Bloomberg’s Foreclosure Plan to Avert Urban Blight

According to an article in the New York Times, Mayor Bloomberg and outgoing Housing and Urban Development Secretary Preston announced at a press conference held at City Hall on January 14th 2009, an initiative to save neighborhoods from the threat of urban blight from foreclosure.

New York City will buy 115 homes with a $24 million budget in neighborhoods hard hit with foreclosures in Queens, Brooklyn, Staten Island and The Bronx. The funding is coming from a grant from the federal government as part of the Housing and Economic Recovery Act of 2008.

As part of New York City’s Neighborhood Stabilization Program efforts, the city will purchase properties directly from lenders whose properties did not sell at a scheduled auction for no more than 85% of the appraised value (to learn specifics about the city’s plan click here)

The reasons cited by Mayor Bloomberg for the initiative is to put in place a safety net for targeted neighborhoods where hard won progress had been made to establish safer streets and improved quality of life for it’s residents.

On the surface the plan appears to have the best interest at heart for neighborhoods where we’ve seen the rate of home ownership increase substantially, where just 10 years ago the same neighborhoods were considered undesirable.

Thinking back to the crack wars of the 1980′s and the Crip/Blood gang violence of the 1990′s, you couldn’t see why anyone would not support this effort. Particularly when you consider the number of new housing starts by 1st time home buyers in neighborhoods like East New York, Brownsville, Bedford Stuyvesant, Ocean Hill, Canarsie, East Flatbush, Bushwick and Crown Heights.

But in a city where the modern real estate business was birthed in the USA, what appears on the surface rarely lives up to it’s altruism where politics are involved (or never let the left hand know what the right hand is doing – left hand being YOU, right hand being THEM).

Remember back in the 1970′s when you would walk down a street in Bedford Stuyvesant, Bushwick, East New York, or any neighborhood in the city whose demographic was predominately Black and/or Latin and come upon an abandoned building with open entrances and busted out windows.

Well, Mayor Koch had a plan for the urban blight then as well. He ordered the city’s Department of Housing, Preservation and Development to seal the entrances of those buildings with concrete and cover the windows with pictures of shutters and house plants, ultimately setting the stage for the biggest real estate land grab in New York City’s recent history (anyone recall the $1 for a building program). It created some of today’s wealthiest real estate barons in New York City, none of whom lived in any of those neighborhoods.

Unfortunately, there is a terrible irony to today’s Nieghborhood Stabilization effort and the city’s track record on Housing. Even Mayor Koch echoed many of the same goals and intentions in the 1970′s that Mayor Bloomberg has in the face of today’s economic crisis. And where crisis exists, opportunity abounds.

And what paves the road to hell are good intentions, always. Good intentions such as what’s been proposed in the Neighborhood Stabilization Program. As I said, on the surface, it appears that the city has the best interests at heart for the hardest hit neighborhoords. As the title of the page on HPD’s web site reads;

MAYOR BLOOMBERG AND HUD SECRETARY PRESTON ANNOUNCE FEDERAL APPROVAL OF $24 MILLION FOR NEW YORK CITY TO PURCHASE, REHAB AND RESELL FORECLOSED HOMES TO INCOME-TARGETED NEW YORKERS

A few questions come to mind upon reading the above title;

1. What happens to the family(ies) who lost their home to a foreclosure action resulting in it being unsold at an auction that the city decides to purchase?
2. Was a formal review of the Mortgage and Lending Practices conducted by authorities to determine if a crime had been committed (Predatory Lending)?
   
3. What happens to the tenants in 2 to 4 family properties who leased apartments from landlords who lost their property to a foreclosure action resulting in it being unsold at an auction that the city decides to purchase?
4. What General Contracting firms will the city hire to rehabilitate these properties and will they require green building standards used?
5. Who will determine the market price and conduct sales and marketing activities on behalf of the City?
   
6. How will the City determine the Income Target Demographic to market and sell these homes to?
   

Foreclosure, the F word, tends to cover up a diverse set of financial circumstances home owners find themselves in, of which the Broadcast, Electronic and Print Media focus on the hot storyline: “People Buying Homes They Couldn’t Afford”.