Funding Needed to Rehab Vacant Homes
In 2008, approximately two million families faced the devastating impacts of foreclosure and at least as many foreclosures are anticipated this year and next.
As the foreclosure crisis and larger economic crisis expand, borrowers and the communities in which they live urgently need resources to create solutions that will put them back on solid ground. Members of the National Foreclosure Prevention and Neighborhood Stabilization Task Force say it's time for immediate fixes to the housing infrastructure to create jobs now and get local neighborhoods back on track.
The task force is pushing for the addition of $4 billion to the American Recovery and Reinvestment Act of 2009 for the Neighborhood Stabilization Program that it says will help state, county and city efforts to meet the overwhelming and growing need to rehabilitate vacant and foreclosed properties. This would provide thousands of new jobs for rehab contractors and homebuilders.
Yet, why was the $2.25 billion slated to expand NSP cut from the Senate version of the Act, which task members say will further threaten the ability to recover from the foreclosure crisis? Expending neighborhood stabilization funds will allow communities to purchase and rehabilitate an additional 80,000 vacant, often blighted properties.
Those properties will pay approximately $132 million in property taxes annually and generate an additional $6.78 billion in economic activity nationwide. It also will save localities nearly $797 million in costs ranging from trash removal, grass cutting, and boarding up vacant properties to more serious problems of vandalism, increased property and personal crime rates and arson. Industry insiders are discussing how the provisions in the economic stimulus legislation offer powerful incentives for homebuyers to participate in the economic recovery. ďJob creation and tax cuts are going to help families recover and prosper, and the tax credit will bring first-time home buyers to the market,Ē said Howard Zielke, president of the Dallas Forth Worth Realtors.
The National Association of Realtors estimates that the homebuyer tax provisions could fuel up to 300,000 additional home sales, thereby helping stabilize home values and creating better opportunities for sellers to sell their home and avoid foreclosure.
Also making headlines is the Treasury Departmentís Financial Stability Plan aimed at unlocking frozen credit markets and reviving the economy. It includes a public private investment fund to help cleanse banks of their toxic assets. Other aspects of the plan seek to stabilize the housing market and inject more capital into banks through convertible preferred shares.
Lawmakers, meanwhile, are working through their own reforms of last yearís bailout program and other proposals that pertain to the respective deposit insurance funds of banks and credit unions.
Through the Financial Stability Planís consumer and business lending initiative, up to $1 trillion in loans could be provided to support securitization markets by way of a Federal Reserve program. Banks that accept government funds face restrictions on dividends, share repurchases and acquisitions. They also will have to implement mortgage foreclosure mitigation programs.
The A.M. Best special report says losses from bank failures to the DIF likely will be higher than last fallís estimate of $40 billion for the 2008-2013 period, the FDICís chief operating officer said in early February. The FDIC may consider extending its Temporary Liquidity Guarantee Programís maturity to 10 years from current limits through June 2012.