The bad news first: The rising foreclosures that are the fallout from the housing crisis are forcing millions of Americans from their homes. The silver lining: In Baltimore and other cities, it's offering nonprofit rehabbers like Chesapeake Habitat for Humanity (CHFH) the chance to snap up more houses that they can then repair for affordable resale to the working poor.
CHFH Executive Director Mike Mitchell says Habitat is working with city officials to rehab—and re-occupy—some of the 4,000 properties now in foreclosure that otherwise would be magnets for trash, trespassers, and the drug trade. That recent wave of foreclosures is in addition to the roughly 18,000 houses that were already vacant before the subprime crisis (the city controls about a quarter of those 18,000). But while some Habitat chapters around the nation have picked up foreclosed homes for as little as half their mortgaged value, a challenge faces Baltimore: About two-thirds of the homes in foreclosure are owned by investors, who, in many cases, have no intention of making them habitable any time soon, and who are biding their time until the market recovers and they can resell for a profit.
In reclaiming the abandoned homes, the skilled volunteers of CHFH are providing the muscle and materials, with help from corporate and individual supporters, while the city is trying to cut through red tape to complete the title-transfer process in less than the usual two years.
"We are also securing abandoned properties by partnering with Bank of America, Park School of Baltimore, Thrivent Financial for Lutherans, and other backers," says Mitchell. "By leveraging capital, we are providing families—many with annual incomes of $15,000 to $25,000—with affordable, decent housing.
"Baltimore has just too many hard-working families that could not access conventional mortgages and lacked simple, decent housing."
So far this year, 30 vacated homes in East Baltimore have been overhauled or are in the process of rebirth. And Mitchell has arranged with the city to buy and rehabilitate dozens more buildings over the next five years. And now it looks like Chesapeake and Arundel Habitat chapters may team up to invest in similar properties around the harbor.
"We are happy to work with Chesapeake Habitat for Humanity as they take on tough housing challenges," says Baltimore City Housing Commissioner Paul Graziano. "Habitat also has a national reputation of working alongside community members to change their neighborhoods. Their model is effective, and we have a great deal of respect for how they do business."
If passed, legislation working its way through Congress could help the city's efforts, sending $15 billion to states hardest hit by the housing crisis for the purchase and improvement of foreclosed property. States could then resell properties to nonprofits such as Habitat. However, the Bush administration has threatened a veto.
Meanwhile, some cities, including Baltimore, Los Angeles, Trenton, and Philadelphia, are getting aggressive with lenders they blame for the crisis, either ordering them to make additional efforts to work with homeowers before foreclosing, offering low-interest loans to bail out distressed borrowers, or suing the lenders, as Baltimore did when it sued Wells Fargo & Co., alleging a pattern of predatory lending practices in poor neighborhoods (which Wells Fargo denies).
For William Hudson, a 50-year-old housekeeper and recovered cocaine addict who once ran the streets, the new approach to the mortgage meltdown has been his ticket to home ownership. Having juggled up to three jobs just to afford rent, Hudson now has a $465 a month mortgage on his $100,000 home.
"I've been blessed, and there are no gimmicks," Hudson says. "Habitat's the real deal."
One of the communities where hesapeake Habitat has bought up properties is Washington Village in Pigtown. Neighbors there have been taking it upon themselves to deal with the wreckage that many of the absentee owners have left behind, says Donald Phillips, president of Citizens of Pigtown Community Association.
"The city has been responsive to our requests to address housing violations, but it seems that they have limited manpower, so it can take a while," he says. "In the meantime, the residents themselves are picking up trash and boarding up entrances where we've literally had vagabonds come in and squat."