Key Players

Many different stakeholders need to be brought together to create an effective foreclosure recovery team. Building broad cross-sector partnerships of local government agencies, nonprofits, lenders and servicers, real estate brokers, state housing finance agencies, for-profit developers, private foundations, and state agencies will facilitate a coordinated, effective approach.

Local Government
Strong leadership from the Mayor and City Council is a prerequisite to creating and implementing a city-wide foreclosure recovery plan. Not only is the Mayor and Council’s leadership needed to unify the public and private sector around a single plan, but also their signatures may be needed to authorize property acquisitions and/or dispositions. Local government agencies that typically work in silos must work together to handle foreclosure: housing agencies that administer the Neighborhood Stabilization Program, Community Development Block Grant funds and low- income housing tax credits; planning departments that can map foreclosures and identify targeted areas that will preserve past city investment; police and fire departments that will fight crime and fires at foreclosed sites; and the RDA or land bank that has expertise in holding and transferring vacant properties.

Lenders and Servicers
Lenders and servicers who hold the properties in their REO inventories are critical partners. A key goal of foreclosure recovery is to reclaim these REO properties from bank inventories. Enlisting lenders and servicers as partners is important so they will rapidly negotiate fair sales terms for banked owned properties and maintain those properties until they are transferred out of their REO inventory.

Community-Based Organizations
State and local governments can and will contract with nonprofit entities, such as community development corporations to carry out many of the property acquisition and rehabilitation activities. Community groups’ knowledge of the neighborhood, capacity to perform rehabilitation or redevelopment and relationship with residents makes them invaluable partners. Across the country, nonprofit community based organizations have pioneered best practices on how to address abandoned and vacant properties. In addition, community development financial institutions are experts at leveraging capital for community development projects.

Private Market Real Estate Professionals
Brokers, attorneys, and appraisers are “capacity” partners, providing staff and skills the municipality will need to achieve its goals. Real estate brokers play a vital role by selling both foreclosed properties in move in condition and others in less viable condition once they have been rehabilitated. Appraisers are essential as the Housing and Economic Recovery Act’s Neighborhood Stabilization Program requires local governments to pay 15 percent less than a property’s appraised value.

Private Foundations
Private foundations that have historically invested in neighborhoods may be willing to fund efforts to protect these neighborhoods and their prior investments. Since mid-2008, Living Cities has disbursed $7 million in grants and loans to test the most promising local approaches for returning foreclosed properties to productive use. The John D. and Catherine T. MacArthur Foundation is investing $68 million to fund foreclosure prevention and recovery in Chicago neighborhoods. With a portion of this funding, the City of Chicago expects to collaborate with Mercy Housing Inc., to develop the capacity to acquire for resale, rental, rent-to-own, and redevelopment as many as 3,500 properties in Chicago’s hardest hit communities. The redevelopment work will be done in collaboration with numerous developers and community partners.

Private Developers and Contractors
Developers and contractors have the skill sets to acquire, rehabilitate and sell foreclosed properties. Hiring for profit professionals to take on these tasks under the watchful eye of local government officials or nonprofit staff will allow government to stretch their capacity quickly.

Universities and schools
Universities’ use of GIS mapping and other interactive web based technologies has grown tremendously. Foreclosure recovery is assisted greatly through online mapping and planning tools that universities are making available to agencies. Universities can also provide concrete data and analysis needed to demonstrate foreclosure inequities and improve the ability of economically challenged cities to compete with wealthier cities for larger shares of available funding.