Land bank wants Fannie, Freddie to donate homes
Thursday, September 25, 2014
Chicago Tribune by Mary Ellen Podmolik,
The Cook County Land Bank may have as many as 30 properties in its portfolio by year's end, but it is aiming much higher for 2015 and expects Fannie Mae and Freddie Mac to help its efforts.
The land bank is calling on the two agencies and their overseer, the Federal Housing Finance Agency, to provide a list of foreclosed homes owned by Fannie and Freddie, and then to consider donating those properties and paying for demolishing some.
In effect, the land bank is asking the FHFA and director Melvin Watt to put their money where their mouths are in efforts to help stabilize neighborhoods decimated by the housing crisis as well as in areas where one or two foreclosures are dragging down property values on otherwise-stable blocks. Two months ago while speaking at an event on the city's South Side, Watt announced that Chicago would be the second city, after Detroit, to join the government's Neighborhood Stabilization Initiative.
That program, announced in May, includes finding ways to reduce the agencies' portfolios of low-value, repossessed homes.
Earlier this week, representatives from the FHFA, Fannie and Freddie were in Chicago and toured south suburban communities as well as the city's Woodlawn, Roseland, West Humboldt Park and Albany Park neighborhoods, according to local housing leaders.
"It's our view that they either need to go big or go home," Cook County Commissioner Bridget Gainer, D-Chicago, who chairs the land bank, said of Fannie and Freddie. She said those agencies "need to make some really strategic decisions, not just hanging on to (properties) to manage the balance sheet. As far as the land bank goes, this is a huge opportunity for us."
In the city of Chicago, Fannie Mae's website Thursday listed more than 300 empty lots and homes that were listed for sale or would be soon, including a $7,700 boarded-up home in the city's West Englewood neighborhood and a $460,000 four-bedroom brick home in Bridgeport. Illinois also had about 58,000 delinquent loans backed by the agencies, including 18,000 that were at least 365 days past due and unlikely to be resolved.
"We had a successful visit to Chicago and met with various stakeholders in an effort to determine how best to design (the neighborhood stabilization initiative) for Chicago," said FHFA spokesman Peter Garuccio.
There are plenty of challenges that the land bank must overcome, though. Donating properties and picking up demolition costs run counter to the FHFA's mission. Its job is to preserve the assets of Fannie and Freddie, which means getting the best possible dollar for properties. So, it would have to weigh the cost of donating properties versus holding on to them for a future sale, during which time their condition would continue to deteriorate.
The land bank has run into a similar roadblock in its discussions with banks about foreclosed homes in their portfolios. "It's been a challenge," said Brian White, the land bank's executive director.
Razing homes can cost $15,000 to $25,000.
Next year, the land bank anticipates spending about $3 million of its $6.7 million budget on demolition.
The land bank has closed on 11 homes and anticipates closing on nine more within 30 days and 11 more within 60 days. Several of the properties are valued at no more than $20,000, White said.
On a national level, Fannie Mae and Freddie Mac's inventory of foreclosed properties declined 10 percent during the second quarter, to 131,525 single-family properties, according to an FHFA report issued this week. As of June, Fannie Mae owned more than 10,000 single-family homes in Illinois and Freddie Mac owned almost 3,400 homes
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