| HUD To Cease Boarding Up Rowhouses In Philadelphia |
| Thursday, 12 June 2003 | |
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FYI, FHA servicers: We have received clarification from Golden Feather regarding
boarding in the city of Philadelphia ( A list of the zip codes that are included in the city ordinance that are also listed as pre-approved boarding areas in ML 2002-10 are attached. All Client Alert: If you wish to be removed from this advisory list, please respond via email to robert.klein@safeguardproperties.com and type "REMOVE" in the subject line. Please see the following two articles regarding the boarding of vacant properties in the Philadelphia area. Posted on Tue, Apr. 22, 2003 Bowing to criticism that it contributes to blight in Philadelphia neighborhoods, the federal government said yesterday that it would no longer board up many of the rowhouses it seizes in foreclosure proceedings. The decision, made by the U.S. Department of Housing and Urban Development, could mean about 500 fewer boarded-up houses throughout the city each year. Critics have said that boarded-up houses weaken the fabric of neighborhoods by making it appear that people are abandoning them. They say that the sites can lead to overgrown lots and loitering, and attract drug activity. "We decided this was the right thing to do," Milton R. Pratt, HUD's regional director, said yesterday of the changes in Philadelphia. He made the announcement in front of a formerly boarded-up brick rowhouse on a well-maintained residential block in the city's Olney section. The foreclosed house, which has curb appeal, is owned by HUD. Pointing behind him, Pratt said: "I could never imagine this home being boarded up." In January, The Inquirer reported that Olney had the highest number of foreclosures in the city under a mortgage program for low-income families run by the Federal Home Administration. Residents were alarmed that boarded-up houses were appearing on previously stable residential blocks almost weekly. "You don't know how happy we are to see these boards coming down," said Phyllis Santiago, an Olney activist. "We believe that the way to stem this cycle of foreclosure in Olney is to educate homeowners to potential problems and what they should do if they have a crisis in their lives." Unlike commercial lenders, who quickly resell foreclosed houses, the federal government faces more bureaucratic rules and red tape. When it takes possession of a house through foreclosure, it boards up the windows and doors to prevent vandalism during the sale process. When the boards come down, vandalism will still be a concern for empty houses, Pratt said. "We certainly are going to protect our assets. But in many neighborhoods we think that locking the door is protecting the asset." Pratt also announced yesterday that HUD would offer up to $2,000 per house to would-be homeowners and to real estate agents to promote sales in a large area of the city. The incentives would not be available to investors, who buy HUD's foreclosed houses to rent or resell, the government said. The area where these incentives will be provided entails 12 zip codes [see attached]. An Inquirer analysis had shown that between October 1996 and April 2002, 40 percent of all FHA foreclosures in Philadelphia were in Olney, Lawncrest, Tioga/Nicetown, Hunting Park, Juniata Park/Feltonville, Frankford, Port Richmond and Kensington. The HUD incentives include those neighborhoods plus Germantown, Oak Lane, Logan, Holmesburg, Tacony, Bridesburg, and parts of Fishtown. They have suffered from higher rates of foreclosures in recent years. HUD is a major force in the city's housing market through the FHA, which insures lenders against losses on mortgages to low-income families and individuals. In effect, FHA backs 5,000 to 6,000 new mortgages in the city each year. When a person stops making payments on an FHA-insured mortgage, the government can end up owning the house through foreclosure. The government then has to process the house and resell it. As the real estate market has boomed in recent years with low interest rates, so have FHA foreclosures. Besides a weak economy and buyers ill-prepared for home ownership, real estate scams have contributed to foreclosures in the FHA program. For instance, over the summer Edward Maier Jr. pleaded guilty to federal charges of repeatedly defrauding FHA. Sentencing for Maier was canceled last week and has been rescheduled for July 24 before U.S. District Judge Herbert J. Hutton. Maier's office was in Olney, and he made many of his sales in the area targeted by HUD for board removal and new financial incentives. Santiago of Olney said yesterday that in addition to not using boards on FHA houses, HUD has to do a better job of selling to people who can afford them. That would reduce the number of foreclosures, she said. She said that she has become such an expert in how houses are boarded up that she can identify an FHA foreclosure from the screws used. In the last three years, she has helped organize groups in two Catholic parishes in Olney and enlisted the help of the Eastern Pennsylvania Organizing Project, an activist group, to force changes