Bridges - Autumn 2008

8/9/2019 Bridges - Autumn 2008

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PUBLISHED QUARTERLY

BY THE COMMUNITY

development

DEPARTMENT OF

THE FEDERAL RESERVE

BANK OF ST. LOUIS

L i n k i n g L e n d e r s A n d C o m m u n i t i e s FALL 2008

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By Lisa Locke

Sae and aordable hous-

ing is a pressing issueor many residents in the

Over-the-Rhine neighborhoodo Cincinnati. The low-incomecommunity has more thanits air share o neglected andvacant buildings. One orga-nization, Cornerstone Corp.or Shared Equity, is not only

providing single-amily hous-ing, but much-needed rentalunitswith a twist.

Cornerstone was establishedin 1986 as a community devel-opment loan und. The sociallyresponsible loan und attractsinvestments rom individualsand organizations, pools the

unds and then make loans tononprot community-basedhousing developers.

Over the last 20 years,Cornerstone has helped 30

nonprot organizations develop

more than 300 housing unitsboth or sale and or rentor low-income households.

Although the loan und hasbeen successul in produc-

ing aordable housing units,

Margery Spinney, executivedirector o Cornerstone, recog-nized that not all low-incomerenters want to be homeown-ers. She also recognized that

renters still deserve sae, decentand aordable housing andopportunities to accumulate

assets. As such, she developedan innovative concept calledRenter Equity, a program thatenhances the nancial securityo low-income renters.

The Cornerstone RenterEquity program started in 2002in the Over-the-Rhine neighbor-hood. It is a unique model in

which low-income renters buildwealth, develop ownership skillsand help stabilize their com-munity. In addition, propertyowners benet rom the RenterEquity program because it helpsincrease property values, attractsmore stable residents andgenerates greater interest in the

property and neighborhood.So what is Renter Equity?Each month that residents

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Landscaping at St. Anthony Village in the Over-the-Rhine neighborhood o Cincinnati ismaintained by residents.

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participating in the programulll the requirements otheir lease agreement, whichincludes paying their rent ontime, attending monthly resi-dent meetings and maintainingdesignated common areas onthe property, they earn equitycredits toward a cash payment.

Carol Smith, CornerstoneRenter Equity coordinator, saysnding residents to participate

in the program is not dicult.Its not about changing people,but about providing an oppor-tunity or individuals who havealways done what is requiredin the Renter Equity program,she says.

Each equity credit earnedhas an equivalent cash value.

For example, the rst monthscredit has a value o $57.78.Twelve months o credits havea cumulative value o $715.98and 24 months o credits have acumulative value o $1,483.73.

Ater ve years, residents arevested, and the credits can beconverted to a cash payment

through Cornerstone. Mosto the residents average about$3,500 in Renter Equity creditsin ve years, Spinney says.

Funding or Renter Equitycomes rom a variety o sources,such as developers ees,management ees, grants andreserves saved by keeping the

occupancy rate high.Although Cornerstonedoes not stipulate in the leaseagreement what residents canpurchase with their earned

equity, the company encour-ages residents to use the moneyin ways that will improve theirlives, such as making a downpayment on a house, starting abusiness, continuing their edu-cation, paying o debt or justcontinuing to save. Residentscan accumulate as much as$10,000 in equity credits over10 years.

Another innovative compo-nent o the Renter Equity pro-gram is the ability or residentsto borrow against their cred-

its, even beore they are ullyvested. The concept is similarto a home equity loan. Equitycredits are used as collateral.In the rst year o residency,households can borrow theequivalent o one months rentat a zero percent interest ratewith a 12-month repayment

schedule. In years two throughve, households can borrowup to two months o their rent.Residents who are ully vestedcan borrow up to 80 percent otheir earned equity credits.

Sharon Jones, a six-yearresident, said the RenterEquity program has been a

dream come true. Jones hasborrowed against her equitycredits or her daughters col-lege tuition. Other typical useso the loans are or short-termemergencies, such as medi-cal expenses, car repairs, newappliances and as an alternativeto high-cost payday lenders.

