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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.
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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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Study area
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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.
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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.
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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.
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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