Cities around the country are trying to preserve low-income neighborhoods devastated by foreclosures, and the Twin Cities are in the forefront of finding solutions.
First the big picture: A new nonprofit called the National Community Stabilization Trust was launched last October. Its goal is to create an efficient process to connect the giant national institutions holding many, many foreclosed and vacant homes (think Wells Fargo or JPMorgan Chase) with the smaller-fish, local organizations working to preserve neighborhoods.
Here’s the problem: These large banks and loan servicers want to get properties off the books as efficiently and economically as they can. Working with community-based organizations on neighborhood stabilization is a lower priority.
To make it easy for the banks to work cooperatively, the Trust acts as a national clearinghouse to streamline communications. It serves as a single point of contact. Every day, participating institutions give the Trust a master list of properties that will come on the market soon. The Trust then forwards the information to partner organizations, which get a first look before they go on sale publicly.
In the Twin Cities, the Greater Metropolitan Housing Corp. (GMHC) and the Dayton’s Bluff Neighborhood Housing Services partner with the Trust.
Even before the Trust started, GMHC was pursuing foreclosure auctions and relationships with banks. It wants to beat speculators and absentee landlords to the punch, getting homes in the hands of homeowners or landlords who would invest in properties and care about the neighborhoods’ long-term health.
The Trust makes that neighborhood stabilization work easier.
How it works
GMHC President Carolyn Olson said her organization can get between two and 55 listings a day from the Trust in its targeted ZIP codes. It has 24 hours to look at them.
GHMC goes through the Multiple Listing Service to do background research. Some homes clearly are not worth buying. Others deserve a look. GMHC creates a list of properties it might want to buy and asks the institutional owner for a price. (At this point, the banks themselves are still assessing the property.) Once a price is set, GMHC decides whether or not to buy.
“We know what we can resell it for and how much it will need for rehab,” Olson said.
As of early March, GMHC had bought 28 properties through the Trust and had six more under contract. It had asked for prices on 12 others. (It does other programs and acquisitions independent of its work with the Trust.)
The system has advantages for both parties. By fast-tracking sales, banks reduce their holding costs and the risks of housing price fluctuations. They also are selling homes in what could be their most challenging neighborhoods.
For the Trust, it hopes this efficient process helps keep prices down. The approach also should improve coordination and targeting in troubled neighborhoods. For instance, GMHC works with other nonprofits looking to buy property, such as Project for Pride in Living, Alliance Housing, or Powderhorn Residents Group, Olson said.
“Each organization has given us a target area where they want to work,” she said.
How it started
Mary Tingerthal, president of Capital Markets Cos. for the Housing Partnership Network, was part of the research team that created the Trust. Her organization is one of four founding partners. The other three are Enterprise Community Partners, NeighborWorks America and Local Initiative Support Corporation.
They held initial meetings in early 2008 to discuss foreclosure problems and how they threatened decades of investments to revitalize communities. They realized the problem was bigger than any one of them could address individually.
Independently, the Minnesota Foreclosure Partners Council was looking at the same issues. Both groups realized the foreclosure problem had grown beyond prevention work and needed a more aggressive response.
While Tingerthal’s organization is Boston-based, she works in St. Paul. She credits the Foreclosure Partnership Council for getting an early jump on the problem and framing it as a communitywide issue.
“The Twin Cities had the most coordinated approach,” she said. The Foreclosure Partners Council “had raised money and started a concentrated approach well before the Stabilization Trust was in place.”
Helped frame the national initiative
In particular, Tingerthal knew Olson and said GMHC’s work helped frame the national initiative and how the Trust pursued its research and conversations with banks and loan servicers.
The Trust recently hired its first full-time staff person. “I think of this week as our official launch,” Tingerthal said in an April 2 interview.
The Trust provides technical assistance to partner organizations. It also is working to build capital from national private and philanthropic sources to support community stabilization. (Federal money approved last summer to support neighborhood stabilization is starting to arrive at the local level,)
The Trust is working with organizations in Memphis, Los Angeles and other cities. The numbers are growing. “We are in conversations in well over 100 communities around the country,” Tingerthal said.
‘Speed dating’ for nonprofits
This last item has nothing to do with housing or foreclosures, but the MACC Alliance for Connected Communities and MAP for Nonprofits deserve a plug for their new nonprofit speed-dating initiative.
No, it isn’t for all those lonesome nonprofit singles who work too many uncompensated hours. It’s a networking event aimed at helping nonprofits explore new alliances and strategic partnerships. With all the talk about downsizing, cost pressures, mergers and doing more with less, it’s a chance for nonprofit leaders to see if they have, well, any organizational chemistry with other agencies.
The event is May 20, 4-6:30 p.m. at Tubman Family Alliance, 3111 First Ave. S., Minneapolis. Space is limited. For details, click here.