Foreclosures Increase

We are not out of the woods. According to Tim Logan in the Boston Globe, foreclosures are spiking in Massachusetts despite the housing market rebound. New rules may be the main culprit.

Logan writes, “Boston’s housing market may be red hot, but other parts of the state are wrestling anew with an old problem: foreclosures.

“The number of foreclosures initiated by lenders in Massachusetts climbed nearly 60 percent in the first five months of 2015 compared with a year earlier, according to data released Tuesday by the Warren Group. The biggest gains came in cities including Springfield, Brockton, and Worcester.

“The increases are being driven by lenders pushing through their backlogs of delinquent loans after new rules governing repossessions were ironed out, said banking groups and housing advocates.

“Much of the current wave is a matter of paperwork, not the return of a problem that plagued the sate and much of to rest of the country during the recession, housing market watchers say. State laws passed in 2012 prompted many banks to all but halt foreclosures in Massachusetts for more than a year while regulators crafted rules governing titles and requiring lenders to offer loan modification before launching a repossession. …

“ ‘There’s more predictability,’ [housing consultant Tim Davis] said. ‘Lenders now know how to cross their ‘t’s’ and dot their ‘i’s’. That’s the reason they’re cleaning up now.’ …

“A majority of mortgages nationwide that are going through foreclosure today were originated before the crash in 2008. Troubled loans have lingered longer in Massachusetts, where the average foreclosure in the first quarter took more than two years from initial filing to final repossession. Other states with similarly slow processes — which in many cases are designed to protect borrowers — have also seen their foreclosure rates climb in the last year, he said, including Maryland, New Jersey, and New York.” More here.

[Your faithful blogger will be on vacation for a few days. Have a Glorious Fourth. Meanwhile, here is some reading on the importance of housing, Home for a Bunny. I think it says it all.]


Training for Jobs Calls for Steady Funding

A recent article at the Washington Post Wonkblog contends that funds for apprenticeships and training have been cut too much, sometimes as part of efforts to weaken unions.

In her report, Lydia DePillis attends “a training session run by the seamen’s union — something that’s become a rarity, as labor’s reach has contracted, even as the need for vocational training has risen.”

She observes some of the ocean-going skill building that’s so essential to public safety. She notes, however, “The organization is not educating as many of the people who steer ships in and out of U.S. ports — even as the profession overall is projected to expand at a faster than average pace through 2022, mostly on inland routes where the union has lost membership, and the international shipping lines where it never had it.

“The union’s predicament illustrates the challenge organized labor in the rest of the country: Although it has historically constructed high-quality educational pipelines to well-paying jobs in cooperation with employers, labor has lost ground over the years.

“In the absence of union training programs, businesses in vast sectors of the economy are scrambling to meet their workforce needs through other means, like piecemeal job training programs and partnerships with community colleges, with few solutions that have really broad reach.

“ ‘What is sorely needed are forums for scaling. And that’s where there’s possibly a really important role for other intermediaries, including labor unions,’ said Brookings Institution scholar Mark Muro. ‘It’s extremely difficult for companies to organize these properly, and obtain these certification systems, and have agreements for what the testing systems are.’

“With mounting evidence that a four-year college degree isn’t the best way to prepare everyone for the workforce, and can instead leave students with staggering debt, governments are trying to ramp up career-focused vocational education systems — like apprenticeships, which unions have long provided.  …

“According to University of Washington history professor Dan Jacoby, craft unions — which had an organizing model of limiting the labor supply to highly skilled professionals — gave way to industrial unions, which emphasized size, solidarity and militancy over training as a way to win higher wages and rights on the job.

“Then, in the last few decades, college became the key to advancement rather than enrollment in a vocational program. That might have given more people access to higher education, but it also eroded the unions’ role in career development.” More here.


Conn. Income Grows but Businesses Angry

I’m trying to find the connection between two Connecticut stories appearing on the same day: business leaders are furious about proposed tax increases; personal income grew by 1 percent, higher than nationwide.  Bad news, good news.