Currently Cornerstone Corp.or Shared Equity has twoRenter Equity communities andis developing a third commu-nity. They are all located in the

Over-the-Rhine neighborhood.The rst Renter Equity com-

munity, St. Anthony Village,was completed in 2002 andreached the ve-year milestonein June 2007. It oers 22 two-and three-bedroom apartments.Residents o St. Anthony Villagehave earned almost $40,000 innancial equity.

The second Renter Equitycommunity, Community

Views, was completed in 2005.It has 14 apartment units,which were occupied as soon

as construction was completed.The third community, Friars

Court, is under construction,with a target completion dateo June 2009. Friars Courtwill add 26 units to the RenterEquity program. As the ownerand developer o Friars Court,Cornerstone is continuing its

revitalization eorts in Over-the-Rhine but with another newtwist: The company is employ-ing and training residents romthe community. The traineesare learning carpentry, drywalling, painting and otherbasic skills necessary to obtainemployment with other con-

struction companies once theFriars Court project is complete.

For more inormation on theRenter Equity program, visitwww.cornerstoneloanund.orgor send an e-mail to [email protected].

Lisa Locke is a community develop-

ment specialist at the LouisvilleBranch of the Federal Reserve Bankof St. Louis.

continued from Page 1

r rwaov-h-rh:

Wha oc Wa

Over-the-Rhine is a neighbor-

hood in Cincinnati, Ohio, that

is rich in history and tradition.In the late 19th and early 20th

centuries, the neighborhood

became home to many o the

German immigrants settling in

the United States. Historians

recall the neighborhood during

these early days as thriving,

densely populated, architectur-

ally elegant and as a center o

social and cultural activity.

Over-the-Rhine as knon orits grand Italianate structures,

three- to ve-story ro houses,

restaurants, retail shops, grocery

stores, churches and theaters.

The socioeconomic status o the

neighborhood as diverse, made

up o ne immigrants looking or

ork and oners o various types

o businesses.

By the late 19th century, the

Over-the-Rhine population asalmost 45,000. As the city o Cin-

cinnati continued to gro, the eco-

nomic and demographic character

o the historic neighborhood began

to change. Many o the afuent

residents o the community began

to leave the urban core and move

to the suburbs, stripping the neigh-

borhood o cultural netorks and

vital economic resources.

Today, the historic neigh-borhood still has remnants

o Italianate architecture and

historic churches, but many o

the once-admired buildings have

been abandoned or demolished.


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By Michael Duncan

There are many aspectsto the oreclosure crisis.Initially, the crisis was

seen as limited to cities withsevere economic problems anddeclining population, such as

Cleveland and Detroit. Morerecently, the crisis oten hasbeen characterized as result-ing rom speculative excess inrapidly growing areas, such asLas Vegas, Phoenix, SouthernCaliornia and Florida.

The St. Louis metropoli-tan area has ranked close to

national averages in the severityo the oreclosure problem orthe last year. Problems werenoticed in 2006 in the City oSt. Louis and St. Louis County,but have spread throughoutthe metropolitan area. InDecember 2007, the number osubprime loans delinquent 30

days or more was between 35percent and 40 percent or eacho the large counties (Jeerson,Franklin, St. Charles andSt. Louis counties) and the cityo St. Louis in the Missouri sideo the metro area.

In St. Louis County, the larg-est county in the St. Louis area,

the epicenter o the oreclo-sure crisis is ound in neitherrapidly growing nor rapidlydeclining areas. Rather, it isthe ordinary, unremarkable

postwar suburbs o northeastSt. Louis County that have thehighest concentration o ore-closures. The concept o FirstSuburbs has become popularin recent years, reerring tosuburbs that were developed inthe immediate postwar years

and that have now undergonedemographic and economictransitions. My ocus will beon a paradigmatic First Suburbthat has undergone consider-able stress rom the oreclosurecrisis, the northeast St. LouisCounty suburbs.

St. Louis County is notori-

ously ragmented into clusterso small municipalities andunincorporated areas. Thenortheast county study area isbounded by Interstate 270 onthe north, Interstate 70 on thesouth, West Florissant Road onthe west and on the east by thecity o St. Louis and the cities

o Jennings, Dellwood, Belle-ontaine Neighbors, Moline

Acres and Riverview Gardensas well as unincorporatedneighborhoods and containsZIP codes 63136 and 63137.

