City gets $13.6m in foreclosure funding

The city of Boston received $13.6 million last week in federal foreclosure funding, a grant that could have a significant impact on Dorchester’s 254 bank-owned homes.

The money was awarded to the Department of Neighborhood Development and represents a second round of funding in support of the city’s Homeownership Stabilization Program, which was announced last summer. The program had already received $4.3 million in federal funds and a matching amount from the state.

The goal of the program is to prevent foreclosures by helping existing homeowners and to reclaim foreclosed properties and get them in the hands of home buyers or developers who will rehabilitate the properties and sell them as affordable housing.

There are currently 860 foreclosed properties citywide, according to the city department. This additional funding will help the city accelerate some of the programs already under way.

Some of the money is being used to support the Boston Home Center, a program designed to help first-time home buyers with financial support and technical assistance. The program encourages buyers to purchase foreclosed properties.

A second component provides financial support for nonprofit organizations and developers to acquire foreclosed properties. And a third provides for the city to purchase foreclosed properties. Depending on their condition, they may be sold directly to home buyers or to developers to perform rehabilitation if repairs are needed.
With the new funding the city may be able to acquire 275 properties, said Lucy Warsh, spokeswoman for the department. To date, the city has purchased 33 units of housing and is in the process of closing on another 40 units, Warsh said. In addition, she said, there are another 100 properties “in the pipeline,” where the city has begun working with the banks with a goal of acquisition.

Buyers must meet certain guidelines and be in low and moderate income brackets in order to participate in the programs.

Boston has not been as hard hit as other comparable cities by foreclosures, said Warsh. The city got ahead of the issue in 2007 with an educational campaign to prospective buyers warning them about subprime mortgages, she said.

The city began tracking foreclosures in 2006. The number of such properties grew from 60 in 2005 to 261 in 2006 and 703 in 2007. In 2008, there were 1,215 foreclosed properties.

While the number today stands at 860, it may go up this year. “Because of the economy and the jobless rate, we think the numbers may spike up going forward,” Warsh said.