Foreclosed Properties Task Force

On January 31, 2008 the Urban Land Institute and the Massachusetts Association of CDCs hosted a forum to explore ways to redevelop foreclosed properties in Massachusetts.  This Task Force, with participation from State Agencies, Quasi-Public leaders, foundations, for-profit and non-profit developers, consultants, and municipal officials, emerged from the discussion as a way to join efforts to quickly create viable tools, resources and responses. 

The goal of the Task Force was, within 6 months, to create a network of programs, policies, products and best practices to enable local entities to implement local strategies to promote neighborhood stabilization and minimize displacement of existing occupants through the sound disposition of properties that are in foreclosure, or at-risk of foreclosure. 

The Task Force was designed to work on a number of issues simultaneously, with subcommittees reporting back to the full Task Force every 6 weeks to coordinate issues and address overarching concerns that do not neatly fall within the purview of any single subcommittee. 

The five subcommittees were:

1. Funding – Identify an interest-free or low-interest, patient and readily accessible pool of funds for the acquisition of properties that are in foreclosure or at risk of foreclosure. 
2. Acquisition – Identify strategies to acquire properties in foreclosure or at risk of foreclosure including:  a) a clearinghouse to broker relationships with servicers/lenders/owners; b) models of acquisition (i.e. loan portfolio acquisitions or standardized short sales); and c) best practices for efficient purchases (i.e. bring to scale the acquisition of small properties).
3. Holding Period – Identify the costs of holding properties and management models that address issues such as:  obtaining insurance, performing emergency repairs, minimizing displacement of occupants, obtaining local code and tax relief, and strategies for achieving economies of scale (i.e. production network/aggregation opportunities).   
4. Exit Strategies –  Model best practices to develop foreclosed properties as affordable or mixed-income homeownership developments, bundled rental projects, or demolition of blighting buildings as part of revitalization plan; identify barriers and proposed solutions (e.g., suspending the low-income housing tax credit "10-year rule" to facilitate including acquisition in basis of tax credit deals).
5. Matching Properties and Homebuyers – Develop a model for non-profits who wish to facilitate the transfer of properties from foreclosing lenders to new homeowners.  

The Task Force further focused on enlisting the help of "test communities" to assist the subcommittees with creating recommendations and policies. Although Chelsea, Lawrence, Springfield and Worcester were considered formal test communities, many other municipalities participated on the Task Force and contributed to its recommendations.

Click here to read the report "Massachusetts Foreclosed Properties Task Force: A Report on Its Accomplishments, Recommendations for Next Steps and Lessons for Addressing Future Crises". (September, 2008)

Click here for the Appendices. (Please note: the Appendices are 213 pages and may take a few minutes to upload.)

Below are some of the key documents developed by or for the Task Force:

• Massachusetts' Efforts to Address Foreclosed Properties - Written by: Prabal Chakrabarti, Federal Reserve Bank of Boston
  
• Neighborhood Stabilization Loan Fund description and term sheets
• "Challenges in the Renovation for Foreclosed Housing" - a report by Louise Elving, VIVA Consulting for the Acquisition Subcommittee
• Distressed Housing Life Safety Checklist: Developed by the Holding Subcommittee to highlight life safety risks in order to establish a work plan to early ownership of distressed housing.
• Two scenarios were developed for the Exit Strategies Subcomittee to review estimated rehab costs for several property types in Brockton, Chelsea and Worcester. The two scenarios are for 12 buildings with 36 units developed with tax credits and another with 3 buildings with 18 total units.
• Receivership Matrix
• Memo and budget for Worcester's pilot receivership for 12-14 LaGrange

Other resources and models reviewed by the Task Force:

• HANDS, Inc. model for acquiring, rehabilitating and selling problem properties in Orange and East Orange, New Jersey
• Rochester, NY's Housing Development Fund Corporation uses HUD's ACA program to acquire and rehab homes
• Managing Residential Short Sales, a presentation by Amanda Zuretti, Esq.

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