The housing and mortgage industries should look to Detroit as they work to address the nation’s foreclosure crisis. Detroit shouldn’t be viewed as a model of success, however. The city has been decimated by the decline in the auto industry, high crime and unemployment, a declining population and the foreclosure crisis. “Look at how to use Detroit, not as a model, but as a laboratory to try different things and different approaches and different concepts and in which everyone participates,” said Stephen Bancroft, executive director of the Detroit Office of Foreclosure Prevention and Response, an independent think tank working to reduce the effects of the foreclosure crisis in Detroit, now in its second full year. Bancroft and others spoke about urban renewal Thursday during SourceMedia’s annual mortgage servicing conference in Dallas. Big Rust Belt cities like Chicago, Detroit and Cleveland have had entire neighborhoods shattered by foreclosures. Detroit is trying to get a handle on its blighted and declining neighborhoods, Bancroft said. The arrogance of the once mighty Motor City is long gone and the city is working hard to get in front of its problems, he said. “Vacancies are the single biggest issue outlining the problems we face,” Bancroft said. “Whatever can prevent that house … from going vacant solidifies the neighborhood.” Once a house goes vacant in Detroit, it immediately gets stripped of anything of value, he noted, and the decline sets in. Sam Bready, executive vice president at a small specialty servicer called Home Servicing, said his company is working to keep low-value urban homes like those in foreclosure-ravaged Detroit occupied with homeowners. “We keep people in these houses by keeping payments affordable,” Bready said. “We are writing their balances down, and giving them an ownership interest again.” Part of the problem with low-value homes stuck in the foreclosure crisis, however, is that tax liens on these properties can exceed the value of the home, panelists noted. And counties, who oversee the tax liens, are selling the homes to get the taxes paid off without participating in renewal efforts to keep the homes occupied. Servicers, meanwhile, are sometimes limited in what they can do by their investors, Bready said. “We don’t always own the loans so we are constrained on that point,” he said. “On some level it’s always the right thing to do, but on an economic level it’s going to be really hard to do,” Bready said of urban renewal efforts. Geoff Smith, senior vice president with the Chicago-based Woodstock Institute, said that while some have suggested donating such properties in Chicago to the city, that presents its own challenges. Maintenance, security and liability become issues for the city, he noted. Some of the properties are in extremely poor condition. Minority communities, where much of the foreclosure blight exists in Chicago, already distrust the local government and any plans by the city to seize property and potentially redevelop it will be viewed suspiciously, he said. Bancroft detailed several plans his think tank is working on in Detroit — from letting previous owners stay in their foreclosed home for a set time for a fee to a pre-foreclosure program designed to prevent vacancy. Detroit even plans to bulldoze blighted neighborhoods and set up an urban farming program. Bancroft said he wants servicers to look “beyond just ‘how do we get rid of this (foreclosure)’ and the urban renewal possibilities.” Write to Kerry Curry. Follow her on Twitter @communicatorKLC.