By Eugene Lowe and Jocelyn Bogen
June 28, 2010

A special forum on vacant and abandoned properties, sponsored by Freddie Mac and Wells Fargo took place on the afternoon of June 11. Bridgeport Mayor Bill Finch served as moderator of the session, which included a panel of three mayors and two professional experts on vacant and abandoned properties. The purpose of the meeting was to give mayors tools on how to prevent foreclosures and how to address the issue of vacant and abandoned properties when their cities have them. Finch opened with brief remarks on a survey released at the session conducted by the Conference of Mayors on the extent of vacant and abandoned properties in cities and how they respond to the issue.

Eric Will, Senior Sales Director REO Sales Freddie Mac, opened with an overview of the HomeSteps program that was created by Freddie Mac to market its REO assets, while reducing the negative stigma of foreclosed homes. Currently, the HomeSteps Program effectively manages Freddie Mac's credit losses on its REO in a way that benefits communities and provides affordable housing opportunities. Through the Good Neighbor Practices, Freddie Mac properly secures and maintains homes, brings homes to FHA standards whenever possible, uses well-trained, licensed, and experienced vendors, and performs regular inspections to ensure properties are properly being maintained. Some of the disposition strategies utilized are listing properties in MLS, developing incentives for owner occupants and real estate agents, as well as auctions and bulk sales.

Phil Bracken, Executive Vice President Industry Relations Wells Fargo Home Mortgage, led a lively discussion on how they can assist cities with the prevention of foreclosures, as well as a management strategy for mayors to dispose of the existing foreclosed, vacant and abandoned properties in their cities. In the past year, Wells Fargo has hosted Home Preservation Workshops across the country, which has led to more than 12,000 customers having face-to-face time, and the people who attended have received some kind of workout option on site or shortly after the events. One of the strategies to assist cities with the disposal of properties is to utilize the Wells Fargo Exclusive Remodel Express or FHA 203(k) mortgages in a box as a renovation solution to purchase or refinance and remodel a home. These mortgages are fully underwritten FHA fixed-rate 30-year mortgage loans, the maximum repair cost is $35,000, faster processing and underwriting times, and lower, and the improvement (repair costs) are built into the 30 year mortgages

Little Rock (AR) Mayor Mark Stodola gave a presentation on Little Rock's NSP and NSP2 programs that are revitalizing some of the urban neighborhoods in his city with energy-efficient design. Using Neighborhood Stabilization Program (NSP) and NSP2 funds the city developed a revitalization strategy built around institutional magnets or major points of interest in the city to spur redevelopment of the areas surrounding these destinations. Some of the revitalized areas are: Little Rock Central High, Arkansas Baptist College, Arkansas Children's Hospital, University of Arkansas Medical Sciences/Veteran Administration Hospital etc. Another initiative the city has undertaken is to build quality affordable green housing with Energy Star certified houses, the philosophy is to "Turn Worse House in Neighborhood to the Best (Eyesore-to-Energy Star)." The city hired and trained young men from the neighborhood, all of the homes have been completed in ten weeks, construction costs are less than $35 per foot, and the monthly mortgage payment less than rent ($314 per month).

Philadelphia Mayor Michael Nutter described his city's challenge of 40,000 vacant and abandoned properties (12,000 are city owned) and 5,000 foreclosures. He said that many of the long-term vacancies are over ten years. Coming into office in June 2008, Nutter started a mortgage foreclosure prevention program that has led to 6400 homeowners saving their homes. The program has been a success because all interested parties, including the banks, have cooperated. The mayor said that, "Because vacant property is a valuable asset, we are looking for ways to market our property." He said that private realtors are helping to market the properties. The Philadelphia Redevelopment Authority hopes to market at least 25 properties each year. Nutter also said that his city received NSP 1 and 2 funding. The city is using the funds to acquire vacant and abandoned properties. But 25 percent of the funding is being used to provide affordable rental opportunities to low income families. Over the long term, Nutter is looking to better organize his city's approach to dealing with vacant and abandoned properties with the responsibility for all properties in one city institution. Philadelphia will also increase fines and penalties so as to make for stronger code enforcement. The city also plans to adopt the land bank model developed in Genesee County (Flint, MI), which is a streamlined process for getting vacant and abandoned properties back into productive use.

Tallahassee Mayor John Marks discussed the challenges of vacant and abandoned properties of the State of Florida. The state has been seriously challenged by mortgage foreclosures, especially with condominiums. Marks presented data that illustrated the magnitude of the problem which is especially challenging in the southern part of the state.