Maria Saporta
Originally Published in the Atlanta Constitution Journal on: 12/10/07
Vacant, boarded-up houses destroy communities. They become havens for crime, vandalism and deterioration, pulling down the value of neighboring homes and spreading unease for nearby residents.
Unfortunately, this is a reality that communities throughout the region face with the record number of foreclosures.
Formerly reviving communities are being hit with decline, and many families, once part of healthy neighborhoods, are in disarray and may even become homeless.
It's not a pretty picture.
Our region already faced a shortage of affordable housing. Foreclosures will exacerbate the problem, especially in the near term.
Much needs to happen in a short time.
At the Regional Housing Forum meeting last week, experts offered game plans on how to help attack the problem.
The best solution: Prevent homeowners from having to declare bankruptcy. As soon as a homeowner is 30 to 45 days late with a mortgage payment, help should be available before it's too late.
"The likelihood of stopping foreclosures is much more likely in that time period than after 90 days," says Emory University professor Frank Alexander, who is doing a stint at Harvard University until January.
Several entities, such as the Consumer Credit Counseling Service and the Home Ownership Helpline, can help homeowners restructure their debt and better manage finances. Alexander thinks banks should suggest homeowners get such help at the first sign of trouble.
One critical change that needs to happen is for the state Legislature and the governor to extend the amount of time between a declaration of default and the sale of a foreclosed home.
Currently, Georgia and Texas have the shortest window — 37 days — between default and sale, giving homeowners little time to work on a solution.
Alexander and his counterpart at Georgia Tech, Dan Immergluck, believe a three-month timeframe would be much more reasonable and would help keep people in their homes.
It's too late for hundreds of thousands of metro Atlanta residents who already have suffered foreclosures since 2001.
So what should happen post-foreclosure?
In an ideal world, foreclosed properties could return to the market at reasonable rates for working families.
That's easier said than done.
"These lenders are under pressure from their investors to maximize returns," Immergluck says. "Yet they need to bring down values of the properties that they own so that they're affordable."
It's to the lender's advantage to quickly get new residents into foreclosed homes. The value of their properties will rapidly decline the longer they remain vacant. There are several technical ways to structure deals so that banks can dispose of their property in constructive ways.
They can work with the Atlanta-Fulton County Land Bank Authority, parking the property there tax-free until it is sold at an affordable price. They can work directly with community development corporations or nonprofit builders that can help make repairs and find qualified buyers.
"We are looking at this as an opportunity to try to reverse the impact of having streets and streets of boarded-up houses in neighborhoods," says Andy Schneggenburger, executive director of the Atlanta Housing Association of Neighborhood-based Developers, which has 25 members.
Local governments also can play an important role. Alexander says it's vital that building bureaus pressure lenders and owners to keep properties in good shape. If a lender/owner is not maintaining a home or its yard, a local government can put a lien on the property.Atlanta City Councilwoman Mary Norwood has pushed the city to crack down on slum landlords, investigate mortgage fraud and seek affordable housing solutions.
She calls the current crisis a "foreclosure tsunami," and she is working with other organizations to create a task force to attack the problem.
She also hopes to work with major employers to provide housing grants for down payments and other incentives. It's an advantage to have employees live closer to where they work, which saves them time and money in transportation.
If the state, the region and local governments work together, Norwood sees a "once in a lifetime opportunity to match foreclosures with affordable housing." If not, the consequences will be extreme.
Norwood says half of the city of Atlanta's land area has been affected by foreclosures and fraud.
"The result is abandoned, unoccupied houses," she says. "My real goal is that we not allow our neighborhoods to deteriorate and become depopulated."
The region faces a wave of problems — record draught and water shortages, congestion and limited transit, an embattled Grady Memorial Hospital and escalating foreclosures. Let's hope our leaders are ready to take action in all these areas and that metro Atlanta will be able to survive this challenging era.
rpr by permission
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