While $4 billion in community development block grant neighborhood stabilization funding was riding its way for months on the Capitol Hill roller coaster, states and localities stepped forward with their own innovations to contain the spreading blight of foreclosures. In July, Massachusetts Governor Deval Patrick announced a $20 million Neighborhood Stabilization Loan Fund to acquire foreclosed properties and renovate them as affordable homes in 7 of the state’s hardest hit communities. In what may be a first in the nation, this fund combines money from quasi-public agencies, banks and $3 million from private foundations to write down the interest costs.
Fairfax County, Virginia committed more than $10 million in tax revenue to aid acquisition of as many as 200 foreclosed houses. The DC suburb is funding a mix of outright purchase, aid to buyers through government-backed, low-interest loans, and other financial assistance mainly for first time homebuyers earning up to 80% of median income (roughly $75,000).
These and similar efforts cropping up around the country represent a significant addition to the already active foreclosure prevention efforts that have been underway for some time.
It has been encouraging to see communities and major private funders not wait for Washington to act. As thoughtful and well targeted as local stabilization efforts may be, however, the sheer avalanche of foreclosures is likely to bury these efforts if not combined with Federal resources that flow quickly and easily soon to where they are needed. Congress placed swift deadlines – 60 days for creation of a formula, and 30 days after that to get funds distributed – but communities need to be ready to put these funds immediately to work.
David Abromowitz is a director and partner with Goulston & Storrs, a law firm known nationally for its Housing & Economic Development Group, which works on all aspects of the acquisition, financing and development of residential real estate and affordable housing.