcels Median Assessed Value Number of Foreclosures Total Sales Foreclosure Percentage Qualified Sale Percentage Median Year Built

Sequoia Place Springfield Farms Rollingreen Village 515 329 535 $ 154,700 $ 159,700 $ 157,100 11 6 3 136 116 116

Number of Qualified Sales

8.1% 5.2% 2.6% 61.8% 60.3% 42.2% 1988 1996 1971 30 25 20 15 10 5 0

23 22 24

2007

24 20 18 11 18 16

Sequoia Place 2008 Springfield Farms

4

2009 Rollingreen Village 2010

12 11

Southwestern Residential Neighborhood Comparison: 2007- 2010

2.0%

1.3%

1.0%

9%

0.0% -1.0%

Sequoia Place Springfield Farms

-2.0%

-2%

-3.0% -4.0%

-4%

-5.0% -6.0%

-50%

-7.0% -8.0%

1988 -7.3% 1996 Median Year Built 0.3% Rollingreen Village -1% 1971 -52%

20% 10% 0% -10% -20% -30% -40% -50% -60% % Change in Median Square Foot Price % Change in Median Improved Sales Price % Change in Qualified Sales

Neighborhood

Select Neighborhoods Summary

Southeastern Forsyth County

All sales and foreclosure numbers are for 2007 - 2010

Number of Parcels Median Assessed Value Number of Foreclosures Total Sales Foreclosure Percentage Qualified Sale Percentage Median Year Built

Canterbury Pecan Ridge Weatherstone 419 256 228 $ 114,900 $ 161,350 $ 143,650 18 13 1 132 89 318

Number of Qualified Sales

13.6% 14.6% 0.3% 47.0% 57.3% 53.1% 1973 2002 2007 40 30 20 10 0 90 80 70 60 50

80 29 28

2007

37 15 11

2008 Canterbury Pecan Ridge

22 15 8

2009 Weatherstone

30 4 3

2010

Southeastern Residential Neighborhood Comparison: 2007-2010

30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% 0%

27%

-10% -20% -30%

14.5%

-40% -50%

2.2% -63%

-60% -70%

Canterbury 1973 Pecan Ridge Weatherstone -86% -3% -90% -7.4% -6% 2002 Median Year Built 2007

-80% -90% -100% % Change in Median Square Foot Price % Change in Median Improved Sales Price % Change in Qualified Sales

Neighborhood

Select Neighborhoods Summary

Eastern Forsyth County

All sales and foreclosure numbers are for 2007 - 2010

Number of Parcels Median Assessed Value Number of Foreclosures Total Sales Foreclosure Percentage Qualified Sale Percentage Median Year Built

Sedge Meadow Robbins Brook Sedgemont Village 169 157 122 $ 153,400 $ 181,300 $ 165,550 5 3 0

Number of Qualified Sales

127 199 97 3.9% 1.5% 0.0% 52.8% 43.2% 61.9% 2002 2006 2006 40 35 30 25 20 15 10 5 0

37 22 18

2007

30 22 18 16 10 9 13 11 7

2008 Sedge Meadow Robbins Brook 2009 Sedgemont Village 2010

Eastern Residential Neighborhood Comparison: 2007-2010

15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% -10% -15%

Sedge Meadow Robbins Brook Sedgemont -19% Village -10% -7% -10.6% -12.7%

-20% -25% -30% -20.0% -25.0% -30.0%

2002 11% -39% -25.0% 2006 Median Year Built

0% -5% -35%

2006 -41%

-40% -45% % Change in Median Square Foot Price % Change in Median Improved Sales Price % Change in Qualified Sales

Summary

  General trends in Forsyth County, 2007-2010  Analysis so far has shown :      Foreclosure-related sales have sharply increased.

Qualified sales have sharply decreased.

