Neighborhood Stabilization Program latest news

In Logan Square and Hermosa, home buyers on the hunt

Fri, 05 Oct 2012 12:00:00 -0600

Vanessa Valentin and James Rudyk aren’t exactly salesmen – they’re respectively a community organizer and executive director for the Northwest Side Housing Center – but they recently demonstrated the art of persuasion while leading a trolley-full of potential home buyers through the streets of Logan Square and Hermosa.

James Rudyk and Vanessa Valentin point out items of interest during a tour of Neighborhood Stabilization Program houses for sale in Logan Square and Hermosa.

Photos by Gordon Walek

The occasion was a tour of four formerly vacant, foreclosed houses that Mercy Portfolio Services, through the federally-funded Neighborhood Stabilization Program (NSP), had acquired. The properties were rehabbed by NSP-approved developers and are now available to home buyers of modest means.

NSP has been acquiring similar properties on targeted blocks in 29 Chicago neighborhoods in hopes that returning vacant single-family houses and apartment buildings to productive use would arrest the slide of disinvestment and abandonment sparked by the collapse of the housing market several years ago.

Valentin and Rudyk – she in Spanish, he in English – weren’t just selling the four houses, though. They were selling the neighborhoods.

“We’re not going to pass it,” said Rudyk as the trolley approached the first house – a solid brick single-family at 1823 N. Tripp Ave., “but two blocks north of here, at 2156 N. Tripp, is the childhood home of Walt Disney.”

Who knew? A couple of blocks later, as the trolley rolled down Armitage, the tour guides noted that the Honduras consulate was just up the road, on Fullerton. And on Hamlin Avenue, Rudyk and Valentin pointed out Mozart Elementary School. “It’s one of five local schools where the Logan Square Neighborhood Association (which helped organize the tour) operates community learning centers,” they said. “They provide classes for adults – like English as a second language and GED – plus after-school programs and homework help for kids and lots of arts and cultural programs.”

The leafy streets of the Northwest Side neighborhoods are a lure for people who want not only a house but a good community to live in.

On a brief detour on North Avenue, through neighboring Humboldt Park, they passed a number of excellent restaurants, businesses, churches and key community agencies. The roughly 30 mostly Latino passengers, many with small children, nodded approval. The local amenities, coupled with the appeal of the leafy Logan Square and Hermosa streets, lined with tidy frame and brick single-family homes, made this expedition a realtor’s dream.

And the realtors were on hand, too, at each of the houses – 1823 N. Tripp Ave., 2028 N. Kilbourn Ave., 2016 N. Karlov Ave., and 3508 W. Palmer St., where they dispensed listing sheets and answered questions during the 10-minute house tours. The drill was repeated many times over the course of the day as two trolleys ferried about 150 people back and forth between the McCormick Tribune YMCA at 1834 N. Lawndale Ave. and the four houses.

At the Y, they had the opportunity to speak with lenders, meet with housing counseling agencies and eat lunch.

Juan M. Zapata was in the market for a house for his parents.

“This is a good program,” Juan M. Zapata, who was helping his elderly parents find a new, small house relatively close to where he’s living on North Springfield, said about NSP. He was impressed with the quality of the rehabs and the generous subsidies available through the program.

Ditto for Ana Jimenez, 22, and Anita Dzitkowski, 26, friends who currently live on adjacent floors in a Logan Square apartment building but are keen to move to single family homes. They’re familiar with the neighborhood, like it, and want to stay. And through NSP they might be able to own places with monthly payments comparable to their rent checks.

Last year, NSP had a similar tour of for-sale houses in Humboldt Park. They sold quickly and it wouldn’t be a surprise if those in Logan Square and Hermosa do, too. All properties showcased on the tour are currently under contract.

Anita Dzitkowski, left, and Ana Jimenez - neighbors in a Logan Square apartment building - were both looking for places to buy.

Spirits on the trolley were high, the houses and streets looked great, and despite the hardship and heartbreak that have afflicted so many homeowners as a result of the foreclosure crisis, plenty of people – many of them on the trolleys – remained convinced that home ownership is a worthy goal. Some of them will soon be moving in to the NSP houses they visited.

