Reports and Studies

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 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 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 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 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 info »

Congress included a special $5 million, mixed-income demonstration program in Neighborhood Reinvestment Corporation's FY 2003 appropriation. The purpose of the set-aside was to explore approaches for serving households with incomes less than 30 percent of the area median ("extremely low income" or "ELI" households) in mixed-income communities. This paper shares highlights of the 21 grant applications (17 of which have been selected for funding) and how the special congressional funding made a distinct difference in the projects. Complete info »

Resident participation has been an area of community development aimed at increasing involvement of tenants in housing development, management and community-building. The precise roles and mechanisms of resident participation are not well understood, however. This paper explores the role of resident participation and its interaction with other factors that drive community revitalization. By understanding the necessary conditions, factors and other variables that strengthen resident participation, public policies can help low-income populations manifest their power and make a difference in their communities. The research presented here (1) describes the challenges and benefits of resident participation; (2) identifies examples of residents successfully contributing to the development and management of their homes; (3) details the conditions necessary for success; and (4) addresses the issue of assessing effectiveness. For those seeking to encourage resident participation, the are three major challenges include time and money; limited options due to economics; and limited community capacity. Examples of successful resident participation are presented, such as the Demonstration Disposition in Boston -- one of the most notable examples of resident participation in development in the past 10 years. Building management has also been an arena for various levels and types of resident participation, and many community development corporations have developed creative ways of involving residents in community-building efforts. The interplay of external and internal factors together creates conditions for resident participation. This paper identifies four major factors: impetus, politics, resources and values, describing the internal and external resources affected by each. To connect these external and internal resources, bridging resources of trust, community organizing, strategic partnerships and organizational capacity are necessary. Community planning and education make up a noteworthy bridging resource that allows for the necessary learning process to take place. Community education and planning happen in three phases: building a foundation, teaching skills, and following through. While there is general support for resident participation in housing development, management and community-building, measuring its effectiveness has received limited research attention. This paper describes the effectiveness of resident participation looking at the individual, building and community levels. These testimonials will be strengthened if hard measures of resident participation are developed and used to study its effects. Complete info »

This is a case study of the first resident-owned community created outside of New Hampshire under the guidance of the ROC USA system, and featuring PathStone, a member of the NeighborWorks Network and a certified technical assistance provider (CTAP) for ROC USA. Complete info »

This document presents introductory information gathered on a wide range of neighborhood revitalization initiatives. Complete info »

Mixed-Income rental properties that include extremely low-income households (below 30 percent of AMI) are a valuable strategy for community health. They simultaneously address two critical challenges: housing for those most in need and desegregating poverty. Understanding how to operate mixed-income apartments profitably is important to increase the development and underwriting of these properties.

With the generous support of the Ford Foundation, NeighborWorks America undertook this study of management and marketing practices of successful mixed-income properties that have served extremely low-income families while maintaining positive cash flow for at least five years.

This report describes seven strategies used by these properties to stabilize and maintain high occupancy rates with healthy operating budgets. For each strategy, we provide concrete implementation examples. Complete info »