Coalition seeking to soften blow of metro Atlanta’s foreclosure crisis

By Guest Columnist JOHN O’CALLAGHAN, president and CEO of Atlanta Neighborhood Development Partnership Inc.

Metro Atlanta is reeling from five years of record foreclosure filings. Home sales have fallen to 1996 levels – the biggest decline in the country. Once-strong communities are riddled by blight associated with the pile-up of vacant homes.

Since 2006, metro Atlanta (10-county) has experienced nearly 530,000 foreclosure filings, has seen a 37 percent drop in home prices, and has lost 51,600 jobs in construction.

Metro leaders are now recognizing that the foreclosure crisis ranks with transportation, water and job creation as among the top most pressing regional priorities. The future of our families, neighborhoods and economy hangs in the balance.

Four years ago, Atlanta Neighborhood Development Partnership’s (ANDP) board voted unanimously to serve our nonprofit, mixed income housing mission by focusing on metro Atlanta’s foreclosure crisis.

We initially developed a six-home pilot to rehab vacant homes and repopulate them with lower-income homeowners and/or lease-purchase tenants. Today, we are one of the largest redevelopers of foreclosed homes in the country.

We are currently working on our 220th home. Thanks to partnerships with DeKalb, Douglas, Fulton, Gwinnett and Rockdale counties, and the City of Atlanta and philanthropic investors, we are lifting property values, putting local builders, realtors and lenders to work and are providing quality housing in urban and suburban neighborhoods across our region.

We are a part of a diverse network of nonprofits, lenders, servicers, local governments, builders, real estate professionals and philanthropic funders that has been working “Piece by Piece” to develop new systems and enhanced capacity to address our devastating foreclosure crisis.

Together we have more work ahead of us than behind us to stabilize the tens of thousands of families and hundreds of neighborhoods ravaged by foreclosure.

The good news is there are signs that we have finally hit bottom and are inching forward on the long road to recovery.

While the number of delinquent home loans remains at historic highs, bank servicers, with the help of the federal government, are doing a better job of keeping families in their homes.

This past month, the number of short sales nationally exceeded the number of foreclosures for the first time ever. Several lenders are successfully piloting programs to write down principal or allow families in underwater loans to stay in their homes as renters.

The federal government, recognizing the simple economics of supply and demand, is stemming the tide of foreclosed homes entering the market by pooling their vacant home assets and offering them to developers that will provide rental options.

Metro Atlanta’s local governments with the help of the Atlanta Regional Commission, the Georgia Department of Community Affairs and HUD fashioned an unprecedented collaboration to leverage scarce stimulus dollars to renovate more than 1,200 vacant foreclosed homes for new homeowners.

The seeds of our current crisis date back over a decade. Loan products designed for Wall Street investors at the expense of new homeowners combined with rampant mortgage fraud and speculative overbuilding helped make Atlanta ground zero for the nation’s worst housing crisis since the Great Depression.

It took 10 years for us to reach the bottom of this mess. It will likely take at least five years (probably 10) for us to fully recover.

To speed our recovery, restore home and neighborhood values and reinvigorate Atlanta’s real estate sector, several things need to happen:

1. First, we must be well-informed as we vote on our transportation referendum and regional future on July 31.

The silver lining to the foreclosure crisis is that housing is now really affordable. Unfortunately, working families spend as much on transportation as they do on housing. The proper investments in roads and transit will link neighborhoods and families to economic opportunities.

2. Bank servicers, their regulators, and the secondary markets (Fannie Mae, Freddie Mac and FHA) must continue to foster outcomes that lower foreclosure vacancies and leave homes occupied.

Homes that sit vacant for up to three years are rotting away. Local governments, land banks and nonprofits need innovative resources to demolish homes that are beyond repair.

Fannie Mae has announced a pilot program to commit some of their foreclosed homes to near-term rental. Vacant homes need good families.

Unfortunately most investors in the single-family rental market are not from Atlanta. Neighborhoods most impacted by foreclosure have lost their base of homeownership. While rental is an important near-term solution, we risk losing control of our most vulnerable neighborhoods.

3. Nonprofits will need to play an increasingly critical role in providing lease-purchase options and in preparing families for future economic success.

Healthy neighborhoods need a good mix of renters and homeowners. Home prices and interest rates are at historic lows. But tightening lending standards are severely limiting the pool of first-time buyers.

4. Congress, bank regulators and lenders must work together to recreate our housing finance system.

U.S. Senator Johnny Isakson(R-Georgia) is providing critical leadership to offer bi-partisan common-sense solutions for Qualified Residential Mortgage rules and market replacements for Fannie Mae and Freddie Mac. His proposals maximize safety and market access while limiting taxpayer liability.

5. We all must advocate to place Senator Isakson’s proposals on the legislative front burner for the next Congress.

While Georgia is one the nation’s most impacted foreclosure states, we are at the forefront of developing a coordinated thoughtful response.

With crisis comes opportunity. Thanks to engaged regional leaders and committed housing sector partners, we are poised for a rebound. Our neighborhoods and families are counting on it.