NSP: Where it's been, where it's going

Wed, 04 Apr 2012 12:00:00 -0600

Katie Ludwig discussing the Neighborhood Stabilization Program at a public meeting on Chicago's South Side.

Gordon Walek

Writer Bill Healy recently spoke with Katie Ludwig, an assistant commissioner dealing with foreclosure mitigation in the Chicago’s Department of Housing and Economic Development, about the impact of the Neighborhood Stabilization Program. Ludwig, who's been the city's NSP point person since the program's inception, grew up in Brighton Park until age 6 when she moved to Texas with her family. She came back to Chicago to attend college at DePaul University, where she met her husband. The Ludwigs owned a home in Pullman before moving to Mount Greenwood, where they currently live.

How much evidence is there that the Neighborhood Stabilization Program has been effective?

We haven’t done any full-blown analysis or evaluation, but I would say the assumptions we started with when we designed the program didn’t hold. We thought the market had hit bottom in 2009-2010 when we started doing all this. We thought, “We’re at the bottom and it’s only up from here.” And I don’t know if we’re even at bottom yet.

It’s such a dynamic landscape we’re in right now. Will Towns [of Mercy Portfolio Services, the city’s non-profit NSP partner] will often say, “The challenge with NSP is that it’s short-term money to solve a long-term problem.” It’s a problem that had been simmering for a while and you’ve got this money that says you have to fix this in three years.

I’ve had to temper my own expectations for the program. I want that “before” and “after” shot. And that “after” shot should show no vacant homes on the block, no garbage, and no houses in a state of disrepair.

If you took the before and after at many of our NSP homes, you’d see that some homes have been rehabbed but a couple more vacants might have popped up in the meantime and there’s still this distressed aura about it. It’s not simple and NSP isn’t going to solve everything by itself.

On a more positive note: We’ve made good relationships with communities and developers in those communities. And the equivalent of 800 full-time jobs have been supported by the NSP.

How much NSP funding has been spent so far and how long does the city have to spend the rest?

Over the three rounds of NSP funding the City of Chicago has gotten close to $170 million. The city received $55 million from the first round of NSP funding (NSP 1). Most everything that has been acquired with that money is either finished or is in the process of being rehabbed. There are a few projects that will begin rehab this year.

The $98 million from NSP 2 is also on the tail end. For NSP 3 - which at $15.9 million is significantly less money than the first two rounds of funding - things are just ramping up. This third round of NSP funding focuses on parts of five communities – Belmont-Cragin, Chatham, North Lawndale, East Garfield Park and West Pullman. NSP 3 money has to be spent completely by mid-March 2014. But the program will be operating after that with revenue coming in from home sales.

What strategies is the city pursuing in conjunction with the NSP money to help stem foreclosures?

Last year Mayor Emanuel announced the Micro Market Recovery Program (MMRP). That program is building on work that was started under NSP. We have nine target areas with the MMRP and we’re asking ourselves, “How can we layer different resources, public and private, with the goal of stabilizing the real estate there?”

One program we’re working on is “TIF Purchase Rehab.” We’re hoping to use TIF (Tax Increment Financing) funds to assist homebuyers looking to buy a vacant home within the TIF district. That could mean helping homebuyers with up to 25 percent of the total cost to acquire and rehab the property in the form of a recoverable grant with some strings attached to it.

Let’s say a house is selling for $30,000 but needs $100,000 worth of work. That’s $130,000 total costs, which in today’s climate would be hard to get financed. But if we gave them 25 percent of that amount in the form of a grant, they should be able to get the rest financed.

We need to create more tools. TIF is an abundant resource in some places, something we could be using more in this battle against foreclosures and vacancies. Right now we’re in the stage of determining which TIFs to work in and how much money to set aside in each of them. The ordinance for the big program passed but now we have to go through the process of finding money in each TIF and setting it aside. It’s possible that by April or May of this year, homeowners could get TIF assistance in purchasing NSP properties.

Is there any possibility of more money from the federal government for Chicago’s Neighborhood Stabilization Program in the future?