Few countywide trends Other variables influence changes in home prices   General economic conditions Existing housing stock / Supply & Demand Neighborhood conditions determine extent of effects on home prices by foreclosures  Age of homes   Location Price point Future considerations:      Expand study period into past and future Examine subsequent sales of foreclosed properties.

Consider neighborhood-by-neighborhood analysis to determine effect of foreclosures on property values Identify variables to control for (effect of foreclosures vs. effect of economic downturn) Change workflow processes for classifying and tracking foreclosure related sales

Changes to Office Procedures

Additional Steps to Capture & Track Foreclosures and Foreclosure Related Sales

Changes to Office Procedures

 Receive list of Notices of Foreclosure on Deed of Trust (by address) served by Sheriff’s department – add a note to the record receiving notice  Receive list of Notices of Foreclosure, as identified by the Housing Department, on a monthly basis  Match that info up with data in our Tax system to identify records foreclosed on  Code those records to identify them as “Foreclosures”

Changes to Office Procedures

 Identify the records with subsequent sales (from financial institutions) after foreclosure and code them as such  These new notes and codes allow us to better track, query and run ratios on sales relating to foreclosures

Effect of Foreclosure Related Sales

Number of Sales Median Assessment Ratio COD

Qualified & Post Foreclosure Bank Sales

10,528

Qualified Sales Only

9,452 1.05

1.03

Post Foreclosure Bank Sales Only

1,076 1.72

29% 22% 43%

For Calendar Years 2009, 2010 and 2011 (through August 26)

Contact Information

 Jason Clodfelter  336-703-2376 Email: [email protected]

 Carlo Frate  336-703-2370 Email: [email protected]

Forsyth County Tax Administration 201 N Chestnut St Winston-Salem, NC 27101

Addendum

Forsyth County Housing Department

Using GIS to Identify Home Foreclosures

A Positive Side-Effect of Foreclosures

A Positive Side-Effect of Foreclosure

Neighborhood Stabilization Program (NSP)

 The NSP is intended to reduce blight, rehabilitate abandoned and foreclosed properties, provide affordable housing for buyers and renters and stimulate the local real estate market.

 Funds are allocated by a formula based on the number of foreclosures and vacancies in the 20% of US neighborhoods (Census Tracts) with the highest rates of homes financed by a subprime mortgage, are delinquent or are in foreclosure.

 These funds are highly targeted to communities with the most severe neighborhood problems associated with the foreclosure crisis.

Source: US Department of Housing & Urban Development, Community Planning & Development Office

A Positive Side-Effect of Foreclosure

Neighborhood Stabilization Program (NSP)

 NSP funds may be used for activities such as:      Establishing financing mechanisms for purchase and redevelopment of foreclosed homes and residential properties Purchasing and rehabilitating homes and residential properties abandoned or foreclosed Establishing land banks for foreclosed homes Demolish blighted structures Redevelop demolished or vacant properties

Source: US Department of Housing & Urban Development, Community Planning & Development Office

A Positive Side-Effect of Foreclosure

Neighborhood Stabilization Program (NSP)

 Requirements of program  30% of funds must be used to assist families at or below 80% of Median Household Income  Recipients getting assistance for rental units must be at or below 50% of Median Household Income  Other first-time home buyers can be at 120% of Median Household Income and still receive assistance

A Positive Side-Effect of Foreclosure

Neighborhood Stabilization Program (NSP)

 Administered locally by the Forsyth County Housing Department  Creating database of foreclosed properties using Notices of Foreclosure  Doing simple geo-coding using addresses and street centerlines to locate foreclosures  Collaboration with the Tax office in terms of data sharing

A Positive Side-Effect of Foreclosure

Neighborhood Stabilization Program (NSP)

 Assistance Provided to Date  Received $3.625 million through the NSP1 program  Distributed $3,436,343.44 in the form of down payment assistance, rehab assistance and the purchase of foreclosed properties in Forsyth County  This includes assistance to 44 first-time home buyers  Approximately 160 new affordable housing units have been made available