Reports and Studies

A series of articles from Fall 2003 NeighborWorks Bright Ideas including articles from Comptroller of the Currency, John D. Hawke, Jr. and Kendall McDaniel, an economist with the Center for the Study of Rural America, a unit of the Federal Reserve Bank of Kansas City. Complete listing and access info »

Real estate owned (REO) housing resulting from the recent foreclosure crisis threatens to destabilize low- and moderate-income neighborhoods across the country. Nonprofit organiza-tions seeking to redevelop these properties into affordable housing face weak market condi-tions and operate with limited resources and capacity. This study presents a framework through which nonprofits can analyze REO redevelopment opportunities for 1- to 4-unit properties within their communities. The paper specifies the conditions necessary for REO redevelopment and discusses how local market conditions, the geographic distribution and the physical characteristics of REOs, their ownership and legal status, internal organizational capacity, and public policies each affect nonprofit efforts to acquire, rehabilitate, sell and rent REO properties. Finally, this paper considers the unique difficulties of the current situation relative to past vacant-housing scenarios and concludes that many nonprofits may wish to pursue alternative, non-redevelopment strategies. Complete listing and access info »

In spite of a diminishing supply of public resources, many nonprofit housing developers are expanding their roles and their portfolios to address an increasing need for decent affordable housing. But as nonprofit housing organizations mature, the traditional project-by-project funding system fails to support their broader development goals. This paper stresses the urgent need for equity, or "organizational capital," to help nonprofit housing organizations build their capacity and their impact. Unlike conventional financing, organizational capital is underwritten against a borrower's balance sheet, or its organizational ability to repay. Whereas project-based loans are tied to one particular project, organizational loans can be a source of liquidity whenever an organization needs it: on the front end of a deal, for general business operations or during periods of organizational expansion. Despite its many advantages, there is an extremely limited supply of organizational capital in nonprofit affordable housing. This research outlines the practical challenges to organizational investing and uncovers the underlying barriers that have prevented a nonprofit organizational capital market from emerging. These findings lead us to explore nonprofit housing organizations in a "closed system" of standardized reporting and rational decision-making. The study concludes that while a new nonprofit reporting system would greatly encourage organizational investing in housing, the private markets alone will not bring organizational lending to scale. The final sections of the paper discuss the public policy implications of a closed nonprofit capital system and highlight some innovative approaches taken by lenders to overcome the obstacles of organizational investing and advance a new model of lending in nonprofit affordable housing. Complete listing and access info »

The NeighborWorks Campaign for Home Ownership 2002, in creating a framework for expanding NeighborWorks organizations' work with first-time homeowners, has also had the positive outcome of pooling the collective talent and creativity within the network. The campaign has given dedicated people who are the well-spring of local organizations' talent a chance to come together, share their wisdom and be inspired by their colleagues' ideas.

Winning Strategies is a natural response to the enthusiasm and collective thought expressed through the campaign. Documenting these strategies as case studies has been an important piece of the campaign's work, in part because these written reports can disperse accounts of successful models to distant locales and a range of audiences. The objectives in publishing Winning Strategies are:

• To describe and record in a straightforward way NeighborWorks organizations' innovative approaches to helping families overcome barriers to home ownership;
• To illustrate how NeighborWorks organizations are implementing the comprehensive approach to home ownership called Full-Cycle LendingSM, itself formalized under the aegis of the campaign; and
• To offer NeighborWorks organizations and others interested in home-ownership promotion a way to learn from and perhaps replicate existing work in the field.

Complete listing and access info »

In the midst of all the foreclosures sweeping the country, and the turmoil on Wall Street, nonprofit housing organizations are quietly going about the work of stabilizing communities hard hit by the crisis. Most have had frontline responsibility for counseling families threatened with foreclosure. With their assistance tens of thousands of families have restructured their budgets, negotiated with servicers to modify their loans, and saved their homes. Other families, too far along in the foreclosure process to stop it from happening, have received help transitioning to new housing arrangements.





While the work with distressed homeowners must continue, nonprofits are feeling increased pressure to deal with the growing foreclosed housing stock. These units are causing incalculable harm to neighborhoods, and any hope of housing recovery must ensure that these units are swiftly put back into productive use or demolished. This collection of 14 case studies outlines strategies that nonprofit organizations across the country are using to begin the process of repairing damaged communities.




