Contact: Jane DeMarines, (703) 741-0144, Cell: (202) 997-8785, jdemarines@naceda.org
Kim Hayes, (301) 585-1131, khayes@naceda.org

Nonprofits and CEDs Should Play Lead Role in Foreclosed Property Disposition if Economic Stimulus Legislation Moves Forward

WASHINGTON, D.C.—January 17, 2008—The National Alliance of Community Economic Development Associations (NACEDA), which through its members represents 2,000 community economic development corporations nationwide, applauds recent economic stimulus proposals and suggests changes to strengthen them to further benefit low-income communities across America.

NACEDA is comprised of state, regional and local associations of community development corporations, who have been at the forefront of foreclosure counseling/mitigation efforts, but are also nonprofit developers of affordable housing.

“The foreclosure crisis is a big part of the reason that our economy is struggling so we think the stimulus bill should help address this issue,” said NACEDA Officer and Board Member Joe Kriesberg, who is also President of the Massachusetts Association of CDCs. “We need to stop foreclosures whenever possible, but when they do occur we need to make sure that those properties are purchased by responsible parties who will maintain them and keep the neighborhood stable.”

Community Development Corporations (CDCs) could buy foreclosed properties, protect existing tenants, maintain the properties and ensure their long term use as affordable housing in low-wealth communities, Kriesberg said.

The affordable housing shortage is at an all-time high. Annually, the country is losing 40,000 units of affordable housing. According to RealtyTrac, more than 201,000 foreclosure filings were reported in November 2007 alone, up 68 percent from the year before. Equally alarming, 5 million more Americans moved into poverty in the past 6 years.

Several Congressional proposals call for an economic stimulus package that specifically deals with foreclosures. “We applaud Senators Clinton, Schumer and Obama for their foresight in proposing such badly needed legislation,” said NACEDA Executive Director Jane DeMarines.

Foreclosed properties shouldn’t be windfall for speculators

“We also hope any future legislation is crafted in such a way that it allows nonprofits and CDCs, who are experts in real estate development in low-income communities, to participate to take advantage of their commitment and expertise in working in low-income communities. We don’t want these properties to become the next windfall opportunity for speculators,” DeMarines said. In addition, NACEDA proposes specific measures with regard to real estate and banking be included in any proposed legislation:

Resources for local government to increase code enforcement of foreclosed properties.
Resources to state/local jurisdictions to allow nonprofits to acquire, rehab, manage and ultimately dispose of foreclosed properties. (This money should be easy to access and flexible.)
Encourage/require Fannie Mae, FHA and Freddie Mac to be more risk tolerant when participating in both foreclosure prevention programs and acquisition strategies.
Convene lenders to negotiate bulk transfer of mortgages/properties to public purpose entities at a reasonable discount with federal money used to guarantee or insure against significant loss.
Pass a mortgage company Community Reinvestment Act (CRA) at the federal level. CRA grades should take into account how well lenders dispose of foreclosed properties.

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About NACEDA and the CDC Industry

Through its member network state associations NACEDA represents more than 2,000 community development corporations. In 2005, as an industry total (aggregate) CDCs produced/created: 1.3 million homes (since 1988), 774,000 new jobs and 126 million sq feet of commercial/industrial space, housing for special needs populations and nearly 2/3 of CDCs offer homeownership counseling. Visit our homepage (http://www.naceda.org) or our newsroom (http://naceda.org/news.php) for more about Naceda and to read previous press releases.