Last year President Obama introduced the American Jobs Act, sometimes referred to as “a second stimulus bill,” which had a lot of money set aside for different programs, many of them jobs focused. That included $15 billion for Project Rebuild – which is basically NSP 4. That would be a lot of money. To date there’s been less than $10 billion total in the first three rounds of NSP funding.

Some of that money is competitive where non-profit and for-profit partnerships could apply. But a lot of it is just guaranteed by entitlement to states, cities and counties. Chicago would be guaranteed to get a certain amount of money. It differs from NSP in that the money is more flexible in how it can be spent: some of the money can be spent on commercial buildings, for instance.

By calling it Project Rebuild instead of NSP 4, is that an indication that the Obama administration is attempting to re-brand the Neighborhood Stabilization Program?

The change in name might be to differentiate it from the NSP because Project Rebuild funding would have more flexibility. There has been pushback on the NSP from some members of Congress. Hearings were held in mid-2011 and the Department of Housing and Urban Development had to defend the program. Some of the changes address concerns that were brought up about the program.

How many people have purchased homes through the NSP in Chicago?

We’ve sold close to 20 homes. Just recently there was a closing on one of the row houses in Pullman. People who are renting in the community or living with their mom there are buying homes through NSP. They know the community and see it as a place of opportunity. More homes have been sold in Chicago Lawn than anywhere else, though not by much. The program started there and so those homes have been on the market for a while.

When we’re trying to sell a home, we have to ask ourselves what the block looks like today, because in some instances that’s changed since we acquired the house. We have to see how many other vacants have popped up since we began working on the block. If we’ve got it listed for $120,000 and we’re not getting any bites, maybe we need to adjust pricing.

A couple of NSP houses have been broken into repeatedly. We may have to sell those homes at much lower prices. We find ourselves starting to think, “Do we need to consider selling them to a community-based organization or to a local church who can get it into the hands of a grand-family, where grandparents are raising grandchildren? Or maybe make sure it gets into the hands of a veteran? Can the local hospital use it for workforce housing?” I think probably over the next couple of months, we’ll be exploring those options.

For one- to two-unit buildings, home ownership is still the first and best option. But we’re beginning to ask ourselves, for properties that are on the market for eight, nine, 10 months, should we consider an alternate disposition?

Any other ideas for what the city might do differently this year?

Right now, Mercy Portfolio Services acquires a house and transfers it to a developer. A developer spends $300,000 let’s say, to get it rehabbed and then we sell it. Costs are high in part because one of the NSP stipulations is that we have to pay State of Illinois prevailing wages to people; $40-50 an hour is not unusual. Costs can double, if not more, because of that. So we’re asking ourselves, “What can we do differently to keep costs down?” One way to do that is to skip over the developer part and go straight to homebuyers. We can work with the homebuyers to get the rehab done.

Mayor hails first fruit of foreclosure fight

Thu, 19 Jan 2012 12:00:00 -0600

Alicia Ivy is fed up with the foreclosure blight dragging down her block in West Humboldt Park and was only too happy, on the sunny first Friday of 2012, to give Mayor Rahm Emanuel a walking tour of the lowlights.

“This is what we’re up against,” Ivy said, waving at a boarded-up, graffiti-pocked two-flat across the street from her nicely maintained graystone on the 700 block of N. Christiana Ave.

Activist Alicia Ivy - proud of her nicely maintained graystone but tired of the blight brought on by nearby foreclosures - was happy to give the mayor a tour of her neighborhood.

John McCarron

“This was my parent’s house,” she said of her place. “This is where I grew up. We can’t let this foreclosure stuff bring us all down.”

Mayor Emanuel was in West Humboldt on Jan. 6 to see the problem first-hand and announce expansion of the city’s core effort to acquire, rehab and re-populate foreclosed properties, called the Micro-Market Recovery Program (MMRP).

First announced by the mayor last August, the idea is to better focus and coordinate a multi-partner effort to acquire and rehab foreclosed buildings—especially multi-unit buildings—beginning in nine target communities.

It’s an extension of a strategy recommended early on by LISC/Chicago and its partners—a strategy that helped the city win more than $150 million from a competitive federal program to fund purchase-and-rehab of lender-owned housing.

