Praiseworthy intentions
The older I get, the less I give credence to future-tense verbs: I’m going to X, I will Y. I place much more reliance on past-tense verbs and durations – for the last decade I’ve Z’d. So as I read the following Boston Globe article on a praiseworthy idea, and my eye caught the future-tense verbs (in blue bold italic) I found my initially upbeat assessment steadily turning ever more glum:
You got a problem with my gloom?
The city of Boston plans to purchase foreclosed apartment buildings still occupied by tenants in an effort to stem evictions under a pilot program officials say is the first of its kind in the nation.
Mayor Thomas M. Menino today [October 28, 2009, five days before the Boston mayoral election – Ed.] is expected to unveil the buyback program, which will initially involve 12 apartments in five properties owned by Bank of America Corp. that are located in neighborhoods devastated by foreclosures in recent years.
Twelve apartments in five properties is a drop in the bucket – yet every program starts somewhere.
Menino said that over the next six months he wants to expand the program to include other lenders and buy as many as 100 occupied apartments.
“Here we go, Boston, here we go”
This one could serve a genuine need, because, as I posted two years ago in zombie landlords, foreclosure is a destabilizing event:
We had a handshake deal on the rent
But even having a lease is no protection against a post-foreclosure eviction. Under Massachusetts law, foreclosing owners are not required to honor leases signed by the former owner.
That’s remarkable — not that landlords would want it, but that the legislators deferred to their desires.
The mortgage industry says its members are not equipped to act as landlords.
Hire one.
There are plenty of management companies.
“Why, yes, we’ll happily evict your tenants for you!”
Buying foreclosed apartments and simultaneously executing a new lease with the sitting resident turns the home into long-term rental … and what’s the harm in that?
“The tenants are the victims. It is not their fault they were foreclosed upon,’’ Menino said. “Not only is this good for the tenants it is also good for the neighborhoods.’’
One of the foreclosures that might be candidates
Is there harm in trumpeting something one has not done?
The city has not yet negotiated a price with Bank of America, but the money to buy the five buildings will come from $8.2 million in federal funds set aside to buy and renovate foreclosed homes.
Here we have an advanced form of political vaporware: a pledge to do something in the future, in exchange for your votes – your political equity – today. That’s outstanding political calculus, of a type I’ve encountered before, most memorably in Egypt, when as a subcontractor to a USAID prime contractor, I designed and built financial projections for a 500,000-home affordable housing production program that President Hosni Mubarak announced one Pharaonic day on the campaign trail, seeking to keep his winning plurality above 90%. I designed the program; I wrote the financial model; I highlighted the key decision variables; I sent the proposal forward. Mubarak got elected overwhelmingly, and I never heard further if the program ever advanced beyond that initial conception.
“What did his models say it would cost?”
The properties will then be resold to homeowners, nonprofit groups, or private developers.
Otherwise known as “people we haven’t located yet.”
City officials said they have also applied for [A deflective version of ‘maybe we will get’ – Ed.] another $39 million under the federal Neighborhood Stabilization Program.
Otherwise known as “money we haven’t got yet.”
Can we apply for money too?
Renters are increasingly being forced to vacate homes reclaimed by lenders through foreclosure auctions. In Boston, more than 75% of those displaced through foreclosure are tenants with no direct involvement in the owner’s mortgage problems, city officials estimate.
While granting the statistic, it doesn’t prove the hypothesis. Boston has had very few homeownership foreclosures; they’ve concentrated in investor-owned absentee-landlord properties. If the rate of eviction is increasing, that’s not because of the high percentage of rental foreclosures, but rather because the lenders have finally got their procedures in place to deal with their foreclosure backlog.
Traditionally, lenders have been reluctant to sell foreclosed apartment buildings that remain occupied because of liability and other issues.
It’s an issue of touch and risk. Making the decision to keep a resident in an apartment requires ‘touch’ – some granular knowledge that’s specific to the market, property, and resident. It also requires some risk tolerance because (x) the tenant may have counterclaims (warrant of habitability) against the owner, and (y) many buyers of foreclosed homes would rather use them for ownership or renovation rather than having to deal with the tenant themselves.
