Speculators, loan schemes cause housing foreclosures

She signs are everywhere in Cincinnati's poor and working-class neighborhoods. "Cash for Homes." "Quick Closing." "No down payment needed."

These signs sprouted throughout Cincinnati as the city struggled with a record foreclosure rate over the past four years. When set out to investigate the impact of these loan defaults, I uncovered a handful of questionable housing practices that many community leaders cited for the rapid decline of some working-class neighborhoods. The result was a two-day series in The Cincinnati Enquirer, "Home Schemes, Broken Dreams."

I focused on Hamilton County because it's the region's core with more than 800,000 residents and has a foreclosure rate far surpassing suburban counties. It also shares many of the urban woes of aging cities in the East and Midwest - population loss, diminishing tax base and, in some neighborhoods, deteriorating housing.

My original plan: analyze home forfeitures by community to determine which areas were hit hardest. The data was easy enough to get. The Hamilton County Clerk of Courts provided a spreadsheet of more than 11,000 foreclosure case filings from 1999 through 2002.

The data included the lender, the property owner and date of foreclosure. Yet one key piece of information - property address - was absent in nearly 1,000 cases. So I set off on the laborious task of pulling each foreclosure case file via the court clerk's Web site to compile a complete list of property addresses. That was the only major glitch in assembling a useful database.

From there, I imported the data into a mapping software program and began tracking trends by community. While wealthier, predominately white communities were largely untouched by the foreclosure spike, many city neighborhoods and older suburbs ringing the city were decimated. During a period of unprecedented prosperity, African-American communities had the highest loan default rates with up to eight foreclosed homes per block in some areas.

Real estate speculators

With the help of CAR reporter John Byczkowski, we were able to determine that about one of every five defaults came from loans written by subprime lenders. These lenders specialize in loans to people with weak credit or low income.