Using resources afforded under the federal Neighborhood Stabilization Program, a new nonprofit organization is bringing together mortgage companies, philanthropic organizations and community groups in an effort to rehabilitate foreclosed properties.
So far, more than 100 hard-hit communities in 35 states have signed up for services from the National Community Stabilization Trust, which facilitates the transfer of foreclosed property from financial institutions to locally designated community housing providers. The housing providers then renovate the housing for new homeowners and renters.
This effort will help speed use of $6 billion in new federal NSP resources that the U.S. Department of Housing and Urban Development (HUD) is making available to localities and public-private partnerships, the organization says.
‘Bringing together nonprofits, government and the private sector, we have built a powerful public-private partnership to revitalize communities and homes undermined by mortgage defaults and foreclosure,’ says Tom Bledsoe, board chair of the Stabilization Trust and CEO of the Housing Partnership Network.
Bank of America, Citi, Fannie Mae, Freddie Mac, GMAC, JPMorgan Chase, Nationstar, Saxon and Wells Fargo are among a growing list of financial institutions working with the Stabilization Trust to convey foreclosed property.
In May, Bank of America began allowing NSP grant recipients to review its real estate owned properties (REOs) before they are listed on the Multiple Listing Service or other public sites. That approach has been adopted by the Stabilization Trust in its First Look program, one of the group's two main acquisition programs.
The First Look program gives buyers the opportunity to inspect and acquire foreclosed and vacant properties before they are listed for sale through traditional means. The program results in an adjusted purchase price that reflects savings passed on to the buyers from avoided expenses associated with prolonged holding periods, the Stabilization Trust says.
The First Look program "puts the local housing providers in the driver's seat, able to strategically decide which properties are most important to their neighborhood revitalization plans," says Stabilization Trust President Craig Nickerson.
The second acquisition program allows buyers to purchase portfolios of distressed properties in bulk. The properties comprise aged inventory from the sellers and are offered at pricing similar to the First Look program.
Six nonprofit organizations – Enterprise Community Partners, Housing Partnership Network, Local Initiative Support Corporation, the National Urban League, National Council of La Raza (NCLR) and NeighborWorks America – serve as the founding sponsors of the Stabilization Trust.
Funding from these organizations and from philanthropic groups – including the MacArthur Foundation, Ford Foundation, Open Society Institute and Heron Foundation – have helped capitalize the nationwide operation.
For example, a $50 million low-interest line of credit from the Ford Foundation is enabling the Stabilization Trust to increase access to private capital for property acquisition, renovation and short-term rental housing.
Over the next year, the Stabilization Trust hopes to leverage over $1 billion in additional lending capital to foster property renovation and community revitalization.
In July, Citi and one of the nonprofit groups, NCLR, launched their own Preserving Neighborhoods and Creating Homeowner Opportunities program, which supports the efforts of NCLR's affiliates to purchases REOs in high-foreclosure Latino markets.
Last winter and spring, the Stabilization Trust's approach was piloted in a handful of test markets, including Minneapolis and St. Paul. The test run resulted in several hundred foreclosed properties in target markets being purchased by local housing providers at affordable prices.
Minneapolis Mayor R.T. Rybak has called the Stabilization Trust's involvement a "core component of our fight against foreclosures in Minneapolis."