Today the Federal Reserve cut interest rates by .75 of a percentage point. Everywhere you look, the subprime lending crisis appears to be hurtling the US into a recession. Newspaper stories talk about cities having to deal with epidemics of foreclosures. While all of this is true, the whole thing is a useful exercise in looking at where the media priorities of the big national newspapers lie. Because, while cities across the Country are certainly experiencing high levels of foreclosures, in reality, they are not much higher than they have been for years. In other words, yeah, subprime lending is hurting us, but, it has been hurting us for plenty long before now.

One way to measure foreclosures is to look at foreclosure filings per 1000 owner-occupied homes.

These are the rates of foreclosure in Philly per 1000 owner-occupied homes (2000-2003 numbers here):

2000: 14.6
2001: 17.1
2002: 18.2
2003: 18.1
2004: 16.1
2005: 15.9
2006: 16.4

I don't have 2007 numbers, but, I suspect they will not be higher than 2002-2003, when the wild-wild west world of 1998-99 loans were all coming through the foreclosure pipeline. Does that mean Philly is not hurting? Certainly not. But simply, it is nothing new. For example, in 2005, I rode around Philly with a reporter who wrote this:

PHILADELPHIA -- To walk Thayer Street in northeast Philadelphia is to count, door by door, the economic devastation afflicting a working-class neighborhood. On a single block, 18 of the 42 brick rowhouses have gone into foreclosure in the past three years.

There's Marciela Perez, who fell ill with cancer, lacked health insurance and stopped making mortgage payments. Barrel-chested Richard Hidalgo, who got divorced and could no longer make his monthly nut. And Mike O'Mara, a rawboned and crew-cut truck driver who took on too much debt, lost his job and fell behind on his mortgage.

"Mortgage companies convinced us to refinance, and each time our bill went up," O'Mara said as he surveyed his narrow street from his shaded front porch. "You fall behind and they swoop down on you."

Philadelphia, its suburbs and indeed much of Pennsylvania have experienced a foreclosure epidemic as low-income homeowners take on mortgage debt they cannot afford. In 2000, the Philadelphia sheriff auctioned 300 to 400 foreclosed properties a month; now he handles more than 1,000 a month. Allegheny County, which includes Pittsburgh, had record auctions of foreclosed homes, and officials speak of a "Depression-era" problem. The foreclosures fall particularly hard on black and Latino families.

In a TRF study on Predatory Lending (full disclosure: I worked on both reports), for example, one neighborhood that was closely examined- Harrowgate- had about 173 foreclosures per 1000 owner-occupied properties for the years 2000-2003. To me, at least, that is a stunning amount of foreclosures, and we are talking about a time period from up to eight years ago.

Because of the advocacy community in Philly- groups like PUP, CLS, ACORN, etc., because of a progressive minded Secretary of Banking under Rendell, because of having TRF located in Philly, because of the Daily News and Marian Tasco taking on predatory lending in... 2001, this really, truly, is nothing new. Yet, to read the New York Times, this phenomenon is like nothing before.

Part of this is that the pain of subprime lending is reaching new communities, and that the Wall Street house of cards is falling, so it is having a more mainstream effect. However, even that could have been forecasted, considering that it has long been routine for the biggest subprime lenders to go out of business after ravaging communities. The difference now is that mainstream lenders- Countrywide, Citi, etc., and mainstream investors- Bear Sterns, Morgan Stanley, etc have woven themselves deep enough into the morass, that just about everyone is paying attention.

However, for the average Philadelphian, has much changed? No. The crisis that we had before is the same crisis we have now. The only difference is now, the national media is 100 percent fixed on the problem.

But, Philly still has a great predatory lending bill on the books. All that would have to happen for it to take effect would be for Dwight Evans and Vince Fumo to undo Act 55- the State preemption bill. What do you say, fellas? Want to undo some of the damage you wrought?

Brady wrote earlier about the need for a well-stocked rescue fund, and talked a little bit about why everyone should care about the crisis in subprime lending.

First though, let me just say that this is not new. In fact, the scope of the crisis in Philadelphia does not even appear to be all that changed from a year ago. It was high then, it is high now.

Foreclosures in Philadelphia skyrocketed about 10 years ago, to thousands per year. Any rise in foreclosures in the last year here is really nothing compared to the growth that we had from the mid-1990s to the early part of this decade. The reason you are hearing about it now is simply because Wall Street is now being hit by the crisis.

So, again, people in Philly have been getting slammed by subprime lenders for years. And much of that is because Dwight Evans and Vince Fumo killed the City's predatory lending bill. We can talk about how much blame regulators should get for this crisis (a lot), or Wall Street should get (a lot), but in Philadelphia we had a great bill, and it was crushed by our own legislators. The pain of a lot of homeowners simply would not exist in Philly if they didn't do the financial services industry's bidding back in 2001, and made sure there was a big 'open for business' sign for crappy lenders.

Anyway, back to why everyone should care, aside from basic morality: If you are a homeowner, a foreclosure in your neighborhood costs you money. Ira Goldstein (my sometimes boss) of the Reinvestment Fund and Dick Voight of EConsult conducted a study in Philadelphia to determine, other factors controlled for, whether a foreclosure affects surrounding home values. They found that for each foreclosure within 1/8th of a mile (or roughly one block) of your home, you lose 1 percent of your value. Considering that many blocks have upwards of 5 or more foreclosures, that is a very significant loss of value. (There is an outline of the study here.)

And, Dan Immergluck conducted a study in Georgia that found very similar results. There they found each foreclosure within 1/8th of a mile costs a property 0.9 percent of its value. (And they also found, unsurprisingly, increased crime.) Immergluck has, I believe, started to find similar results in other studies, as well.

Which is to say that this may seem like an abstract problem. But in all but very few neighborhoods in the City, there are a ton of foreclosures. And each one is yanking at the pocket of Philadelphia homeowners.