The stakes are enormous. Vacant housing invites vandalism, and becomes a hub for gangs and crime. Virtually all case study subjects reported that, within weeks of housing becoming vacant, thieves break into the units and strip them of their valuable copper plumbing and wiring, heedless of any destruction they leave in their wake. In Phoenix a half-finished, abandoned subdivision was used as an informal "Home Depot" as other homeowners broke in and helped themselves to fixtures and appliances. In Cleveland, vandals remove not just the copper but the aluminum siding from vacant houses. In photos these houses have a desolate, post-disaster look, like the aftermath of a hurricane. When units get demolished the vacant lots soon sprout grass and trash, adding to the community's forlorn appearance.




Vacant, deteriorated units place a downward pressure on housing values that puts nearby neighbors in a bind. In order to sell their units they will have to reduce the price, as no one will pay top dollar to live in a blighted neighborhood. Yet their ability to refinance into a more affordable mortgage may be compromised by the drop in property values; in some cases this leads to additional foreclosures and the downward cycle continues.




Intervening in these troubled neighborhoods is challenging. In some markets housing prices are still falling, making it hard to determine the value of the units. Bank asset managers and servicers often lack detailed knowledge of the markets, or even of the units they have in their own inventory. This leads them to overvalue their properties and hold out for more than they are worth, delaying the process of acquiring and renovating them for resale to new homebuyers. Finally, the complex ownership structure of mortgages which were rolled into collateralized debt obligations and other investment vehicles makes it very difficult to establish who owns properties and who has authority to negotiate their sale.08
Complete listing and access info »

Foreclosures have been increasing across the nation, reaching record levels in 2006 and 2007, with elevated levels of foreclosure likely for several more years. Responses to the rise in foreclosure have been decidedly local. Local governments and local nonprofits working on the ground have developed unique solutions to help keep families from losing their homes and neighborhoods from becoming blighted by foreclosed properties. These efforts have generally been small, and few have reached a national scale. This report summarizes lessons from five successful foreclosure prevention programs that may be instructive for national and local replication. While each program is unique, together these five leading strategies provide examples of innovative practices that can be adopted by other organizations and other communities. Complete listing and access info »

The recent rise in subprime mortgage foreclosures threatens to undermine the historic homeownership gains made by low-income and minority households during the 1990s.

Particularly problematic is the fact that the wave of foreclosures sweeping the country is concentrated in low-income communities. Foreclosures have devastating financial and psychological impacts on borrowers, damaging their credit reputations and ability to secure credit in the future.

Yet the negative impact of foreclosures extends beyond individual borrowers, lenders, and investors. Foreclosed properties often represent an eyesore, a site for illicit activity, and a drag on local house prices in vulnerable neighborhoods, and contribute to negative perceptions of these places. These factors can, in turn, generate a vicious cycle in which the presence of several foreclosed properties in a concentrated geographic area increases the likelihood that loans on neighboring properties will be defaulted on as well.

Obviously, a run-up in foreclosures can impose unanticipated costs on mortgage industry participants. For investors and insurers of securities issues, foreclosures represent a direct reduction in cash flows and can reduce the market value of their securities. Foreclosure is also damaging to servicers, who incur significant expense pursuing and attempting to rectify problem loans. In addition, a servicer's bottom line deteriorates as the value of servicing rights must be written down as loans drop out of the pools backing securities issues.

Funded by the Neighborhood Reinvestment Corporation and building on the work of Neighborhood Housing Services (NHS) of Chicago, this report seeks to chart new ways that community-based organizations -- working cooperatively with private industry and federal, state, and local governments -- can develop new national-scale foreclosure prevention initiatives. Through its Home Ownership Preservation Initiative (HOPI), the NHS of Chicago has forged a new partnership with the city of Chicago and key lending, investment and servicing institutions doing business in the city. The partnership seeks to preserve homeownership whenever possible and keep families in their homes through pre- and postpurchase counseling, prudent application of loan workouts, and in some cases by providing opportunities to refinance into more affordable NHS loans. When foreclosure is unavoidable, the partners seek to preserve the vacant properties as neighborhood assets. Complete listing and access info »

Homeownership has always been a strong component of housing and housing policy in the United States. Owning a home is considered an important social and economic indicator, as well as a symbol of having a stake in society and contributing to the stability to the community. The system for producing housing units suitable for homeownership, and for financing home mortgages, has changed dramatically in recent decades. Technology and innovations have increased speed, efficiency and volume, resulting in more families finding mortgage financing than ever before and new homes being produced in record numbers. While homeownership rates are near all-time highs, particular demographic and economic populations, as well as distressed areas, lag behind. Despite greater access to mortgage credit for most families and communities, increased risks, and higher costs of credit, are being shouldered by consumers.