Row upon row o modestbrick and rame houses tookshape in the late 1940s and

early 1950s, oten on curving,tree-shaded lanes. The rstinhabitants were working-class amilies who had jobs atthe GM plant in nearby north

St. Louis or at Emerson Elec-

tric. They were moving out othe crowded city o St. Louisto live the American dreamin their resh new suburbanhomes. The northeast countypopulation peaked in 1970,with 76,959 residents, o whom97 percent were white. Therst generation grew older,

children moved out, and thepopulation declined to 65,142in 1990. Landmarks such asthe River Roads and North-land shopping centers, the rst

suburban shopping centers

in St. Louis, declined and wereeventually abandoned. TheEmerson Electric world head-quarters, an employment bas-tion, held on as some nearbyemployers, such as the largeGM assembly plant inSt. Louis, let the area.

During the 1990s, a sweep-

ing generational turnovertook place, and a new classo moderate-income, black

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homeowners moved into theseneighborhoods. The popula-tion stabilized at 65,011 in2000. The number o childrenincreased 20 percent and thepopulation over 55 years o agedecreased 25 percent between1990 and 2000. Childrencomprised 32 percent o thepopulation, compared to 25percent or the entire county.Predominantly white in racial

composition in 1990 (61 per-cent), the population becamelargely black by 2000 (69 per-cent). The area grew dramati-cally younger, with two-thirdso working-age adults underthe age o 45 in 2000, and thepercentage o adults with some

college increased rom 36 per-cent to 44 percent rom 1990to 2000. Homeownershipremained strong, with 70 per-cent o homes owner-occupiedin 2000, above the nationalaverage. Blacks now made up59 percent o all homeowners.

In recent years, several majordevelopment projects began.Buzz Westall Plaza in Jenningsreplaced the abandoned North-land Shopping Center, witha contemporary developmentanchored by a Target depart-

ment store and a Schnucks gro-cery store. A ormer drive-inmovie theater became Alexan-dria Place, the rst major inllmarket-rate new residentialproject or miles around. Justto the west, a major redevelop-ment project, NorthPark, will

oer a modern oce mixed-use center that is anticipatedto be the most signicantnew employment center inthe St. Louis metro area. AndExpress Scripts is building anew corporate campus, closelyintegrated with the Universityo Missouri-St. Louis. The arearemains one o promise or theuture o St. Louis.

What was the housing stockthat these young amilies inher-ited? It is remarkably homoge-neous, with the average home in

northeast county built in 1950,having 1,056 square eet o liv-ing space and being appraisedat $76,000 in 2007. St. LouisCounty has many such small-house communities with morethan 100,000 homes that werebuilt beore 1960 and are under1,200 square eet in size.

Post-2000 data are notavailable yet rom the AmericanCommunity Survey or the studyarea. For the larger northeastSt. Louis County area (includingareas north o I-270), however,the 2006 data show a stablepopulation, continued growth inthe population under 18 and in

the black population, and mostnoteworthy, a rapid increase inhomeownership costs. Medianmonthly homeowner costs rose30 percent rom 2000 to 2006,compared to a 20 percentincrease or St. Louis County asa whole, one o the ew indica-tors in census data o the

impending mortgage crisis.Young homeowners (under age35) were most aected.

The rapid growth o subprimelending nationwide ater 2000

aroused both hopes o increasedhomeownership opportunityand ears over predatory andhigh-risk lending practicesamong observers such asEdward Gramlich, ormerlyo the Federal Reserve Board.Subprime lending had grownrom 6 percent to 24 percento rst-lien loans nationwidebetween 2001 and 2006.

