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.
It is not just Trenton that Palmer is concerned about. Foreclosure has become a top priority for the U.S. Conference of Mayors, of which he is president and which is holding its winter meeting in Washington January 23-25.
Palmer and other mayors say a mortgage relief plan brokered by President George W. Bush's administration does not help the many people who are already well into the process of losing their homes.
"The federal government response has been anemic," said Mayor John DeStefano of New Haven, Connecticut, where foreclosures rose 80 percent in 2007.
"Mayors are talking to each other about this," DeStefano said. "No one else is going to help these homeowners."
Thomas Cochran, executive director of the mayors' group said foreclosures could become a defining issue for urban leaders, like the AIDS epidemic in the 1980s, which cities were forced to tackle early on when they saw insufficient federal response.
In Trenton, Palmer has focused for years on creating affordable housing for middle-income people, including a collection of attractive row houses in a once-downtrodden area known as the Battle Monument district.
This was the site of the Battle of Trenton, in which the Continental Army under Gen. George Washington won victory after crossing the Delaware River on Christmas night in 1776.
The mayor fears that even neighborhoods like this one, where mortgages are mostly strong, will suffer as foreclosures rise, homes are shuttered, crime festers and property values fall. Police have reported a rise in copper pipe thefts around the city, for example, as vandals strip unoccupied homes, Palmer said.
"This cuts across every area of our economy, of the services we'll have to provide," Palmer said. When homes are boarded up, neighbors complain of blight such as piles of trash and overgrown grass, he said. "Who's going to cut it? The city will have to."
As mayors confront the problem, some are aiming squarely at mortgage companies. The city of Baltimore has sued Wells Fargo & Co, accusing the lender of preying on minorities in its lending practices. The company denies the allegations.
Elsewhere, cities such as Cleveland and Buffalo, New York, are trying to hold lenders responsible for the maintenance of homes in foreclosure. Cleveland has sued companies including Wells Fargo and Merrill Lynch & Co Inc seeking to recover hundreds of millions of dollars for lost property tax revenue and the clean-up of abandoned houses.
"For some cities, this is going to be a crisis," said John Vogel, a professor at Dartmouth College's Tuck School of Business, who studies real estate. A city such as New York "is doing so well on the commercial side and revenue collection, they will be able to deal with this pretty comfortably, whereas a city like Trenton does not have the same sort of resource base."
Mayor Palmer plans to meet in Trenton on January 14 with representatives of major mortgage lenders and community and faith-based organizations in an effort to help city homeowners on the verge of losing their homes.
He's hopeful there are local solutions that other cities could adopt. One idea is for community development organizations to buy homes in foreclosure and lease them to the former owners while helping them prepare to repurchase them, something already being done on a small scale in his area.
"It's going to require a lot of creativity, but the most important thing is the mayors in the country and myself have the will to do this," Palmer said.
Reporting by Martha Graybow; Editing by Eddie Evans