Use Housing Settlement Funds to Help City Families Save their Homes by Marcelene White

Today's guest blog is by Marcelline White, Executive Director of the Maryland Consumer Rights Coalition (MCRC).

Good News: Baltimore City is getting $10 million in housing aid from the National Mortgage Settlement.

Bad News: Under the city’s current plans, none of that money will be used to help city families at risk of foreclosure save their homes.

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That’s why the Maryland Consumer Rights Coalition (MCRC) on Aug. 1 wrote City HousingCommissioner Paul Graziano to ask the city to change its plans and to include direct aid to families facing foreclosure in its plans for spending settlement funds. Twelve other Maryland fair housing and social justice groups endorsed that letter.

Baltimore has been hit hard by the foreclosure crisis. Since 2008, city families have received 89,903 Notices of Intent (NOI) to foreclose on their homes. In 2013 alone, foreclosure filings in Baltimore to date (and the third quarter is not complete) already total 2,533, which means the annual total for this year is likely to exceed the 2012 total of 2,793 foreclosures.

With so many families in trouble, it is very disappointing that the $10 million plan submitted by the city, and approved by the state Attorney General’s Office,  for use of settlement funds does little to address the plight of struggling families in danger of losing their homes. It does not include funding for emergency assistance for homeowners, for forbearances for families struggling to keep up with their mortgages, or to defray the costs to homeowners to refinance their mortgages.

The city’s current proposal focuses on razing and redeveloping more than of 550 vacant buildings in the city and sets aside $750,000 for incentive payments for those who purchase rehabilitated homes or purchase and rehabilitate homes in neighborhoods that are part of the city’s “Vacants to Value initiative.”

No doubt there is a real need to remove dangerous, dilapidated structures throughout the city and to spur new development. But the terms of the settlement allow funds to be spent on foreclosure prevention and foreclosure remediation efforts. The city’s plan focuses instead on helping new homebuyers and promoting redevelopment.

We’d like to see the city find creative ways to use the settlement money to help families stay in their homes and create new housing opportunities for homeless families. The city could, for example:

•  Launch an Emergency Mortgage Assistance Fund -- modeled on an expired Maryland program, an EMAF would assist homeowners who have lost their jobs, suffered a drop in income, or are struggling with medical problems. Under such a program, qualified borrowers who are 3-to-12 months behind on their mortgages could receive a loan for as much as $50,000 to cover arrearages and pay for up to two years of future mortgage payments.

•   Establish a nonprofit community banking program -- modeled after the Boston Community Capital’s Stabilizing Urban Neighborhoods (SUNS) Initiative, such a program would purchase owner-occupied homes facing foreclosure at current market value and sell the homes back to their former homeowners with a new mortgage.

•   Acquire and develop one permanent supportive housing project for homeless families and individuals -- in Baltimore City’s 10-year Plan to End Homelessness, stakeholders agreed to develop three sites for families. A portion of the city’s settlement funds could be used to pilot this initiative.

We’re also deeply concerned about the level of engagement the communities targeted for demolition have had in the planning process. This engagement must go beyond a single community meeting to ensure that residents understand the health and safety protocols required for demolition activities and know whom to contact if protocols are not being followed.

Residents of the communities targeted for demolition need to have the opportunity to understand the timeline for demolition activities and to participate fully in shaping the greening and redevelopment opportunities that will follow.