News from Ford19 May 2009
Creative New Venture to Help Communities Revitalize Neighborhoods Hit Hard by Foreclosures
WASHINGTON, DC, 19 May 2009 — The National Community Stabilization Trust, a collaborative venture of nonprofit housing organizations supported by the Ford Foundation, today announced the launch of a national effort to help revitalize communities hard hit by the foreclosure crisis. Over 80 cities — including New York, Los Angeles, and Chicago — are already working with the Stabilization Trust.
The Stabilization Trust will act as a transfer agent between financial institutions who hold or manage foreclosed homes and community housing providers who want to get these properties renovated and back into productive use as new, for-sale homes or affordable rental housing. In practice, communities seeking to acquire multiple properties in a targeted area have had to negotiate separately with a dozen or more separate financial institutions. Now communities have another option — dealing with the Stabilization Trust to get access to these properties from multiple financial institutions in a more predictable and cost effective manner.
Community efforts to reclaim neighborhoods that have been devastated by the nation's foreclosure crisis received a major boost last week when the U.S. Department of Housing and Urban Development (HUD) announced the availability of $2 billion in additional funding for the Neighborhood Stabilization Program.
"These new federal resources alone cannot get the job done," said Craig Nickerson, President of the Stabilization Trust and a former mortgage financier. "Communities also need a straightforward and streamlined way to access foreclosed properties from financial institutions, as well as a fast, flexible source of capital to finance their acquisition and renovation activity. Working with the Stabilization Trust, communities can now get the expertise, support, and information they need to rebuild their neighborhoods and expand the supply of quality, affordable housing."
Six nonprofit organizations — Enterprise Community Partners, Inc., Housing Partnership Network, Local Initiatives Support Corporation, the National Urban League, the National Council of La Raza, and NeighborWorks America — serve as founding sponsors of the Stabilization Trust. They came together because they recognized that cities and towns needed a way to gain control of foreclosed homes more quickly, efficiently, and affordably. Working with financial services experts, government officials, and nonprofit organizations in communities across the country, they found creative new ways to solve the legal, financial, and logistical problems that have caused the inventory of vacant and abandoned property to grow.
The country's major financial institutions, including Bank of America, Chase, Citi, Fannie Mae, Freddie Mac, GMAC ResCap, Saxon Mortgage, and Wells Fargo, are working with the Stabilization Trust on a number of acquisition programs to assist communities. For example, with the First Look program, participating financial institutions give the Stabilization Trust's participating communities a "first look" at newly foreclosed properties pre-market and offer cost savings designed to expedite the closing process and dramatically reduce the time that foreclosed homes remain vacant.
To bolster its effectiveness and provide further assistance to participating communities, the Stabilization Trust is establishing an affiliated, revolving loan fund that will offer low-interest loans for the acquisition and renovation of previously foreclosed properties. Through a combination of public, private, and philanthropic investment, the Stabilization Trust hopes to build its REO Capital Fund in order to leverage over $1 billion in new financing.
The efforts of the Stabilization Trust began with a successful pilot program last fall in Minneapolis and St Paul. By the end of 2009, the Stabilization Trust expects to be supporting the transfer of foreclosed properties in more than 100 communities nationwide.
The John D. and Catherine T. MacArthur Foundation and the Ford Foundation jointly funded the formation and start-up of the Stabilization Trust through a combination of grants and low-cost loans. MacArthur provided a $250,000 planning grant and a $3 million working capital loan to launch the Stabilization Trust's transfer agent operation. This support is part of MacArthur's $68 million foreclosure prevention and mitigation project launched last year to address the foreclosure crisis in its headquarters city of Chicago. The Ford Foundation made a $200,000 planning grant and a $500,000 operating support grant to the Stabilization Trust. The foundation has also committed a $50 million loan to the Stabilization Trust's REO Capital Fund. Ford has provided $15 million in grant support for other foreclosure-related activity across the country.
About the Partners
Enterprise Community Partners, Inc.
Enterprise is a leading provider of the development capital and expertise it takes to create decent, affordable homes and rebuild communities. For more than 25 years, Enterprise has introduced neighborhood solutions through public-private partnerships with financial institutions, governments, community organizations and others that share our vision. Enterprise has raised and invested more than $10 billion in equity, grants and loans to help build or preserve more than 250,000 affordable rental and for-sale homes to create vital communities. Enterprise is currently investing in communities at a rate of $1 billion a year.
The Ford Foundation is an independent, nonprofit grant-making organization. For more than half a century it has worked with courageous people on the frontlines of social change worldwide, guided by its mission to strengthen democratic values, reduce poverty and injustice, promote international cooperation, and advance human achievement. With headquarters in New York, the foundation has offices in Latin America, Africa, the Middle East, and Asia.
Housing Partnership Network
The Housing Partnership Network has created a captive insurance company for its member organizations in response to unstable coverage and rising costs of insurance. Housing Partnership Insurance, Inc. markets cost-effective property and liability insurance to its network of regional nonprofit housing developers, who collectively represent a portfolio of more than 34,000 affordable apartments nationwide.
John D. and Catherine T. MacArthur Foundation
The MacArthur Foundation supports creative people and effective institutions committed to building a more just, verdant, and peaceful world. In addition to selecting the MacArthur Fellows, the Foundation works to defend human rights, advance global conservation and security, make cities better places, and understand how technology is affecting children and society.
Local Initiatives Support Corporation (LISC)
LISC combines corporate, government and philanthropic resources to help nonprofit community development corporations revitalize distressed neighborhoods. Since 1980, LISC has raised more than $9 billion to build or rehab more than 244,000 affordable homes and develop 36 million square feet of retail, community and educational space nationwide. LISC support has leveraged nearly $28 billion in total development activity.
National Council of La Raza (NCLR)
The National Council of La Raza — the largest national Hispanic civil rights and advocacy organization in the United States — works to improve opportunities for Hispanic Americans. Through its network of nearly 300 affiliated community-based organizations (CBOs), NCLR reaches millions of Hispanics each year in 41 states, Puerto Rico, and the District of Columbia.
National Urban League
Established in 1910, The National Urban League is the nation's oldest and largest community-based movement devoted to empowering African Americans to enter the economic and social mainstream. Today, the National Urban League, headquartered in New York City, spearheads the non-partisan efforts of its local affiliates. There are over 100 local affiliates of the National Urban League located in 36 states and the District of Columbia providing direct services like job training, home ownership and educational assistance to millions of people nationwide along with extensive advocacy and research.
NeighborWorks America creates opportunities for people to improve their lives and strengthen their communities by providing access to homeownership and to safe and affordable rental housing. Since 1991, we have assisted nearly 1.2 million low- to moderate-income families with their housing needs. Much of our success is achieved through our support of the NeighborWorks network — more than 230 community development organizations working in more than 4,400 urban, suburban and rural communities in all 50 states, the District of Columbia and Puerto Rico. In the last five years, NeighborWorks organizations have generated more than $15 billion in reinvestment in these communities. NeighborWorks America is the nation's leading trainer of community development and affordable housing professionals.
National Community Stabilization Trust
The Ford Foundation is an independent, nonprofit grant-making organization. For more than 75 years it has worked with courageous people on the frontlines of social change worldwide, guided by its mission to strengthen democratic values, reduce poverty and injustice, promote international cooperation, and advance human achievement. With headquarters in New York, the foundation has offices in Latin America, Africa, the Middle East, and Asia.