This paper attempts to provide an overview of U.S. housing policies related to homeownership, an analysis of the barriers to homeownership, and background on pressing federal policies, programs, and regulations that could be refined to better support homeownership. As the Millennial Housing Commission considers recommendations regarding federal homeownership policy, several issues are paramount:

1. What more can the federal government do to encourage and support homeownership?

2. What can the federal government do to encourage innovations in the mortgage market, while adequately protecting consumers?

3. What can the federal government do to help ensure that mortgage borrowers understand the rights and responsibilities of homeownership and are prepared to assume them?

4. What can the federal government do to encourage the production and preservation of homes affordable to those with lower-incomes?

Buying a home is typically the largest and most complicated financial commitment most households ever make. Would-be first-time buyers face many barriers to qualify for a conventionally-priced mortgage, including an inability to afford monthly payments, lacking sufficient savings for a downpayment and closing costs, having high debts or an unstable income. Even if they qualify, potential buyers may be hampered by a lack of affordable homes in a desirable area, or even information on how to buy a home or negotiate the best deal. Veiled or overt discriminatory practices still employed by some in the real estate and financial industries also conspire against some potential homebuyers. In combination, these hurdles, especially among low-income and minority populations, keep homeownership, and its ancillary social and economic benefits, out of reach.

Policy makers and practitioners should understand the risks and implications of expanding homeownership to lower-income families. Unlike in the rental housing market, individual families must be able to successfully maintain their homes and their mortgages. Individual households need to have the capacity to stay current on their loans and to undertake needed repairs and upkeep. When families fail at homeownership, entire neighborhoods can be affected in addition to the substantial losses individual households must endure. To the extent that expanding homeownership to low- and very-low income people is a priority, correlated issues of access banking services, personal financial management and education policy must be considered.

Based on interviews with leading practitioners, focus groups and other research, a series of policy changes are explored. Generally, policy prescriptions can be grouped into three categories:

1.) Expanding the reach of mortgage markets for sustainable homeownership;

2.) Educating and protecting consumers engaged in mortgage and home equity markets; and

3.) Producing and preserving units suitable for affordable homeownership. Complete listing and access info »

Enterprise Foundation and Neighborhood Reinvestment have joined forces with regional and local community development organizations in a national collaborative to advance resident services for families in affordable apartment communities. The Resident Services Collaborative meets semiannually to research policy alternatives, explore funding strategies, advance standardizing measures of success, and develop training. Complete listing and access info »

Much of community development work in this country is understood in urban terms - densely populated areas with attendant economies of scale, housing issues that can be addressed largely in isolation of economic development and infrastructure issues, micro-level service area focus without the need to address regional economies and housing markets, even simple communications and relationship-building opportunities.

None of this is terribly surprising. After all, the community development field grew out of urban activism and experience.

The translation of urban revitalization strategies and lessons learned into a rural community development model inevitably highlights the challenges unique to highly varied rural markets. The service area is typically numerous communities, sparsely populated, covering great distances. Absent are highly visible corporate headquarters and other traditional opportunities for local private partnership. Smaller municipalities are less likely to offer a full range of services to complement any nonprofit service delivery system.

At first glance the challenges facing rural development seem daunting. Needs -- or everything that seems to be so glaringly absent -- outweigh assets. However, rural markets are well worth a second look. In the few years since NeighborWorks America launched its Rural Initiative, we've uncovered astonishing examples of innovation with enormous community impact in some of the most challenging markets in America.

We think these innovations are well worth sharing. Rural markets are often the emerging markets for expanding regional economies. The closer we look at the work being done by community based organizations, and in particular, chartered members of the NeighborWorks network, the more we realize that these organizations function as front line economic engines for increased homeownership, infrastructure improvements, job creation and retention.

This report documents the compelling attributes of six business strategies that are successfully transforming diverse rural markets across America. Our hope is that this exciting new information, the first of a series, will stimulate numerous and varied adaptations within the community development field and spur additional investment in rural development by the private and public sectors. Complete listing and access info »