Investors, NAREB to deliver $800 million to minority communities
The National Association of Real Estate Brokers is working with Wall Street investors to buoy minority communities impacted by America's foreclosure crisis, injecting $800 million in aid and capital dollars to rejuvenate blighted neighborhoods. The dollars provided through the Homeowner's Assurance Program will provide capital for the purchase of non-performing loans and REO assets, with organizers set on spending $200 million per quarter, starting in the third quarter of this year. The partnership will be formally announced Sunday, Aug. 7, in New Orleans, one of the cities dealing with an influx of foreclosure-ridden neighborhoods after dealing with the resultant damages of Hurricane Katrina six years ago and a prolonged foreclosure crisis that has left neighborhoods blighted by vacant properties. NAREB said its investor partners will provide the infrastructure needed to acquire, manage and dispose of non-performing loans and REOs. "This wholesale eviction of families, and dumping of foreclosed or abandoned properties in minority communities without a sustainable solution, is causing a new crisis of undervalued and/or vacant and blighted property," said NAREB president-elect Julius Cartwright. "Therefore, an innovative housing assistance program and strategy is needed. Many of the current programs are ineffective - not adequately addressing all of the needs in our nation’s communities, particularly minority communities." Cartwright's assertion that REO community programs are ineffective is bolstered by recent research that finds vacant foreclosures are tough to move and blight entire neighborhoods. Research economist Stephan Whitaker with the Federal Reserve Bank of Cleveland studied the impact of foreclosure-related vacancies in Ohio's Cuyahoga County — an area significantly impacted by an influx of foreclosures and generally viewed as ground zero for the subprime crisis. Whitaker followed vacancy rates in the region and found a home with a foreclosure in its past is more likely to be permanently scarred. As proof, he said the data painted a picture where foreclosures two to five years after going through Sheriff's sale are still more likely to be vacant when compared to their neighboring counterparts. NAREB released its own public policy paper on the foreclosure crisis impacting African Americans and other ethnic-minority neighborhoods. NAREB concluded ethnic minorities were disparately impacted by the foreclosure storm, with much of the damage sitting only a few feet from their homes in the form of vacant or neglected properties. Write to Kerri Panchuk.