NeighborWorks Provides Foreclosure, AH Support
Washington-NeighborWorks America is shifting gears to provide more support for the development of affordable rental housing and to deal with the problem of vacant and foreclosed properties.
The foreclosure crisis has increased demand for rental housing, according to NeighborWorks chief executive Kenneth Wade.
"It has created an additional demand and burden on the already over-taxed rental stock, particularly at the lower end," he said in an interview.
The quasi-government organization was created in 1978 to revitalize distressed neighborhoods.
But in recent years it has focused a lot of resources on training housing counselors so they would be ready to assist homeowners struggling to make their payments and avoid foreclosure. NeighborWorks was one of few government entities to raise concerns about rising subprime delinquencies and prepare for the onslaught.
Now NeighborWorks and its network of 230 community-based organizations want to play an important role in fixing up foreclosed properties so they can be rented or sold.
"We are stepping up our efforts to deal with the stabilization part of the foreclosure crisis," Mr. Wade said.
It is well known that president-elect Barack Obama and his economic team are developing a major foreclosure prevention program.
However, Mr. Wade believes it is important to address the aftermath of foreclosures and redevelop those properties so they can be put back into productive use.
Obama's team faces tough budget choices, he said. "But we are optimistic they see that stabilizing the housing market involves dealing with vacant and foreclosed properties as well as keeping people in their homes."
NeighborWorks receives about $120 million in congressional appropriations annually to fund its operations, training programs, and development efforts. It also receives contributions from major financial institutions.
NeighborWorks community groups own 67,000 rental units and they raise additional funds from cities, states and other sources. Most of those rental units are in multifamily complexes of 40 or more units. But in renovating foreclosed properties, these groups expect to end up with a lot of single-family properties. "We are assuming in the short-term, in a lot of markets, they will likely be rental properties for some period of time," Mr. Wade said.
NeighborWorks organizations also want to increase the supply affordable multifamily housing units.
A recent study by the National Housing Trust discovered that 350,000 federally assisted affordable housing units have been lost over the past decade. "For every affordable apartment created, two are lost due to deterioration, abandonment, or conversion to more expensive housing," the study said.
NeighborWorks can provide grants of up to $500,000 per project that generally go toward pre-development costs.
But acquiring and renovating multifamily projects generally depends on the sale of low-income housing tax credits.