At the Hartford Courant, Mara Lee writes about the positive income data. “Connecticut’s earnings growth in the first three months of 2015 was better than the country’s as a whole, according to new data. Personal income — which includes all earnings, dividends, Social Security, Medicare, Medicaid and rental income — grew by 1 percent in the state, compared with 0.9 percent nationally.

“Income from work was the strongest element, growing 1 percent, seasonally adjusted. Nationally, earnings grew 0.8 percent.

“The data are from the Bureau of Economic Analysis, which released first-quarter income figures on Monday. Connecticut’s growth rate was right in the middle of states, ranked 24th. For the past five quarters, Connecticut has generally been right at the national growth rate or one-tenth of 1 percent below or above.” That makes it sound like the economy is improving in Connecticut.

At the CT Post, Ken Dixon reports on the business view: “State business leaders resumed their full-court press in opposition to the pending state budget on Monday, predicting that if new taxes go into place, a critical ‘tipping point’ would result.

“Joe Brennan, president and CEO of the Connecticut Business & Industry Association, said that while much of the criticism on proposed tax hikes has come from major corporations in recent weeks, hundreds of thousands of subcontractors and smaller businesses would also suffer.

“ ‘These threats are real,’ he said. ‘We can’t just say “well businesses aren’t paying enough in taxes.” If we do that, it’s to the detriment of everybody. For every job that leaves, that’s less tax revenue for the people that need state services.’ ”

“About 75 business leaders and lobbyists attended a news conference on the steps of the Capitol and warned that other states are making pitches to lure Connecticut businesses.” That makes it sound like the state economy may be OK now but it’s about to get worse.

Connecticut is in the Boston Fed district (except for Fairfield County, which belongs to the New York district).

Photo: Anthony Price
Hartford, Connecticut





Regenerating Our Older Cities

Whether they are called legacy cities, secondary cites, Gateway Cities, Working Cities, or smaller postindustrial cities, they are garnering a lot of attention these days. There’s a growing concensus that revitalizing such cities would be good for the overall US economy.

So it was with considerable interest that I read about Alan Mallach and Lavea Brachman’s study for the Lincoln Institute of Land Policy, “Regenerating America’s Legacy Cities.” The more innovative ideas, the merrier.

From the Lincoln Institute website: “This policy focus report explores the challenges of regenerating America’s legacy cities—older industrial cities that have experienced sustained job and population loss over the past few decades. …

“While almost all of the nation’s older industrial cities declined through the 1980s, the picture has changed in more recent decades. The report examines 18 representative cities to explore how their trajectories have changed, with some showing signs of revival while others continued to decline. These 18 cities were selected from a universe of approximately 50 legacy cities, which met two primary criteria: population of at least 50,000 in 2010; and loss of at least 20 percent from the city’s peak population. The cities represent geographic diversity, including New England, Mid-Atlantic, Southern, and Midwestern cities, as well as variation in their level of recovery or regeneration. …

“The authors discuss what is meant by successful regeneration, followed by an exploration of obstacles to change, leading to the presentation of a model, which they call strategic incrementalism, as a framework with which cities can overcome these obstacles and pursue successful change.

“The final section offers a series of recommendations to foster change in the nation’s legacy cities. These include:

“• rebuilding the central core;
“• sustaining viable neighborhoods;
“• repurposing vacant land for new activities;
“• using assets to build cities’ competitive advantages;
“• re-establishing the central economic role of the city;
“• using economic growth to increase community and resident well-being;
“• building stronger local governance and partnerships;
“• building stronger ties between legacy cities and their regions;
“• making change happen through strategic incrementalism; and
“• rethinking state and federal policy toward legacy cities. …

“Alan Mallach is senior fellow at the Center for Community Progress. … Lavea Brachman is the executive director of the Greater Ohio Policy Center.” More here.

See also the Boston Fed’s “Reinvigorating Springfield’s Economy: Lessons from Resurgent Cities,” by Yolanda K. Kodrzycki and Ana Patricia Muñoz, here. It’s a paper that helped to launch the Boston Fed competition known as the Working Cities Challenge.