Subprime lending alsobecame prevalent in thenortheast county study area.Home Mortgage Disclosure

Act (HMDA) data provide acensus-tract-level view o thequantity o loans rom subprimelenders and high-cost loans.The HMDA data or subprimelending in northeast countyrom 2000 through 2004 showan increasing share o subprimelending or both purchase loans

and renancing (rom 28 per-cent to 42 percent) and a note-worthy increase in volume, rom689 subprime loans in 2001 to1,523 in 2004. The high inter-est rate loan data rom 2005 to2006 show very high levels ohigh interest rate loans during2005 (71 percent) and 2006 (75

percent) or purchase loans. Thedramatic increases in share andvolume o subprime lending arerefected in a signicant increasein sales volume and prices dur-ing the same time period.

Subprime lending pumpedup the housing market innortheast county and across the

country, supporting a markedbut unsustainable increase inproperty values. Average salesprices rose steadily throughoutthe decade, rom an average o


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By Kathy Moore Cowan

Not too long ago, somecolleges and universi-ties had reputations o

being bad neighbors, venturinginto the neighborhoods only togobble up available property orcampus expansions. But times

change, and across the coun-try, academic institutions haveredened their relationshipswith surrounding communi-ties, becoming valuable assetsto community and economicdevelopment.

Since 1995, the number ocollege and university presi-

dents who are members oCampus Compact, a nationalcoalition seeking to advancecivic engagement, has grownrom 400 to 1,100, representinga quarter o all American highereducation institutions. Thispast spring, 27 Tennessee col-lege and university presidents

ormed the Tennessee CampusCompact, becoming the 33rdstate Campus Compact.

It is no surprise that Uni-versity o Memphis PresidentShirley Raines serves on theexecutive board o the Tennes-see Campus Compact. Sinceher tenure at the University

o Memphis, the universityhas ormed partnerships withneighborhood and businessgroups and embarked ona strategy to engage the

community in a new andrereshing way. The universityseorts recently were recognizedby the Carnegie Foundation orthe Advancement o Teaching,receiving the oundations high-est classication or communityengagement.

Most o the universitys workin communities alls under itsEngaged Scholarship initia-tive, an ongoing eort to linkaculty members and studentswith urban, regional, state,national and global communi-ties. The goal is to providereal-world applications in the

urban environment, integratingacademic, economic develop-ment and community-buildingeorts with a ocus on interdis-ciplinary applied research.

Many o the universitysEngaged Scholarship eortshave been in surroundingneighborhoods, known col-lectively as the UniversityDistr ict. For example, stu-dents in the graduate programin city and regional planning

partnered with neighborhoodorganizations, the City oMemphis Division o Housingand Community Develop-ment (HCD) and the Memphisand Shelby County Oce oPlanning and Development toprepare a comprehensive planto guide the growth o the

University District.In another example, uni-versity students worked withthe Mason YMCA to give the1950s-building a much needed

ace-lit. Independent graduatestudent research helped deter-mine what additional activitiesand acilities members wanted.

Architectural students preparedthe designs or the revampedacility. Public relationsstudents developed market-ing materials or a $12 million

und-raising campaign.Yet another example is the

University District Initiative, apartnership ormed to addresssocial, urban design and saetyissues in the area. The part-nership includes aculty andstudents rom every college,senior sta rom the university

administration, city planners,developers, business owners,neighborhood groups and localgovernment representativesrom the city o Memphis andShelby County.

Two o the more ambitiouseorts the university hasundertaken are the University

Neighborhoods DevelopmentCorp. and the Center or Com-munity Building and Neighbor-hood Action.

University Neighborhoods

Development Corp.

In 2003, the University oMemphis partnered with neigh-

borhood leadership to createthe University NeighborhoodsDevelopment Corp. (UNDC),a 501(c)3 nonprot, neighbor-hood-based corporation. An

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Members o the University Neighborhoods Development Corp. (UNDC) discuss construc-tion on Highland Avenue in Memphis, Tenn. Shown are, rom let: Ann Coulter; SteveBarlow, UNDC executive director; Charles Lee; and Peter Moon. UNDC is a nonproftorganization dedicated to improving the University District.


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independent entity, the UNDCsrole is to redevelop and pro-mote the University District asa great place to live, learn anddo business. The UNDC wouldaccomplish this by reinorcingexisting strengths, stimulatingnew public and private invest-ment, and bringing new toolsor development to the market.