It’s easier to secure if you’re out of it
Tom Lin, a senior vice president at Bank of America, said the program is an innovative way to stabilize neighborhoods as well as to allow lenders to unload properties.
Generally, foreclosed homes “sell much quicker vacant than occupied,’’ he said, but lenders are beginning to consider alternatives.
Compared to the touch costs of making the rental-continuation decision and the risks of keeping the tenant in place, the interim rent isn’t worth it.
Often, [foreclosing lenders] resort to evictions or strike deals known as “cash for keys’’ in which tenants are given money to move out.
You can post all the notices you want, but it’s often easier just to pay a few bucks for the resident to go away
Voluntarily, that is. If there is an oversupply of foreclosed homes, which there may be, the tenants can readily find new housing. So cash-for-keys may prove a good deal for them. Nevertheless, there’s a human-interest story in protecting these renters, which means there’s both political capital to be accumulated and a policy case to be made.
Lisa Alberghini, cochairwoman of Coalition for Occupied Homes in Foreclosure, a local housing group, said she is pleased the city has taken the initiative in assisting renters living in foreclosed properties.
A while back I had the singular honor and personal pleasure of being paired with Lisa as the 2009 Vision Award winners from the National Housing & Rehabilitation Association (NH&RA).
A good picture of Lisa, animated as usual
She’s on the side of the angels, and smart to boot.
“The idea that the bank agrees to sell properties with tenants still in them and the city has the opportunity to dispose of them without displacing the tenants, it’s just remarkable,’’ said Alberghini, president of the Planning Office for Urban Affairs, a nonprofit housing development group affiliated with the Catholic Archdiocese of Boston. “I hope it prompts others to step forward and do the same.’’
Agreed. If it can be worked out – the touch and the risk – it can add value. For that the city can play a significant role, both in doing the work and in the abating the risk.
Bank of America’s portfolio includes about 330 foreclosed Massachusetts properties, Lin said.
Boston housing chief Evelyn Friedman –
Renovating them one at a time: Evelyn Friedman
We met Evelyn in the blog 4 ½ years ago, in our tour of the Hotel Dartmouth historic rehab, when she was executive director of Nuestra Comunidad CDC. As so often happens in the housing roundelay, she’s now on the government side, interacting as a resource provider with people just like her former self.
– said tenants of the 12 apartments being bought are unaware of the plan, but that they will soon be contacted.
In fact, therefore, nobody’s actually done anything. The intentions are praiseworthy, yet the properties are not purchased, nor are the rehab or transfer funds in place.
The program builds on an ongoing campaign to purchase abandoned foreclosed properties in hard-hit areas of Dorchester, Roxbury, and Mattapan, she said. Since last year, the city has bought 10 vacant buildings and is in the process of closing deals on 28 others.
Tenant organizers yesterday praised the fledgling buyback program.
“Praise us, we’re going to grow!”
The scale is small, and the delivery is slow. By the time the program reaches any meaningful level of activity, most of those who were at risk will have solved their problem one way or another. Still, it’s a start, and if the volume of foreclosed small rentals does spike, at least there will be a mechanism in place, and people who have an understanding of how to use it.
“This is a good thing for occupied tenant buildings,’’ said Steve Meacham, a community organizer with the Jamaica Plain housing organization City Life/Vida Urbana. “It is certainly a step forward.’’
One step forward?
Although the program is being made public six days before the mayoral election, Menino insisted the timing was not motivated by politics.
Insisted. Residents have not been notified, properties have not been purchased, resale buyers have not been identified, and transfer funding has not been secured. We were just so bursting with enthusiasm that we wanted to tell all the voters now, even though we couldn’t tell the twelve lucky households.
Just a happy coincidence.
“Luck favors me, doesn’t it?”
He said the intention is to demonstrate to federal officials that the city is at the forefront of anti-foreclosure initiatives as it seeks more funding.
Let us now praise famous Menino and his praiseworthy intentions.
PS Like President Mubarak, Mayor Menino won re-election.
“Was it ever in doubt?”