upon HUD. Fran McFadden, who has lived in Olney for more than 40 years, is sad and worried about the neighborhood. "We are going to work and fight until every board on every house in Olney is taken down," she told the group gathered for the HUD news conference. In part to help educate buyers, HUD officials said that $1,500 of the incentives announced yesterday would be provided to buyers who participate in a home-buying education program approved by HUD. The remaining $500 in incentives would be a "supplemental commission" provided to real estate agents that sell FHA-foreclosed properties to homeowners. Pratt said the financial incentives would last for six months. The incentives have been used in some form in Baltimore, Chicago and parts of Tennessee, he said. Kevin R. Hanna, the city's secretary of housing and neighborhood preservation, said the changes that HUD announced were good. "Boarded-up homes send absolutely the wrong message. They send a message of a neighborhood in decline," he said. Contact staff writer Bob Fernandez at 215-854-5897 or bob.fernandez@phillynews.com . HUD trying to woo homeowners PHILADELPHIA once had the highest rate of homeownership in the nation. But not since 1998. That's when the percentage of owner-occupied homes in the city decreased from 62 percent to 59 percent. Now, Philadelphia is second, behind San Jose, Calif. While the city lost a net of 13,000 housing units during the '90s, there was a net gain of 11,000 rental units. This apparent conversion of owner-occupied housing to rental units is having a debilitating effect on working-class neighborhoods like Olney. Milton Pratt, director of the HUD regional office here, is offering up to $1,500 in cash incentives to anyone who buys a house from HUD as their primary residence. He's also giving brokers a $500 bonus on sales to owner-occupants. These incentives are available on HUD houses in 12 Zip Codes - 19120, 24, 26, 34, 35, 36, 37, 38, 40, 41, 44, and 49 - for the next six months, Pratt said. The cash incentives can be combined with existing HUD programs such as those that provide a 50 percent price discount to police officers and teachers in grades K-12. Pratt also has extended the time during which houses in these areas are marketed exclusively to owner-occupants and non-profit groups from five to 20 days. Pratt chose these neighborhoods because they have the highest concentrations of HUD owned properties and a disproportionate number of sales to speculators. In another significant policy shift, Pratt said HUD will remove the plywood sealing the windows of HUD houses to comply with a new Philadelphia law. Phyllis Santiago, a leader of the Eastern Philadelphia Organizing Project chapter at St. Helena Catholic Church, was one of those who lobbied Pratt to do something about the problem. Olney has the highest concentration of HUD-owned properties in the nation. It would be a good thing if these homes were purchased by buyers who want to live in them. However, that's not what's happening. A recent Temple University study found three-quarters of the HUD properties in Olney are snapped up by investors who turn them into rentals. "So many renters is not good for the neighborhood," said Santiago, who moved to Olney in 1990 with her husband and four sons. Investors and their tenants don't make the same investment in the community that homeowners do, she said. "What will have the most immediate impact on the neighborhood is taking down the boards," she said. "Not only will it add curb appeal for Olney, it may also speed up the resale process so these homes don't' sit so long.". On average it takes 18 to 24 months after foreclosure for a HUD house to sell. During that time, the windows are boarded up to protect the house from vandals. But it also creates an eyesore for the community, said Steve Culbertson, executive director for Frankford Community Development Corp. Frankford is one of the neighborhoods that will benefit from the program. "The boards are a clear indication of a problem," he said. "In a positively functioning real estate market, houses don't get boarded up because they are not vacant for a long period of time." Sealed properties also have a financial impact. Studies show that a vacant house lowers the value of nearby occupied dwellings by 25 percent. Pratt hopes the HUD houses will sell faster once the boards come down. "The houses will have more curb appeal and when people get inside, they will be able to see what the house looks like without needing a flashlight," Pratt said. He hopes to move 200 houses through the special incentives. HUD typically owns 550 to 600 properties in Philadelphia at any given time. "These incentives are based on what I heard and what I witnessed at the White House conference on minority homeownership," Pratt said. "I made a commitment to come back home and do something good for these neighborhoods." HUD homes must be purchased through a licensed real-estate agent, who has access to the local Realtor's multiple listing service. A list of HUD properties also can be found at www.goldenfeather.com Information about the Philadelphia incentives can be found at www.hud.gov/pennsylvania . |