One o the rst tasks was todevelop a community and eco-nomic development strategy,closely coordinated with com-munity and university leader-

ship. In 2006, the UNDChired a local architectural andplanning rm to develop aplanned growth strategy. Inthe summer o 2007, SteveBarlow became the UNDCsrst executive director and wascharged with overseeing thestrategy, now called the High-

land Street Master Plan.In the past year, the UNDC,

in collaboration with theUniversity o Memphis, helpeda local developer obtain a taxincrement nance (TIF) districtdesignation, worth in excess o$10 million. Without the TIF,the developer said, he could

not have completed a planned$65-million, mixed-use projectin the University District.

Other accomplishmentsinclude development o a neigh-borhood-based comprehensiveplan, a public art project and aseries o neighborhood beauti-cation eorts. Plans are underway to develop a public-privateland acquisition und and toimplement a National Trustor Historic Preservation MainStreet Program.

The university is a much

valued resource to the UNDC,providing signicant technicalresources. Barlow estimatesthe dollar value o servicesprovided by the university inthe past year alone at approxi-mately $200,000.

Center or Community Building

and Neighborhood ActionNot all o the universitys

Engaged Scholarship eortsare ocused on the UniversityDistrict. Many neighborhoodshave beneted rom the worko the Center or CommunityBuilding and Neighborhood

Action (CBANA). CBANA links

university research with com-munity action. A part o theSchool o Urban Aairs and Pub-lic Policy, CBANA was createdin 2000 as an outgrowth o indi-vidual projects university proes-sors and sta were working onin housing, neighborhoods andworkorce development.

CBANA is a critical resourceand partner to MemphisCDCs, says Emily Trenholm,executive director o the Com-munity Development Councilo Greater Memphis (CDCoun-

cil), a trade organization orCDCs. Its sta works withorganizations on a varietyo projects, such as assetmapping, problem propertysurveys, and analyses o neigh-borhood demographics andreal estate market indicators.CBANAs eorts help CDCs

develop data-driven strategiesand interventions or change.

Phyllis Betts, associate proes-sor, School o Urban Aairsand Public Policy and oundero CBANA, serves as its direc-tor. She is the only Universityo Memphis employee assignedto CBANA. Salaries or all other

sta persons are unded throughgrants. In addition to the Uni-versity o Memphis, HCD is amajor supporter o CBANA.

The ollowing are some othe programs CBANA oers.

Neighborhood-by-NeighborIn March 2008, CBANA,

along with HCD, implementedthe Neighborhood-by-Neighborprogram, the rst citywideproblem property audit initi-ated in Memphis. The goal othe program is to document

blight and vacancy in the hous-ing market through an orga-nized inventory o all propertiesin violation o the citys Anti-Blight Housing Code.

Data collection and volun-teer recruitment is coordinatedby CBANA and the ProblemProperties Collaborative, a

grassroots organization ocommunity-based associations.

The neighbors knowledge othe properties, neighborhoodsand neighborhood resources isimportant, says Tk Buchanan,program coordinator. Their

th f f f hhca a xably hhalh f h c.

f Leveraging Colleges and Universities for

Urban Economic Revitalization: An Action Agenda

At right: Tk Buchanan (standing center) demonstrates how to use GIS hand-held PCsto Frayser residents participating in the Neighborhood-by-Neighbor program.

continued on Page 8



participation is crucial toour success.

CBANA sta train volunteerson common housing code vio-lations and the use o portabletablet PCs with built-in cam-eras running GIS sotware.

Volunteer teams drive downeach street and conduct awindshield survey o theirneighborhoods, documentingblighted properties. A pre-

loaded neighborhood map withsatellite photos allows volun-teers to document where thetroubled structures are and totake a picture.

CBANA analyzes and distrib-utes the data to participatingorganizations, including a copyo the database and a compre-

hensive map o rehabilitationopportunities in the neighbor-hood. CBANA also providesthe neighborhood with techni-cal support in achieving codecompliance through grantapplications, redevelopmentplanning, beautication projectplanning, environmental court

and other creative ways.

