Elizabeth Mayor J. Christian Bollwage addresses citizens who are seeking to buy forclosed and pre-foreclosed homes.
As the foreclosure crisis escalates nationally and New Jersey steadily climbs the ranks of hardest hit states, the City of Elizabeth is taking a proactive approach and playing real estate match-maker. Last month, the Elizabeth Home Improvement Program (EHIP) and the non-profit organization Brand New Day coordinated a Foreclosure Assistance and Selection Tour (F.A.S.T.). The idea was to match first time homebuyers with ready to sell homeowners looking to avoid foreclosure.
F.A.S.T. participants were pre-qualified first time home buyers who had gone through an extensive housing program, which prepares residents for homeownership and was sponsored by the city and Brand New Day. Residents in the program learned about credit scores, budgeting, loan programs, and all the in-and-outs of buying a home. All participants were financially ready to purchase a home if they found one to their liking and in their price range. In addition to the identification of tour participants, the other important component of the program was the selection of homes that would be viewed. While some of the houses on the tour were already classified as foreclosed properties, the majority of the homes were identified as pre-foreclosure sites, where owners needed to sell quickly.
Ultimately F.A.S.T. minimizes the potential spiraling effect of the foreclosure crisis by mobilizing potential homebuyers and guiding them through available properties. Further facilitating the process, the City of Elizabeth is attempting to establish a connection between notification of foreclosed homes and maintenance of these properties by the municipality. Elizabeth’s City Council is working on a resolution that would require banks and lending institutions to notify the city when a property is foreclosed upon and would require them to maintain that property until it is sold.
If analysts are correct and this is only the beginning stages of the foreclosure crisis, then this proposed resolution will be critical to the vitality and marketability of municipalities. However, it will also contribute to municipal responsibilities and increasing operating costs, which are not receiving much relief due to shrinking financial aid.
As housing concerns grow, municipalities will have to find solutions that work specifically for them and their market. The City of Elizabeth’s tour concept is new to New Jersey, however it has had some success in other states, especially where the foreclosure situation hit hardest. Real estate agents actually started organizing the bus tours in California, where the idea seems to have originated, and cities such as Detroit, Jacksonville and Phoenix have also participated. Now there are even companies that host and organize foreclosure tours for a fee.
The City of Elizabeth took a different approach to this process by determining their target audience as well as the type of housing focused upon. Placing a concentration on pre-foreclosed homes enabled the City of Elizabeth, EHIP, and Brand New Day to provide a spotlight on housing stock that was experiencing an economic hardship. In addition, the city took a pro-active approach to feasibility and intent of the potential homebuyer by pre-screening all participants, thereby avoiding the curious or weekend shopper, who may be “just looking.”
In no way does the city want to become a real estate broker. However, through the assistance of Brand New Day, a New Jersey Housing and Urban Development certified local non-profit organization; participants received help in pricing, selecting, and buying a home. Brand New Day staff helped tour participants find their dream home, offering assistance and guidance through the research and steps needed to be completed in order to purchase a house. They provided a list of banks ready to assist in mortgage selection, lawyers needed to work through the closing, and information on grants for first time homeowners. In addition, the Elizabeth Home Improvement Program, through their First Time Homebuyer Program, can offer closing costs and even down payment assistance for qualifying residents.
For years the city and agencies like Brand New Day have had programs that help residents achieve the American Dream of home ownership. Now, as the economy falters, recession looms, and the housing crisis grows, such programs are becoming ever more important for the vitality and growth of cities across America. Existing housing programs that help those looking to purchase a home, can be altered to help those that are about to lose their homes, creating a win-win for all involved.
Minimal costs are incurred with regard to implementing a pre-foreclosure or foreclosure tour. The City of Elizabeth used its own Senior Citizen bus for transportation, prepared all the handouts and information packets in-house, and provided light refreshments for participants.
So instead of reinventing the wheel, municipalities should look at modifying existing programs. Maximizing potential outreach, using resources efficiently, and thinking outside of the box, is the formula to safeguarding neighborhoods and increasing overall municipal benefits.