(January 25, 2008) — The U.S. mortgage crisis is affecting home values in low-income Rochester neighborhoods and inner ring suburbs, advocacy groups said Thursday at a forum held to celebrate the 30th anniversary of the federal Community Reinvestment Act.

Foreclosures in Rochester rose from 539 in 1995 to 1,206 in 2000 and have remained at approximately that level, with 1,222 foreclosures in 2006, said Bret Garwood, director of development services for the city.

Initially, the foreclosures were on Federal Housing Administration-backed loans but now they are mostly subprime loans, he said.

According to Diane Thompson, an advocate for the poor who worked with residents of East St. Louis, Ill., home values drop 1.1 percent when there is a foreclosure within one-eighth of a mile.

Another speaker, Barbara van Kerkhove, researcher and policy analyst for Empire Justice Center, said high-cost subprime loans were made throughout Rochester between 2004 and 2006, concentrated in the northeast and southwest sections.

There were 1,100 high-cost loans in the city in 2004 vs. 1,962 in 2006, she said. In several neighborhoods, more than 50 percent of the loans in that period were high cost, said van Kerkhove, who added that there were also many such loans made in inner ring suburbs.

One-in-five subprime loans made in 2005 and 2006 will end in foreclosure, said Ali Solis, vice president of public policy for Enterprise Community Partners, based in Washington, D.C. "We have a crisis of magnum proportion we have never seen before," Solis said.

Rochester is monitoring the problem, especially with adjustable-rate mortgages as they reset, Garwood said. Subprime loans are often this type.

The forum, sponsored by Empire Justice Center, a nonprofit law firm that helps low-income people, invited national and local advocates to speak about the issue.

The Community Reinvestment Act requires lenders to help low-income areas of the cities where they do business.

Mosie Hannah, senior vice president and community impact regional manager at Bank of America, attended the seminar to learn about the current mortgage situation.

Rochester may be in better shape than many cities because of the community organizations involved in preventing foreclosures, Hannah said.

"We're very fortunate to have the collaboration in Rochester," he said.

MCHAO@DemocratandChronicle.com