Community-Based ResearchFor cash-strapped nonprots,

money or research is an itemthat oten gets cut rom the bud-get, no matter how tremendousthe need. Steve Lockwood,executive director o FrayserCommunity Development Corp.(CDC), says, The data gener-ated at CBANA, particularlythat involving oreclosures andhousing conditions, has been

invaluable in crating our strate-gies to counter epidemic oreclo-sure rates in the community.

Sutton Mora Hayes also hasused CBANA research andresources in her work as execu-tive director o the Cooper YoungDevelopment Corp. (CYDC).They have helped me analyzeoreclosure rates, code enorce-ment problems, and othersocial issues that have directlyimpacted our programming.

Some o the signaturecommunity-based research

programs o CBANA includecommunity/neighborhoodindicators, neighborhoodinventory, asset mapping, com-munity proles and compre-hensive community initiatives.

Student InternshipsCBANA coordinates intern-

ships or graduate and under-graduate students who areinterested in community devel-opment. Students are placed orthe academic year with nonprotCDCs, where they provide tech-nical and research assistance, 20hours a week. In return, internsreceive community development

experience, a monthly stipend,course credit and a tuition eewaiver. In addition to the Uni-versity o Memphis, the programis supported by HCD throughuse o Community DevelopmentBlock Grant unds.

Curtis Thomas, deputyexecutive director or The

Works, a nonprot commu-nity development corporation,was a CBANA intern with theCDCouncil. He researched andmapped patterns o government

inrastructure spending or theCDCouncils Coalition or Liv-able Communities, a group ocommunity associations seekingto create healthy communities

in the Memphis region.Refecting on his experience,

Thomas says, I was exposedto a range o organizations andprograms in the Memphis area,which helped me to develop abetter understanding o the stateo our community and whateorts currently exist. These

experiences were instrumentalin shaping my career path andhave been an invaluable resourcein my role as deputy executivedirector or The Works.

Hayes remembers her daysas a CBANA intern with NewPathways. I received rst-hand knowledge and hands-onexperience while connectingwith key leaders in the commu-nity development industry inMemphis. It was, in part, dueto those connections that I was

hired as the executive directoro CYDC ater I graduated.

Trenholm says interns haveperormed a variety o assign-ments or Memphis CDCs,

rom writing policy manualsand marketing plans to helpingorganize and engage neighbor-hood residents.

And Lockwood says Fray-ser CDC has been ortunateto have had CBANA internsor the last six years. Theyhave been critical in helping

the CDC implement its workplan, he says. Ater receivingher undergraduate degree in

August o this year, FrayserCDCs CBANA intern immedi-ately began working ull timewith them as a homeownershipand oreclosure counselor.

Kathy Moore Cowan is a com-munity development specialist atthe Memphis Branch of the FederalReserve Bank of St. Louis.

F fa:Campus Compactwww.compact.org

Carnegie Foundation or the Advancement o Teachingwww.carnegieoundation.org/classifcations

University o Memphis Engaged Scholarshiphttp://cas.memphis.edu/suapp/

University Neighborhood District Corp.http://cas.memphis.edu/community/undc.htm

University o Memphis Center or Community Buildingand Neighborhood Actionhttp://cbana.memphis.edu


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The Federal Reserve

Board recently approved

a fnal rule or home

mortgage loans. The rule

is intended to provide

better protections or

consumers and acilitate

responsible lending.

The rule amends Regula-

tion Z (Truth in Lending)

and was adopted under

the Home Ownership and

Equity Protection Act

(HOEPA). The fnal rule

largely ollows a proposal

released by the Board in

December 2007, with some

changes that take intoaccount public comments,

consumer testing and

urther analysis.

Importantly, the new rules

will apply to all mortgage

lenders, not just those

supervised and examined

by the Federal Reserve,

says Federal Reserve

Chairman Ben S. Bernanke.

Besides oering broader

protection or consumers,

a uniorm set o rules will

level the playing feld or

lenders and increase com-

petition in the mortgagemarket, to the ultimate

beneft o borrowers.