Claremont, New Hampshire


Casino Supposed to Bring Back Glory Days

New Bedford (MA) has voted overwhelmingly for a casino, believing, as the mayor says, that it will return “New Bedford to its status as one of the leading cities in the Northeast.”

The mayor knows his city better than I do, but I wonder what history he is referring to. Whaling brought glory days to New Bedford, but some industries come with sell-by dates.

Sean P. Murphy writes at the Boston Globe, “For the third time in 20 years, New Bedford residents have voted overwhelmingly to welcome a casino into their city. …

“The vote represents a major win for Mayor Jon Mitchell, who has enthusiastically backed the casino proposal as a possible economic stimulus for the city’s historic but aged downtown waterfront. …

“Mitchell insisted that the developer design the site in a way that would integrate the casino with downtown. Mitchell has also promised to use a portion of the money to be received by the city from the casino to spur other development. …

“David Lima, pastor of a New Bedford church, led the opposition to the casino. He said it was not surprising that voters supported the proposal because of the dire need for jobs in a city with one of the highest unemployment rates in the state.

” ‘The casino companies look for cities with high unemployment to come into because those are the only places where people will vote for them,’ he said. ‘But casinos aren’t for the communities. They are for the profits. The big problem with casinos is they take money from the people who can least afford to lose it.’ ” …

“KG Urban has promised to pay the city $12.5 million a year to compensate for increased traffic and other casino-related inconveniences.

“The developer also promises to make a one-time $4.5 million payment to the city, build a $10 million harbor walk, and spend as much as $50 million for environmental cleanup.”

More here.

[The views expressed in this blog do not necessarily reflect those of the Federal Reserve Bank of Boston or the Federal Reserve System.]


Housing Webcast at Noon Today

Harvard’s Joint Center for Housing Studies is offering a live webcast today at 12 pm. You may watch online at to learn about the center’s 2015 State of the Nation’s Housing report, twitter hashtag #harvardhousingreport. No registration is required.

The report finds that homeownership rates are at historic lows and the middle class is feeling the strain of rising rents.

“The fledgling U.S. housing recovery lost momentum last year as homeownership rates continued to fall, single-family construction remained near historic lows, and existing home sales cooled, concludes our 2015 State of the Nation’s Housing report. In contrast, rental markets continued to grow, fueled by another large increase in the number of renter households. However, with rents rising and incomes well below pre-recession levels, the U.S. is also seeing record numbers of cost-burdened renters, including more renter households higher up the income scale.”

More here.








Transfer Payments Boost Personal Income

The news from the Portland Press Herald is that personal income in Maine is up, but mostly due to transfer payments like Social Security and Medicaid.

J. Craig Anderson writes, “Personal income in Maine was up 0.9 percent in the first quarter compared with a year earlier, according to a U.S. Bureau of Economic Analysis report issued Monday.

“Maine’s average personal income growth outpaced that of the nation in the first quarter, led by a spike in income unrelated to wages, such as Social Security and Medicaid. …

“Personal  income growth was led by a 2.2 percent increase in current transfer receipts, which represent money paid to individuals for Social Security, Medicare and Medicaid, General Assistance, insurance benefits and other reasons not related to work. By comparison, workplace earnings increased just 0.9 percent in Maine.

“Nationally, current transfer receipts increased 2.1 percent in the first quarter, the largest increase in five years, according to the bureau. …

“It isn’t surprising that Maine outpaced the nation during a quarter in which income growth was led by an increase in current transfer receipts, said economist Charles Lawton of business consulting firm Planning Decisions in York.

“Because of Maine’s aging population, a higher-than-average percentage of Mainers receive Social Security benefits, he said, so the cost-of-living increase likely had an even bigger impact on overall income growth in the state than it did nationally. And since Maine has fewer working-age residents and lower average wages overall, the more tepid wage growth affected the state less than it did others, Lawton said.” Read more here.