Best Practices for Strengthening Neighborhoods
Foreclosures negatively impact neighborhoods. As property-tax revenues decline, it is harder for municipalities to provide good schools, police protection, and other services.
Local governments have various tools to help them protect the health and welfare of residents. Some of these can be used to address the impact of foreclosures on neighborhoods, although they were often designed for other circumstances. Ordinances can be an important tool for maintaining neighborhoods, especially if enforced properly and updated as needed.
Highlight: City of Boston’s Foreclosure Response
Since 1999, Boston has been warning homeowners and homebuyers of the dangers of risky loan products through its “Don’t Borrow Trouble” campaign. That campaign has been adopted by Freddie Mac and is now in over 50 cities nationwide. The Boston Home Center has been counseling homebuyers about how to obtain a good loan since 1996, and of those homebuyers that received counseling and financial support, only 0.7% have been foreclosed on – less than one-third the rate in the overall market.
Boston has been closely tracking foreclosures since 1992, and in late 2005, the earliest signs of the predicted foreclosure boom began to appear. The City convened a group of prominent bankers to develop strategies to address the coming crisis in the spring of 2006. In May of 2006 the Boston Home Center set up an in-house foreclosure prevention team, marketed its services through bus shelter ads, and began working with homeowners to help them avert foreclosure. In the fall of 2006 the First Choice Lenders initiative was launched with most of Boston’s major banks participating. Participating lenders agreed to model business practices in originating loans, and agreed to help refinance homeowners out of bad loans. Over $3 million in refinancing loans have been issued.
At the start of 2007 the City expanded its foreclosure prevention efforts by funding four non-profit organizations to provide community based foreclosure prevention counseling. A fifth organization was added in early 2008. With support from a State grant, another two organizations were added in May 2008. Over 300 homeowners have averted foreclosure though this foreclosure prevention network. The City is currently working with two of these non-profit groups to develop an enhanced refinancing loan product that will enable homeowners to refinance out of bad loans that cannot qualify for conventional refinancing products available from FHA or MassHousing.
For more information, visit: http://www.cityofboston.gov/dnd/bhc/Preventing_Foreclosure.asp
Highlight: Receivership Activities in the City of Malden
Malden organized the Mayor’s Housing Task Force, which brings together all of the City’s Inspectional Service Departments and the police and fire departments to address dilapidated, vacant, abandoned, and foreclosed properties, utilizing the receivership power granted by MGL Ch.111. Vacant or dilapidated properties are fully inspected on the interior and exterior. If owners fail to correct cited violations within 30 days, the Task Force seeks to have the Malden Redevelopment Authority designated as the receiver to complete the repairs and a lien superior to all mortgages is placed on the property. If the owner fails to pay the lien, the receiver is allowed to foreclose and re-sell the property. Malden has done this in over 100 cases in the last five years.
Using DHCD Neighborhood Stabilization Funds, the Massachusetts Office of the Attorney General will expand their Abandoned Housing Initiative with a focus on promoting receivership in the 39 NSP-Eligible Communities. The AHI provides legal assistance with respect to the receivership process, including coordinated outreach with local officials and community groups.
Land Banking is a technique used in other states to maintain neighborhoods. In Michigan, The Genesee County Land Bank has been very successful in encouraging re-use of more than 4,000 residential, commercial, and industrial properties that it acquired through the tax foreclosure process.
Through the DHCD Neighborhood Stabilization Fund, Boston, Brockton, Springfield and Worcester will be able to apply to DHCD for administration and operation assistance for land banking activities. Under this pilot program, requests must include a neighborhood revitalization strategy, activities to address neighborhood decline, and future banked-land development/ use plans.
This provides three strategies in stemming the foreclosure tide and helping individual families regain financial stability: neighborhood coalition, or partnership programs; loan counseling programs; and emergency fund programs.
Legal Resources to Strengthen Neighborhoods
- City of Chelsea’s Foreclosure Ordinance
- City of Everett’s Chapter 13B Maintenance Foreclosed Residential Property
- Boston’s Property Registration Ordinance
State statutes can help local governments craft ordinances to strengthen neighborhoods. Potential ordinances include:
- Abandoned possessions
- Dangerous building
- Fire prevention
- Grass and noxious weeds
- Inoperable vehicle
- Property maintenance
Please contact Amy Reilly at 617-451-2770, ext. 2059 or at firstname.lastname@example.org with questions or for additional information on any of these initiatives and ordinances.