New Reg Z Rule Applies to All Mortgage LendersThe nal rule adds our protec-

tions to a nely dened category

o higher-priced mortgage loanssecured by a consumers princi-

pal delling:

A lender is prohibited rom

making a loan ithout regard to

the borroers ability to repay

the loan rom income and

assets other than the homes

value. A lender complies, in

part, by assessing repayment

ability based on the highest

scheduled payment in the rst

seven years o the loan. To

sho that a lender violated

this rule, a consumer does not

need to demonstrate that it is

part o a pattern or practice.

Creditors are required to

veriy the income and assets

they rely on to determine repay-

ment ability.

Prepayment penalties are banned

i the payment can change in

the initial our years. or other

higher-priced loans, a prepay-

ment penalty period cannot last

or more than to years. Thisrule is substantially more restric-

tive than originally proposed.

Creditors are required to

establish escro accounts

or property taxes and home-

oners insurance or all rst-

lien mortgage loans.

The rules also adopt the ollo-

ing protections or loans secured

by a consumers principal dell-

ing, regardless o hether the

loan is higher-priced.

Creditors and mortgage

brokers may not coerce a real

estate appraiser to misstate a

homes value.

Companies that service mort-

gage loans may not engage in

certain practices, such as pyra-

miding late ees. In addition,

servicers are required to credit

consumers loan payments as

o the date o receipt and pro-

vide a payo statement ithin

a reasonable time o request.

Creditors must provide a

good-aith estimate o the loan

costs, including a schedule o

payments, ithin three days

ater a consumer applies or

any mortgage loan secured

by a consumers principal

delling, such as a home

improvement loan or a loan

to renance an existing loan.

Currently, early cost estimates

are only required or home-

purchase loans. Consumers

cannot be charged any ee until

ater they receive the early dis-

closures, except a reasonable

ee or obtaining the consum-

ers credit history.

or all mortgages, advertis-

ing rules no require additional

inormation about rates, monthly

payments and other loan eatures.

The nal rule bans seven decep-

tive advertising practices, including

representing that a rate or pay-

ment is xed hen it can change.

The rules denition o higher-

priced mortgage loans ill

capture virtually all loans in the

subprime market, but gener-

ally exclude loans in the prime

market. To provide an index,the ederal Reserve Board ill

publish the average prime oer

rate, based on a survey currently

published by reddie Mac. A loan

is higher-priced i it is a rst-lien

mortgage and has an annual per-

centage rate that is 1.5 percent-

age points or more above this

index, or 3.5 percentage points iit is a subordinate-lien mortgage.

This denition overcomes certain

technical problems ith the origi-

nal proposal, but the expected

market coverage is similar.

One element o the original

proposal has been ithdran.

The ederal Reserve Board had

asked or public comment oncertain requirements pertain-

ing to so- called yield-spread

premiums. During the interven-

ing period, the Board engaged in

consumer testing that cast signi-

cant doubt on the eectiveness

o the proposed rule. As part o

its ongoing revie o closed-end

loan rules under Regulation Z,

hoever, the Board ill consider

alternative approaches.

The ne rules take eect on

Oct. 1, 2009. The single excep-

tion is the escro requirement,

hich ill be phased in during

2010 to allo lenders to estab-

lish ne systems as needed.


10/120L I N K I N G L E N D E R S A N D C O M M U N I T I E S

The region served by the Federal Reserve Bank of

St. Louis encompasses all of Arkansas and parts of Illinois,

Indiana, Kentucky, Mississippi, Missouri and Tennessee.

SPANNING tHe regioN

Kentucky Sets Up Center

or Homeowners in Trouble

The 2008 Kentucky GeneralAssembly has established theKentucky HomeownershipProtection Center to address

the states oreclosure issue.The center provides supportand guidance to homeownerswho are in deault or in dangero deaulting on their mort-gage loan.

The center is administeredby the Kentucky HousingCorp. (KHC), which will collect

data or the governors oce.KHC has created a reerral

system in conjunction withservice providers in counselingand Legal Aid. Homeownerscan call a toll-ree number ithey need help. The number is1-866-830-7868. Inormationand resources or Kentucky

homeowners also are availableat www.ProtectMyKYHome.org.The center is a joint eort

o the Department o FinancialInstitutions, KHC and manyother organizations acrossthe state.

