While many urban communities have a limited supply of undeveloped land, there are many redevelopment opportunities in the form of vacant, foreclosed, and abandoned properties.  Municipalities need new programs to speed the rehabilitation of vacant and abandoned properties, in order to prevent neighborhood destabilization and jumpstart neighborhood revitalization.  

Properties can become abandoned in a variety of ways: owners may “walk away” during the foreclosure process; lenders may fail to assume title for properties valued at less than the lien; or owners with clear title may simply stop maintaining the property and paying taxes.  Even empty properties that are not truly abandoned may have a destabilizing effect on neighborhoods.  Concentrations of vacant, lender-owned properties can significantly depress surrounding property values and may attract crime and vandalism.

New strategies are needed to take advantage of the opportunities presented by vacant properties, by transferring them to community-based developers that will bring them back to productive use as affordable or mixed-income housing, commercial space, or open space.  At the very least, municipalities should adopt foreclosure ordinances that require bank owners to register and maintain foreclosed properties and provide contact information to the municipality.  

Challenging conditions exist when lenders fail to complete the foreclosure process, leaving properties in legal limbo; public/private partnerships might pursue clear title by completing the foreclosure action or pursuing title through forfeiture or nuisance proceedings.  Partnerships may be needed to address this issue as demonstrated by the Homeownership Preservation Initiative (HOPI) in Chicago, an organization working with servicers and the city to reclaim properties that remain owned by a financial institution that has not completed a foreclosure, and therefore cannot transfer title directly to the nonprofit.

Many vacant properties are not foreclosed but tax delinquent.  However municipal procedures for seizing and rehabilitating these properties can be outdated and excessively onerous.  There are innovative models to accelerate and streamline the foreclosure process for tax-delinquent properties, while still protecting tenants and minimizing financial impact to delinquent property owners. 

10.a    Municipalities should adopt ordinances regulating the maintenance of vacant residential property in the foreclosure process

10.b    The Department of Housing and Community Development should identify strategies to streamline the tax lien foreclosure process

Add Comment