"Nobody's going to spike the ball on the 30-yard-line," Mayor Rahm Emanuel said of the city's efforts to date. "We're not in the end zone. But these are the right type of strategies ... to get smart and to solve the problem."

Gordon Walek

MMRP services will include targeted code enforcement efforts; foreclosure prevention outreach; and resources and incentives to induce developers and owners to purchase, rent or sell foreclosed or vacant properties. Also, the city will use its power to assume title to or control certain distressed properties, holding them for future development or alternative uses.

“When a home gets foreclosed on a block,” Emanuel said, seconding Ms. Ivy’s fears, “research shows every other house loses about $10,000 automatically in value. It has an immediate impact.”

'Smartened up'
The mayor ended his walk-around with an outdoor press conference at the corner of West Huron Street and North Spaulding Avenue. There, on the northwest corner, is an eight-unit red brick walk-up being rehabbed by Hispanic Housing.

The city's Micro-Market Recovery Program will provide targeted code enforcement; foreclosure prevention outreach; and resources and incentives to induce developers and owners to purchase, rent or sell foreclosed or vacant properties.

Gordon Walek

“We’ve ‘smartened up’ to the problem,” Emanuel said, conceding that, even with the federal millions, there’s no way City Hall can make a noticeable impact unless it targets specific neighborhoods.

“We were spreading the peanut butter way too thin,” he said. “Then Andy came to me, and we decided this had to be dealt with from a neighborhood perspective.”

“Andy” is Andrew Mooney, who left his position as executive director of LISC/Chicago in the fall of 2010 to help reorganize the city’s Department of Housing and Economic Development (HED). He was asked last year by newly elected Mayor Emanuel to stay on as commissioner.

Lengthy process
Asked at the press conference why the red brick walk-up at 3304-08 W. Huron St. will be just the first MMRP-assisted property to be reoccupied when it opens this spring, Mooney explained why foreclosure turnarounds are such a tough slog.

“This is a lengthy process,” Mooney said. “It’s finding out who owns the buildings, getting title through the court system, figuring out how to get the rehab work financed and done. And once they’ve been vacant for a period of time they need a lot of rehab.”

The Huron building made a good example, having lapsed into the foreclosure process after a developer tried to convert it to condominiums. Mercy Portfolio Services, which manages the funds won through the federal Neighborhood Stabilization Program (NSP), purchased the empty building at a deep discount last year. With financing provided by Community Investment Corporation (CIC), the finished property will be transferred to Hispanic Housing, which will act as landlord.

The city won a $150 million federal grant to purchase and rehab lender-owned housing.

Gordon Walek

In addition to LISC, other MMRP partners include Neighborhood Housing Services of Chicago, which counsels troubled borrowers and often identifies buildings ripe for purchase; and the MacArthur Foundation, which is making nearly $20 million available through loan programs that will leverage another $50 million in private capital.

LISC/Chicago provides financing to Mercy Portfolio Services through a $4 million line of credit to cover due diligence and acquisition costs, said Susana Vasquez, who succeeded Mooney last year as executive director. To date that revolving line has fronted over $19 million to get the paperwork moving on dozens of buildings.

Organized people
LISC/Chicago and NCP provide a lot more than money to help advance the MMRP strategy. Early NCP organizing efforts will help the city hit the ground running in five of the nine neighborhoods targeted by the city that are part of New Communities: Chicago Lawn, Woodlawn, Auburn Gresham, Englewood and Humboldt Park, which includes West Humboldt.

There the NCP effort is led by Bickerdike Redevelopment Corp., which, like several other NCP communities, already had organized a foreclosure prevention program and, with partners like Neighborhood Housing Services, was in a good position to identify blocks—and clusters of blocks—where the city and Mercy could focus their efforts for maximum effect.

One stop on the mayor's tour was this building on Huron Street, rehabbed through the federal Neighborhood Stabilization Program that's managed locally by Mercy Portfolio Services.

Gordon Walek

Joy Aruguete, Bickerdike’s executive director, attended the mayor’s press conference and said her group, which operates several affordable-rent buildings nearby and even oversees its own construction subsidiary, hopes to take possession of other buildings via MMRP.

