President-elect Barack Obama, as part of the urban agenda that he proposed during his campaign, promises to create a White House Office of Urban Policy, and it can’t come too soon.

We have written often about the neglect, no longer benign, that has characterized the federal governments’ relationship with American cities. Routinely ignored although they remain the engine for the U.S. economy, there’s hope that cities will return prominently to the agenda of this nation, and that new federal policies will be defined by seeing cities as places of opportunities rather than problems. More importantly, we hope that there is a greater understanding of the realities of our national economy – so goes our cities, so goes our country.

We were reminded again of the need for more leadership by the federal government – in areas like land banking – about three weeks ago in a briefing about foreclosures in City Hall. It was sobering. From 2000 until now, there were 58,000 foreclosures in Memphis.

The Main Points

The first point: we were already in trouble before the Wall Street meltdown so unless something fundamental is done, things could get even worse.

The second point to keep in mind: national data indicate that the public cost of each foreclosure is $20,000. In other words, the cost of the foreclosure crisis in Memphis has been about a $1.2 billion problem since 2000.

Memphis Mayor Willie W. Herenton said that Memphis is in the top 10 of U.S. cities in foreclosures, and Shelby County Mayor AC Wharton described the situation as the “perfect storm” and said if there is an issue that should unite city, county and state governments, it should be attacking the sources of predatory lending.

A Biblical Struggle

“It’s a David and Goliath struggle,” the county mayor added, calling strongly for a class action lawsuit against the most egregious subprime lenders. “It’s about making a social statement, not just a legal statement.”

Mayor Herenton called for actions to “freeze” foreclosure actions until homeowners are given more time to work out the financial problems caused by the “current un-level playing field.”

The “to do list” developed by local government and housing organizations as a result of this crisis includes the coordination of databases that are now disparate, development of a response team that targets geographic areas, recycling foreclosed properties, stronger code enforcement for vacant properties, counseling and foreclosure mitigation, mortgage assistance and developing a model intervention program with the $12-14 million received by city and county governments from the federal government.

Public Impact

The epidemic of foreclosures could not have come at a worse time for local governments. Already faced with predictions of a reduction in the assessed value of property, the local tax base is further eroded by the lost property tax revenues from the foreclosures.

Government public services are also affected, because foreclosures tend to cluster, and high subprime lending in a neighborhood predicts high foreclosure in about eight out of 10 neighborhoods. We’ve mentioned previously that in more than a dozen Memphis city schools, 50% of the students move during the year, yet another effect of the foreclosures.

In Shelby County, one-third of all zip codes had subprime lending rates of at least 50% in 2006, and for zip codes within Memphis, it was one out of two.

Trouble Signs

And if you think things are improving, in the past two weeks, The Daily News reported that there have been 542 foreclosure notices.

Since 2000, Frayser has led Memphis in the number of foreclosures – 5,743, followed by Westwood with 5,107 and Parkway Village with 4,305. However, no area of Memphis is immune although downtown was at the bottom of the list with 179 foreclosures.

Foreclosures By Zip Code

Here’s the zip codes and the number of foreclosures:

Zip code 38127 – 5,743 foreclosures

38109 – 5,107

38118 – 4,305

38128 – 4,209

38141 – 3,560

38111 – 3,367

38106 – 3,282

38116 – 3,281

38115 – 3,239

38114 – 2,753

More

38125 – 2,514

38108 – 2,097

38122 – 2,031

38107 – 1,883

38134 – 1,674

38018 – 1,394

38112 – 1,373

38016 – 1,361

38133 – 1,034

38135 – 1,001

More

38117 – 998

38104 – 928

38119 – 683

38126 – 295

38105 – 284

38120 – 253

38103 – 179

38131 – 1

The Deadly Count

As for the trend line, it’s moving up. With a bullet.

In 2000, there were 4,425 foreclosures. In 2001, 4,753 foreclosures. In 2002, 6,272 foreclosures.

In 2003, 6,854 foreclosures. In 2004, 7,115 foreclosures. In 2005, 7,746 foreclosures. In 2006, 9,837 foreclosures

In 2007, there have been 8,046 foreclosures; and this year, more than 4,000 foreclosures so far.