Spotlight on the District|
New Life for Foreclosed Properties
Rehabilitation of foreclosed or abandoned property by local governments, nonprofits or housing providers is an important step on the road to neighborhood recovery in areas hard-hit by foreclosure. Financial institutions play a significant role in this process, and a new organization, the National Community Stabilization Trust, is designed to smooth the way.
Working directly with financial institutions
A group of volunteers from the Federal Reserve Bank of Atlanta rehabbed one of the properties, and volunteers from JP Morgan Chase, Emory University and Agnes Scott College are completing work on the remaining two.
"The total rehab cost for the three properties isn't expected to exceed $15,000," says Beverly Dabney, first vice president and senior community affairs relationship manager of Washington Mutual (WaMu)/JP Morgan Chase.
Like similar programs at other financial institutions, the Chase/WaMu/EMC program works with nonprofits and government entities to donate or sell real estate owned (REO) properties to help areas with high foreclosure rates.
The National Community Stabilization Trust eases the way
The NCST provides two types of services: First, it acts as a central point of contact with the financial institution that holds the property. It establishes a streamlined process for identifying, inspecting and evaluating offers from the seller. And it makes it possible for prospective government and nonprofit buyers to acquire the property before it goes to market.
Second, it assists with the short- and intermediate-term financing needs of participants through an affordable, revolving line of credit. This allows for better leverage of Neighborhood Stabilization Program funds, as well as provides more flexible financing for stabilization activities.
The NCST is working in 100 communities in 35 states. In places where NCST is not operating, local recovery efforts are forging their own partnerships with lenders and servicers that hold REO properties, much like the Initiative for Affordable Housing in Georgia has done.
This article was written by Sibyl Slade, senior regional community development manager of the Federal Reserve Bank of Atlanta.
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