What LISC and NCP contribute most to the foreclosure fight, though, might just be engaged people like Alicia Ivy. She’s been active with Bickerdike, with the West Humboldt Park Development Council, with Ald. William Burnett’s 27^th Ward office, and with the West Humboldt Park Farmers’ Market and Bazaar.

Emanuel thanked Ivy for leading the tour of her block, but then cautioned the press that Chicago, with nearly 10,000 bank-owned residential properties, is only beginning to turn the corner.

“Nobody’s going to spike the ball on the 30-yard-line,” the mayor said. “We’re not in the end zone. But these are the right type of strategies … to get smart and to solve the problem.”

Chicago NSP helps fill demand for affordable rental housing

Mon, 31 Oct 2011 12:00:00 -0600

When Chicago first applied for Neighborhood Stabilization Program funds to help stabilize neighborhoods hit hard by foreclosures in 2008, it imagined that most of that money would go toward buying and rehabbing foreclosed single-family houses and getting them into the hands of homeowners. City officials thought only about 40 percent of their NSP money would go towards creating affordable rental apartments.

The 46-unit building at 60th Street and Indiana Avenue, formerly a neighborhood eyesore, was acquired and renovated through NSP.

Bill Healy

“Very early on that flip-flopped,” said Katie Ludwig, the assistant commissioner in the city’s Department of Housing and Economic Development who helped apply for, and helps administer, Chicago’s NSP.

One reason for the switch was that the city, and Mercy Portfolio Services, which administers NSP, was discovering more and more multi-unit apartment buildings in distress. Some of those buildings, which can span entire city blocks, were abandoned and deteriorating, and their hulking remains cast foreboding shadows through many neighborhoods.

Meanwhile, “People think landlords are raking in cash hand over fist,” Ludwig said. “But when renters are having a hard time paying their rent, yes, you can evict people, but that’s not easy – it’s long and costly. And in the meantime they’re not paying rent. How are you supposed to maintain your building? Pay your taxes?”

Leasing agent Jim Watts, left, in one of the apartments on Indiana Avenue.

Bill Healy

And while prices for single-family homes still remain within reach for many people, it’s less common to find someone able or wanting to purchase a multi-unit building that might cost hundreds of thousands of dollars.

But, working with a variety of developers, that’s exactly what NSP has done, and in the next three to four months a number of fully rehabbed larger apartment buildings will open their doors to tenants for the first time in years.

NSP rentals in Washington Park

On South Indiana Avenue, in the Washington Park neighborhood, a 46-unit blonde brick courtyard-style building runs almost the entire block from 60^th to 61^ststreets. In recent years, empty and deteriorating, it had been more a drag on the neighborhood than a benefit. But now, thanks to NSP and Brinshore Development, it’s been completely rehabbed.

Ironwood Courts, as it’s now known, has already leased 28 of its 46 apartments, with plans to fill the rest of the two-, three- and four-bedroom units by the end of the year. Jim Watts, the leasing agent, said he’s had no trouble finding tenants.

“We had some signage up,” said Watts, adding that a lot of people looking at the apartments already live in the area, but are interested in moving to this building.

Two blocks away, at 59^th and Wabash, a 36-unit building, St. Edmund’s Court, will open in November, also thanks to NSP. St. Edmund’s Redevelopment Corporation, which is doing the rehab, has been building affordable housing inWashington Park for more than two decades.

“As soon as people see the construction underway, there’s a waiting list,” said Kevina Bronaugh, regional manager for St. Edmund’s. She noted that people looking for affordable apartments come from all walks of life, but that St. Edmund’s properties often include many seniors and single mothers. Affordable housing is not synonymous with the unemployed, though a quarter of all the rental units are set aside for low-income individuals and families. A teacher could qualify for affordable housing, for instance.

Though St. Edmund’s Court is still under construction, building managers are accepting general inquiries about the apartments. They want to know what the potential renters’ annual income is and how many people are in their household. As the project nears completion, they’ll begin processing applications – interviewing potential renters, running credit checks, going on visits to their current homes. They want to have the building full by February.

