Providence Offers Help to Buy Foreclosed Homes
ALEX CHADWICK, host:
This is DAY TO DAY from NPR News. I'm Alex Chadwick.
MADELEINE BRAND, host:
And I'm Madeleine Brand. Despite all those efforts to slow down the mortgage crisis, the wave of foreclosures continues. Tens of thousands of homes sit boarded up in neighborhoods across the country. We'll turn now to two cities taking different approaches to dealing with those empty houses.
CHADWICK: First to Providence, Rhode Island. The mayor there is trying to help families buy those empty houses and fix them up and move in. He's also pressuring banks to sell them more quickly. NPR's Tovia Smith reports.
TOVIA SMITH: Providence loves to boast about its renaissance. The city went so far as to move a river to remake itself from a down-and-out old city into a thriving urban center. It's exactly why the mayor is so distressed to see what's happening now.
Mayor DAVID CICILLINE (Providence, Rhode Island): And here's a house right here on Pico(ph) Street that's boarded up. It's been foreclosed; it's sitting there vacant. You can start to see there's some damage, a broken window...
SMITH: Driving through Smith Hill, an historic neighborhood that's seen hundreds of millions of dollars of new investment. Mayor David Cicilline points out the latest casualties of the mortgage lending crisis.
Mayor CICILLINE: You can see right up here, on the same side of the street, there's another boarded-up house. There's an open window so that's not even secure.
SMITH: Cicilline says there are some 750 boarded-up homes in Providence now, a kind of second wave of destruction in the tsunami of foreclosures, as one observed called it. It's bad enough when families lose their homes, the mayor says, but now those vacant houses are dragging down property values community-wide.
Mayor CICILLINE: This house here, for example, is for sale. Well, it's hard to get someone excited about the house across the street which is for sale when it's across the street from two houses that have been foreclosed that are boarded-up. And that being not sold has an impact on the next-door neighbor. And you know, it's like a cancer, it just grows and grows and grows.
SMITH: To help get families back into these vacant houses, Cicilline is basically offering a cash handout to help buyers fix them up. The city has put up a million dollars for no-interest loans. And since he announced it two weeks ago, more than a hundred people have applied.
Mr. KENNETH GRAHAM(ph): I mean, there's no words to even describe free money. I mean, you can't beat that.
SMITH: Kenneth Graham is hoping to get $20,000 from the city. He says the offer convinced him to shop for a place in Providence and ultimately to buy.
Graham's new home on Alabama Avenue was relatively lucky. While it sat empty for six months, it was never vandalized or looted for its copper pipes or boiler like so many others. But, Graham says...
Mr. GRAHAM: It was disgusting. I mean, it really was. It was disgusting. You know, there was dropping everywhere. Rats and different types of animals could get in. The bank was in - I believe it was Oklahoma. So they didn't care.
SMITH: Trying to get the banks' attention is also part of Mayor Cicilline's strategy. He wants to fine and possibly sue financial institutions who hold vacant properties too long, and he's imploring lenders to sell even if it costs them.
Mayor CICILLINE: They ought to take a haircut. Of course they should. Look, this is about correcting really what a national disgrace. And they ought to be willing to reduce in their prices and take some losses to move those properties over the next 90 days into the hands of Providence families.
Mr. BILL REINDHART (Aquin(ph) Loan Servicing): The mayor does need to understand that institutional investors are probably not inclined to walk away from their investment and give a property away.
SMITH: Bill Reindhart is a vice president with Aquin Loans Servicing that represents investors who now own title on several dozen homes in Providence. He says everyone wants to sell but there is pressure from investors to get something back.
Mr. REINDHART: To the extent that we start, quote-unquote, "giving away properties," then potentially we have liability and we're subject to an investor asking, well, did you get the best price or did you just, quote-unquote, "dump it"?
SMITH: And with those investors now more likely to be from around the world than from the local bank, they are not so swayed by community appeals that they're causing neighborhood blight. Tom Fitzgibbons is president at MB Financial Bank.
Mr. TOM FITZGIBBONS (President, MB Financial): I would be embarrassed, if you will. But for somebody in the Netherlands, or India, or wherever, who owns this security that's been written off at this point, they're willing to be patient and so they'll wait.
SMITH: And in some cases mortgage holders says there are simply no buyers at any price. In Cleveland, for example, they offered to give foreclosed properties to the city and the city said no. Many of the vacant houses were already ruined beyond repair and the city said it couldn't afford the cost of demolition. Tovia Smith, NPR News.
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