I had a great meeting with the foreclosure recovery folks today and thought I would share. The meeting was great because I was able to share what I had learned through my research with folks who can actually benefit immediately from any new information that I can provide. In return, these folks who are in the trenches every day gave ME a lot of valuable insight to help me improve my research.
What I Told Them
The objective of my talk was to share what I have found so far when trying to answer the question, “what has been the impact of the Deepwater Horizon oil spill on foreclosure filings in the Alabama coastal region?” I was hoping to provide them with some hard numbers so that they could anticipate the change in their workload due to the disaster. I had hoped that I could tell them how closely correlated foreclosures were to economic factors and then link this back to the economic impact of the spill. Instead, (my colleagues and) I found that the linkages just aren’t there. I told the group that I didn’t know if we didn’t find it because it’s not there or if it’s still too early to tell. My hunch is that in Alabama, at least, it’s not there. It probably won’t be until the latter half of this year before we know for sure, but in Alabama, I think the effect on foreclosures will be negligible. Why? Well, in Alabama, there just isn’t enough income tied to Gulf-related industry. So, even if that industry takes a hit, I doubt that the impact will be great enough for it to affect foreclosures. Second, even without regard to this particular incident, we just didn’t see that the economic factors that we tested (changes in unemployment, interest rates and house prices) drive foreclosures. My current thinking is that this is because Alabama is just different in some ways. To test my theory, we’re now taking a look at the other Gulf states (Florida, Louisiana, Mississippi and Texas) which all, coincidentally, have many more jobs tied to Gulf-related industry. If I’m right (that having just two coastal counties and less than 2% of the population working in Gulf-related industry isn’t enough to drive foreclosures after a Gulf disaster), we’ll see foreclosures rise in Louisiana where over 1% of the state population works in Gulf-related industry or in Florida where over 140,000 people are employed in Gulf-related industry. If I’m right, we’ll see a jump in foreclosures after the spill even after accounting for all of the other causes for foreclosure.
What They Told Me
This was a well-attended working meeting of practitioners and agency folks who are in the business of trying to help homeowners deal with foreclosure regardless of where they are in the process. These folks help with prevention, intervention AND recovery so they know what’s going on ‘on the ground’. They looked at my data and filled in a number of gaps for me. When I told them that I expected unemployment to rise in Alabama’s coastal counties after the spill, they told me that many of the folks who lost income are not captured by the Bureau of Labor Statistics’ unemployment figures. They told me that many of the independent fisherman and tour operators were sole proprietors who don’t hit the unemployment rolls when they lose their livelihood. However, they also told me that even if they were, many are not homeowners, so that loss of income would not result in foreclosure. They also told me that many of the folks there have not fully recovered from the devastation of Hurricane Katrina in 2005. In fact, when the topic of Hurricane Katrina came up, a lively discussion ensued. A representative from the Department of Housing and Urban Development who was in attendance told me that they are finding that just as post-Katrina, many folks who are foreclosed on owned homes that were already in disrepair. These disasters seems to exacerbate already bleak situations. That is, the disaster doesn’t drive foreclosure, it simply hastens it. My head was whirling with all of this new information. How do you accurately capture the economic impact of a manmade disaster? Can we measure the loss of income (as reported to the IRS) as opposed to an increase in unemployment? Are we analyzing a region where homeownership rates are already low and that is why the impact on foreclosure is negligible? How do we deal with confounding events such as the slow pace of recovery from prior disasters?
I felt as if I walked away with more questions than answers. Did I add ANY value today? I was thinking that I did because I saw several heads nodding and just as I jotted down notes on these additional issues to consider, I could see that they too jotted down notes about my predictions. Still, I wished that I had given them more to take back to their respective agencies. The meeting organizer was from the Federal Reserve and was hoping to publish a summary of our findings in the magazine that they distribute to their community partners. I scratched my head wondering if that even broader audience would find value in my message. As I packed my things and prepared to head back to the university, a gentleman from arguably the largest community development network in the country asked for my business card. He asked if I would be interested in presenting my work at their annual training meeting this summer to an audience of 1,500 to 2,000 community leaders and developers from across the country. I was humbled and honored. I think today was a good day.