What Chicago can learn from other locales, and vice versa

Chicago is not alone in thinking about how to use NSP dollars to create affordable rentals and stabilize neighborhoods.

A spokesman for the U.S. Department of Housing and Urban Development, which administers the NSP, said funds are being applied differently in cities and counties across the country, according to each place’s temperament. Some places – such as Detroit and Cuyahoga County, in Ohio – use demolition as a primary strategy for stabilizing communities. Other locales started off with a strategy that emphasized homeownership and have since shifted to more rental approaches.

Katie Ludwig, assistant commissioner in Chicago's Department of Housing and Economic Development, speaking at an NSP event.

Gordon Walek

In Milwaukee, for example, there is strong demand for affordable rental apartments. Between 400 and 500 rental units were created in Milwaukee using money from the second round of NSP, said Maria Prioletta, the city’s redevelopment manager. She said because more units are at stake than with single-family home transactions, rehabbing apartments allows the city to have a strategic impact on particular neighborhoods.

Ditto for Pinellas County, Florida, which comprises St. Petersburg and Clearwater and has endured a large number of foreclosures in the past few years.

Anthony Jones, the county’s community development director, said the housing crisis showed that homeownership isn’t necessarily good for everyone, especially people of modest means. So he and his colleagues have worked to acquire and rehab rental units as part of their evolving approach to using NSP funds.

When asked if he had any advice for Chicago as it embarks down this new path of creating rentals in concentrated areas, Jones said Chicago should consider putting properties in land trusts, which can impose rental price restrictions beyond the limits required by the NSP, and for longer periods of time.

Maybe, said Ludwig, but land trusts can also serve as a deterrent to potential investors. And, she said, rents are already low in the Chicago neighborhoods where the NSP is focused.

Moving Forward Together

Fri, 28 Oct 2011 12:00:00 -0600

The one-two punch of the foreclosure epidemic and Great Recession is teaching community development practitioners to build more effective partnerships, get closer to local conditions … and maybe even redefine what’s possible.

An epidemic of foreclosures is redefining how community development practitioners work with one another.

Alex Fledderjohn

There’s a new reality out there and its lessons are coming fast and hard.

“Building community is getting a lot harder,” said Cindy Holler, president of Mercy Housing Lakefront. She welcomed some 400 community development professionals – from bankers to neighborhood organizers, from contractors to foundation executives – to Mercy’s “Moving Forward Together” conference held in Chicago on October 19, 2011.

“Some of the best community work in housing has come from Chicago,” she said. “But the world has changed.”

The nation is becoming more divided both economically and politically, she explained. “We’re losing our ability to get to the middle … community development is about negotiating and getting to the middle … moving across sectors and across organizational silos.”

Cindy Holler, president of Mercy Housing Lakefront.

File photo by Alex Fledderjohn

Conference keynoter Mercedes Marquez seconded Holler’s call for a deeper kind of “community engagement.” She observed that the complexity of structuring affordable housing – deals involving complex federal tax credits and multi-layered financing – tends to focus practitioners more on “the deal” and less on the neighborhood itself.

“That’s a problem,” said the assistant HUD secretary for community planning and development. Marquez promised that within the Department of Housing and Urban Development the same “technocratic” trend is being replaced by a less theoretical and “more of a practitioners view” to actually “help people get it done” at the local level.

Cuts = targeting

“We have an unbelievable lack of capacity” at the local level, Marquez said, caused in part by 20 years of a federal block grant system that doesn’t give cities and states sufficient wherewithal to develop in-house capacity to plan and, and especially to target areas where need is greatest.

Targeting is key going forward, she said, because the foreclosure crisis has made it clear that many cities, such as Detroit, “have to get more compact” and in some areas move to other land uses besides housing. Marquez conceded, however, that local officials often “don’t want to talk about that because it’s very difficult politically.”

Another reason for getting better at targeting, said Marquez, who once ran the housing department for the City of Los Angeles, is the expected budget bloodletting as Congress sets out to curb the federal deficit.

LISC/Chicago Executive Director Susana Vasquez at the groundbreaking ceremony for Zapata Apartments, an affordable housing development in the Logan Square neighborhood.

