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Fallout: The Financial Crisis

Program helps stabilize neighborhoods

Marketplace Staff Mar 4, 2009
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Fallout: The Financial Crisis

Program helps stabilize neighborhoods

Marketplace Staff Mar 4, 2009
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TEXT OF STORY

Kai Ryssdal: Now that we know what the president wants to do to help homeowners facing foreclosure, there is a whole other side of the real estate meltdown that’s got to be dealt with too. The hundreds of thousands, or millions, maybe, of foreclosed properties already sitting on the market and driving down home values. Congress has already thought about that. Tamara Keith reports on another federal program aimed at soaking up all that housing inventory that nobody wants.


TAMARA KEITH: It’s called the Neighborhood Stabilization Program and Congress created it last summer. It helps people who don’t own homes buy foreclosed homes and get them off the market. In the coming months that program will give cities and states $4 billion. They can use it to assist buyers, to buy, renovate and rent properties, or simply to tear them down.

The program is aimed at places like Prince William County, Va.

Ruth Henriquez is a broker with Casa Latino Real Estate, and she’s driving me around the city of Manassas Park.

RUTH HENRIQUEZ: We’ve driven by dozens of foreclosed homes, very easily.

It’s a working class Washington D.C. bedroom community with too many foreclosed homes and not enough buyers.

HENRIQUEZ: But just to give you an idea about this house, it’s been on the market for 408 days. That’s over a year. Anybody could come in, anybody could break a window. It’s costing the bank money every day it sits.

The federal program is channeling $4 million to Prince William County. The county plans to use the money to help people with small incomes buy these now bargain-basement houses and fix them up. Elijah Johnson is the county’s director of housing.

ELIJAH JOHNSON: We want to make sure that we can get those units off the market back into that investment pool to help that homeowner help that neighborhood be a viable neighborhood.

But here’s the thing, Prince William County has some 2,000 foreclosed homes on the market, and Johnson figures he has enough funding to rescue maybe 50.

JOHNSON: With the magnitude of foreclosures, I don’t think any jurisdiction is going to say they got enough money.

But he’s not complaining. The money will be targeted in 10 neighborhoods with the biggest problems.

JOHNSON: It’s a kind of a bowling effect. You hit the front pin, everything starts going and that’s what we’re trying to create here.

KEITH: And do you think it’s going to work?

JOHNSON: I’m sure it’s going to work.

BRIAN SULLIVAN: We’re trying to stop the bleeding and make these houses homes again.

Brian Sullivan is with the U.S. Department of Housing and Urban Development. HUD is passing out the money. In cities like Cleveland and Detroit, a chunk of the funds will be used to demolish blighted homes.

SULLIVAN: It’s designed to be targeted to a very particular category of property: the property that goes into foreclosure and stays that way.

Back in Manassas Park, realtor Ruth Henriquez has a stack of listings printed out that she believes would be perfect candidates for the program. But Manassas Park has only been allotted a pittance — $86,000.

HENRIQUEZ: And the sad part is, I’ve already showed you several homes, and the program’s not going to help this many homes.

The Neighborhood Stabilization Program is about to get a bit more money. The economic stimulus package included an additional $2 billion to spread around.

I’m Tamara Keith for Marketplace.

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