Program Highlight: Massachusetts Foreclosed Properties Initiative

Amid boarded-up and abandoned buildings in New Bedford, government officials and housing advocates recently unveiled a program to reclaim foreclosed properties and turn them into affordable housing.

Citizen's Housing and Planning Association Inc. (CHAPA), a nonprofit housing agency, will operate a clearinghouse to help community organizations purchase foreclosed homes and upgrade them for low- and moderate-income families.

"Our goal with this program is to stabilize neighborhoods affected by this crisis by reducing vacant and abandoned units and by providing property tax revenues to municipalities, who need it now more than ever," said Aaron Gornstein, CHAPA executive director. "We are also aiming to ensure that the sales of these properties are done in a sustainable manner that does not set the stage for a future cycle of foreclosure or property decline."

The program, he said, will try to keep the properties out of the hands of speculators, who might be tempted to do limited renovations or keep homes vacant while waiting for the market to recover.

The so-called Massachusetts Foreclosed Properties Initiative was outlined by Gornstein and Governor Deval Patrick in New Bedford, one of many Massachusetts cities with neighborhoods damaged by foreclosures. Last year, mortgage holders seized more than 12,000 Massachusetts homes in foreclosure, more than triple the number in 2006, according to Warren Group, which tracks real estate transactions.

CHAPA will help to connect banks and other lenders that own foreclosed properties with local housing organizations and municipal agencies. Participating companies, including the mortgage giants Fannie Mae and Freddie Mac and Bank of America Corp., will allow eligible purchasers to see the properties before they are listed on the open market. Banks also agreed to sell multiple foreclosed properties in certain neighborhoods to local organizations.

The community agencies can tap into $54 million in federal foreclosure aid to buy the properties, or other public development funds. The organizations will either rent out or sell the homes to qualified people at affordable prices.

Before unveiling the plan, officials toured streets near New Bedford's historic waterfront. City officials pointed out several multifamily apartments that were purchased, renovated, and refinanced at the height of the market by an investor who left with the profits. The apartments, empty for more than a year and boarded up, were plagued by illegal activity.

"These foreclosures have a terrible impact on a lot of innocent bystanders," said US Representative Barney Frank, chairman of the House Committee on Financial Services. The Newton Democrat was part of the walking tour. "It is people who own homes in these neighborhoods who are hurt," he said.

Joe Pereira, a New Bedford businessman and landlord, said he has watched his property values plummet and his home improvement business struggle as foreclosures climb.

Pereira, who grew up in the neighborhood, is hopeful the new state initiative will make a difference.

"It is going to get rid of a lot of these abandoned houses and put people into them," said Pereira, 45, owner of Precision Window and Kitchen. "You get more people living in the apartments. There will be more people fixing up their homes. It is good for the economy."

-From: “ Foreclosed buildings to get new lease on life” by Jenifer B. McKim, The Boston Globe, March 17, 2009, http://www.boston.com/business/articles/2009/03/17/foreclosed_buildings_to_get_new_lease_on_life/, retrieved 3/17/08.

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