In New Haven, NSP Funds Help Combat Foreclosures, Set Stage For Greater Impact In Future
February 23, 2009
The City of New Haven has been hit hard by the wave of foreclosures washing over the nation. The City experienced a 600 percent increase in the number of residential foreclosures between 2006 and 2008, and more than 250 properties are now bank'owned. Many of these properties are vacant and subject to vandalism; the resulting deterioration in the housing stock produces a downward spiral in property values.
New Haven has been allocated more than $3.2 million of Connecticut’s total allocation under the Neighborhood Stabilization Program (NSP) of the Housing and Economic Recovery Act of 2008. Over 80 percent of the City’s funds are going into the acquisition and rehabilitation of foreclosed properties. Mayor John DeStefano, Jr. says that, while these funds are essential to combating the destabilizing effect of vacant and foreclosed properties, “the initial allocation provides only a beginning for revitalization efforts, and the limited funding makes it possible to affect only a small percentage of the areas most in need of help.”
New Haven, the Mayor explains, has engaged a strong set of community partners in a community'wide effort to combat rising foreclosures in the City, and NSP is a component of this effort. The ROOF (Real Options, Overcoming Foreclosure) Project, a collaboration of the City and community organizations and institutions committed to a comprehensive response to the crisis, has conducted extensive outreach to borrowers at risk of losing their homes and has connected homeowners with resources to help prevent foreclosure. The first initiative in Connecticut to take such a comprehensive approach, ROOF emphasizes prevention but is also turning its attention to the growing number of vacant and foreclosed properties in evidence in New Haven’s neighborhoods.
Through the ROOF Project, the City and its partners have taken several steps to ensure that the NSP funds are having the maximum impact.
- Using multiple data sources and software mapping tools, ROOF creates street'by'street maps of affected neighborhoods for use in making purchasing decisions; it analyzes existing vacancies, homes at risk of foreclosure and in foreclosure, and proximity of properties to stabilizing anchors such as new school construction and stable owner'occupied units.
- ROOF also collaborates with the City‘s blight reduction agency as well as nonprofit developers with existing investments to determine the most promising areas to be targeted.
- Alternate sources of subsidy and debt financing to leverage NSP funds are identified. For example, NSP dollars will be leveraged with existing debt financing available through the Greater New Haven Community Loan Fund. And Yale has committed $250,000 to the effort over the next two years.
- Relationships with regional and national partners to improve access to and maximize discounts on foreclosed properties are developed. One example is the National Community Stabilization Trust, a national initiative to transfer foreclosed properties from the major servicers of bank'owned properties to communities engaged in neighborhood stabilization activities.
- A local delivery system to ensure smooth implementation of the program also is in place.
Mayor DeStefano believes the initial phase of the NSP, while limited, is helping New Haven and hard'hit cities across the country stem the tide of destabilization that the mortgage foreclosure crisis has created. “Our local governments and non'profits have invested heavily in our communities,” he says, “and NSP funds provide some tools and momentum to protect these investments.”
The Mayor says that while the initial phase of funding “only scratches the surface in terms of need,” it helps local communities create the framework needed for greater success in the future. “Because of the $2 billion added to the NSP in the economic recovery bill just signed by President Obama,” he says, “we can look forward to being better equipped to attack foreclosure problems in all our cities in the year ahead.”