Beneft Bank o Arkansas

Opens Argenta CDC Site

The Benet Bank o Arkansasrecently opened a new site at

Argenta CDC in North LittleRock, Ark.

Benet Bank is a $1.4 mill ionprogram unded through Tem-porary Assistance or NeedyFamilies. Its purpose is to pro-vide convenient oces whereamilies can go to learn about

benets that may be availableto them.

Each year in Arkansas, about$280 million in benets andtax reunds, most o whichare ederal, go unclaimed.The program emphasizes theEarned Income Tax Credit,ood stamps, Transitional

Employment Assistance andmedical benets, includingMedicaid and ArkKids B.

The Benet Bank is a jointeort between the state o

Arkansas and the ArkansasInteraith Conerence in part-nership with the Department o

Workorce Services and Depart-

ment o Human Services.Benet Bank is oering thisree public service rom 9:30a.m. to 4:30 p.m. Mondaythrough Friday by appoint-ment only at Argenta CDC, 401Main St., Suite 200, in NorthLittle Rock. Clients needingappointments outside the listedhours o operation will beaccommodated.

For additional inormation,call 501-374-0622 or [email protected].

Organizations interested innding out how to support thiseort or host a site should goto www.thebenetbank.com.Oces can be located in anypublic place where a computer

and Internet access are available.The Benet Bank o Arkansas

also has sites in Hempstead,Izard, Mississippi, Mont-gomery, Phillips, Pulaski and

Washington counties.

Credit Card Solicitations Limited

on Tennessee Campuses

Acquiring credit cards maybe a lot less tempting to collegestudents in Tennessee since anew law went into eect July1, 2008. The law limits theamount o soliciting companiescan do to get students to opencredit card accounts.

The new law states that:

WheninstitutionsoftheUniversity o Tennessee orthe state board o regentssystems collect personalinormation rom studentsor campus directories, theymust include a section wherestudents can indicate theydo not want to receive credit

card solicitations.

Creditcardissuersmaynotrecruit potential custom-ers on campus, at school

acilities or through studentorganizations. An amend-ment to the law allows themto recruit on days whenathletic events occur, as longas it is in accordance with

university policies.

Recruitersmaynotofferpro-motional incentives to stu-dents on campus or at schoolacilities to persuade them toapply or a credit card.

AnyfundstheUniversityo Tennessee or state board

o regents systems receivesrom the distribution and useo credit cards by studentsand how the unds werespent must be reported annu-ally to the select oversightcommittee on education.

The law responds to concerns

about students acquiring creditcard debt beore graduatingrom college. By the time col-lege students reach their senioryear, 56 percent o them ownour or more credit cards, withan average balance o $2,864,according to Nellie Mae, a SallieMae student loan company.


11/12

L B C


12/12

Save the Date! April 2224, 2009

Chase Park Plaza St. Louis, Mo.

Presented by the Federal Reserve Bank of St. Louis

Community Development Ofce

The theme of the 2009 Exploring Innovation conference is Innovation

in Changing Times. Community development is facing unique challenges

caused by changing economic conditions. This conference will focus on

resiliency, sustainability and innovative programs that can improve your

organizations performance and have a positive impact on your community.

Registration will begin in January 2009. Watch your mail and our web site for

updates. www.exploringinnovation.org

Innovation: Anyone can do it!

A Conference on Community Development

Exploring Innovation

A new report from the Federal Reserve Bank of St. Louis

looks at local business cycles in 30 major cities and how they

inuence crime rates. The report, written by Fed economist

Thomas A. Garrett, includes data for four cities in the Banks

district: St. Louis, Little Rock, Louisville and Memphis.

Garrett will give presentations on the report on the

following dates:

Oct. 29, 2008 Nov. 20, 2008 Dec. 3, 2008 Dec. 9, 2008

St. Louis Little Rock Louisville Memphis

Register online at www.stlouisfed.org/community.

Local Business Cycles

and Crime Rates

Post Oce Box 442St. Louis, MO 63166-0442

PRSRT STD

U.S. PoSTage

paid

ST. LoUiS, Mo

PeRMiT No. 444

Bridges - Autumn 2008

Documents

Transcript of Bridges - Autumn 2008