Minneapolis Saint Paul Pilots National Program to Rebuild Housing Market in Neighborhoods Affected by Foreclosures
Innovative Model Involves Nation’s Largest Mortgage Lenders
November 13, 2008 (MINNEAPOLIS) – Minneapolis Mayor R.T. Rybak and Saint Paul Deputy Mayor Ann Mulholland today announced the two cities will be the first cities in the nation to pilot a new, innovative national program to address the housing foreclosure crisis. The First Look Program will help restore neighborhoods hit hard by foreclosures by allowing the two cities the opportunity to acquire foreclosed properties before they hit the open market.
The First Look Program will coordinate the transfer of real estate-owned properties from financial institutions nationwide to local housing organizations, in collaboration with state and local governments. Lenders — Wells Fargo, CitiGroup and Chase—will make the properties available pre-market at adjusted pricing. A key component of recovery efforts is to gain control of properties and then manage the disposition and redevelopment of those properties at a scale large enough to build confidence and stimulate investment. The First Look program will provide that component.
The two cities were chosen for the pilot program because of their innovative work to fight foreclosures, which includes collaboration between government, nonprofits, developers, real estate brokers and community groups and the dedication of financial lenders who are helping restore healthy neighborhoods. The First Look Program is developed by the National Community Stabilization Trust, a consortium of nonprofit housing and community development organizations (Enterprise Community Partners, the Housing Partnership Network, the Local Initiatives Support Corporation and NeighborWorks America). The goal is to revive a normal, functional, single family real estate market through strategic investment tied to efforts which engage the private sector on a long-term, sustainable basis.
"We are extremely pleased to be launching this exciting new national foreclosure pilot program with some of our nation’s leading financial institutions," Mayor R.T. Rybak said. "A core component of our aggressive and innovative fight against foreclosures has been to regain control of and revitalize foreclosed properties to get them back into the hands of strong, stable home-owners. This pilot project will help us hugely to accomplish that goal, and we intend to make it as successful as we can."
"Saint Paul has been aggressive working with lenders and community groups to mitigate the effects of foreclosures on families and neighborhoods," said Saint Paul Mayor Chris Coleman. "Being chosen as a pilot city for First Look is a testament to our work and partnerships weve created to address this crisis. Only a united effort by government, lenders and community groups will restore the neighborhoods hardest hit by foreclosure."
Two organizations have been identified for the test period to serve as the buyer of these properties on behalf of the effort. Greater Metropolitan Housing Corporation (GMHC) will work with Minneapolis and Dayton's Bluff Neighborhood Housing Services, Inc. (DNHS) will work with Saint Paul.
Details of the First Look Program include:
• The opportunity for cities to purchase foreclosed properties, once the redemption period has passed and before they are listed for sale through traditional mechanisms. This will allow homes to be acquired quickly, saving on expenses associated with prolonged holding periods by both the cities and the lenders.
• Vacant and foreclosed properties will be eligible for purchase in designated areas (see maps).
• The financial institutions will provide access to the property for inspection and will provide an offer price for the property. Prices will be adjusted to reflect a number of factors, including current local market conditions, changes in home values, long holding periods and increased vacancies.
• Funding for acquisition and reinvestment includes: $16 million from the Home Prosperity Fund—formed by the Family Housing Fund in 2007; authorized under the Housing and Economic Recovery Act of 2008, the Neighborhood Stabilization Program has proposed funds of $5.6 million for Minneapolis and $4.3 million for Saint Paul.
In addition to working with the cities of Minneapolis and Saint Paul on property acquisition, the lenders are also providing assistance to rebuild the housing market which is essential in getting the properties reoccupied. They will do this by:
• Funding for the rehabilitation of some of the foreclosed properties, and
• Providing end-loan programs and other assistance to homeowners.
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Published Nov. 13, 2008