By Sarah Greenberg
Senior Manager, Community Stabilization
The foreclosure crisis has created a glut of vacant and abandoned properties that are piling up in some communities, dragging down property values and inviting vandalism and crime.
That’s why I’m so pleased to see community stabilization efforts receiving a substantial boost from the U.S. Department of Housing and Urban Development (HUD), with an additional $1 billion in Neighborhood Stabilization Program (NSP) funding and the announcement of the historic “First Look” program partnership with the National Community Stabilization Trust.
As with the first two rounds of NSP funding, the third round will enable state and local governments and their nonprofit partners to purchase foreclosed properties and rehabilitate or redevelop them for rental or resale to low- to middle-income households.
It has been frustrating to see these efforts thwarted by speculators and investors, who in many cases are just looking for a quick investment opportunity. They may purchase the property and perform minimal cosmetic improvements, but they won’t necessarily bring it up to appropriate health and safety codes or to the standard of other properties in the neighborhood. Some are simply letting the properties sit vacant, waiting for the market to eventually come back so they can flip them for a profit.
Local governments and nonprofit organizations with NSP funds have been outbid by these private investors, but the First Look partnership that HUD Secretary Shaun Donovan announced on September 1st will help local communities get a leg up.
The First Look program gives localities first dibs on foreclosed properties, helping to ensure that communities can acquire those properties that are strategically important to their neighborhood stabilization efforts. Major banks such as Wells Fargo and Bank of America have signed onto this partnership, which gives neighborhood groups up to 48 hours to evaluate properties and decide whether they are interested in acquiring them, before they are listed for sale and offered to the private market.
First Look is not so much about leveling the playing field as it is about strengthening local responses in communities hard-hit by the foreclosure crisis. When NSP grantees purchase foreclosed properties, they take a more holistic approach to rehabilitation, with long-term sustainability as the goal. They ensure the housing units are energy efficient and affordable. They offer subsidies to lower income families to help them afford higher quality housing options. They provide homeownership counseling and responsible mortgage products to help prevent future foreclosures.
Learn more about NSP3 funding and the First Look program. At NeighborWorks America, we are supporting the federal government’s efforts by providing resources, training, and technical assistance to nonprofit organizations and their public and private partners working with Neighborhood Stabilization Program funding. Learn more about our efforts at http://www.stablecommunities.org/.