U.S. mayors face test of spreading foreclosures

By Martha Graybow

TRENTON, New Jersey (Reuters) - Mayor Douglas Palmer, meeting with visitors at City Hall, points to a large map peppered with dark dots. Each one represents a home or group of homes on the verge of foreclosure, and there are dozens all over the city.

The dots represent only those properties that the sheriff's department of surrounding Mercer County has identified as being at risk. Many more they don't even know about, Palmer said.

"Some people are even afraid to talk about it," he said of homeowners facing skyrocketing mortgage payments. "Half of them don't even call their lender when they run into problems, so they try to fly under the radar screen, which is the worst thing you can do."

The challenge, said Palmer, is to prevent more homes from ending up as specks on the map, but the resources at his disposal are limited.

The site of a pivotal battle in the Revolutionary War, this port city more recently has struggled with drugs, violent crime, joblessness and other urban woes.

The latest crisis threatens to derail years of revitalization under Palmer, a four-term incumbent and the first black mayor in a predominantly black city of 85,000 people.

Like many U.S. cities, it has seen foreclosures surge as people who bought homes in a real estate frenzy in the last few years face mortgage payments that have reset to higher rates they cannot afford.

More than 600 properties went into foreclosure or came under threat of imminent foreclosure last year, up from 421 in 2006, according to the mayor's office, collating data from a number of sources. Those numbers are set to grow this year. As of December, the sheriff's office had identified 260 properties in danger.