Gordon Walek

“The dollars are shrinking,” she said, but “NSP shows that it (targeting) works.” She referred, of course, to the three-year-old Neighborhood Stabilization Program, the nationwide foreclosure purchase-and-rehab program managed in Chicago by Mercy Portfolio Servicers. Rather than scatter NSP funds across all impacted neighborhoods, the city and Mercy Portfolio targeted blocks with sufficient other strengths – proximity to schools, say, or a new public library – so that rehab of a cluster of bank-owned properties would arrest overall neighborhood decay.

“But it’s hard,” Marquez said of the upcoming budget flail. “So many of them (members of Congress) lack real knowledge about the votes they’re going to take and what they’re going to cut.”

“We are all in this together,” she said of the budget battle, “whether you’re a for-profit, a bank, a non-profit or in government. We will not survive the next round (of federal budget cuts) unless we hang together and learn each other’s language … and challenge one another on these very difficult issues of integration, of targeting, of leverage.”

Redefine “scale”

Next a panel of senior community development executives took up the question of what’s being learned what needs to happen next.

Susana Vasquez, executive director of LISC/Chicago, suggested community development practitioners may be asking too much of themselves and of their partners if they think they, by themselves, can produce neighborhood turnarounds.

Ed Jacob, of Neighborhood Housing Services of Chicago.

Courtesy of Mercy Housing

“We really need to redefine scale,” said Vasquez. “Change happens at the margins. If we worried about scale at the front end, no one would be working with us in an Englewood (a desperately poor Chicago neighborhood).”

Vasquez previously headed LISC/Chicago’s New Communities Program, or NCP, a grassroots development effort in 16 neighborhoods … and one that is redefining what success looks like in the face of widespread economic setback.

The important question, Vasquez said, “is what, at the margin, can we change that might stimulate the private economy and bring more investment. Sometimes it’s a single discreet investment that will begin to turn things around.”

Panel moderator Stephen Friedman, president of SB Friedman Development Advisors, observed that foreclosed and abandoned properties have become an “unavoidable” problem that in some neighborhoods afflicts 15 to 20 percent of the housing stock. What, he asked, does recent experience say about our best strategy?

Rehabs for rent

“It feels like we’re running faster and faster on the treadmill and we’re losing ground,” answered Ed Jacob, executive director of Neighborhood Housing Services of Chicago. “With NSP we rehab a home, get it sold, and now there’s two more vacancies on the block … so first of all, we’ve got to keep people in their homes.”

To that end, he praised a new effort by Mercy Portfolio to buy at deep discount troubled mortgages and negotiate a lower, more affordable, monthly payment with borrowers so they can stay in their homes. (See: Foregoing foreclosures).

Now that foreclosures are being driven by unemployment and job loss, Jacob explained, as opposed to predatory lending that ignited the crisis, there’s a steady buildup of “shadow inventory” with some 18,000 vacant properties in Chicago alone. “So if we have 400 people here in the room,” Jacob quipped, “each one of us would have to take more than 40.”

He said rental must be a part of any effective rehab strategy. “Quite honestly, in neighborhoods where you see the most vacancies, there is no functioning mortgage market for home purchase.”

But large-scale rental of rehabbed bungalows and two-flats, Jacob cautioned, “creates a challenge on the property management side … so we’ll have to tap into expertise on the private side, including private individuals who maybe own a home on the block and would be willing to buy one down the street. But they’re going to need some training – how to find good tenants, how to manage property.”

The other panelists were: David Doig, president of Chicago Neighborhood Initiatives; Marc Jahr, president of the New York City Housing Development Corporation; and Reginald Jones, executive director of the Steans Family Foundation. Steans continues to make major investments in Chicago’s North Lawndale neighborhood, including a soon-to-be-announced $50 million community learning center.

The “Moving Forward Together” conference was a milestone on Mercy Housing’s campaign to address the foreclosure crisis in the Chicago/Milwaukee region by: building or saving 7,500 affordable homes, helping 2,000 families avoid foreclosure and preventing displacement and homelessness for 20,000 people. Major campaign sponsors include the Pierce and Associates law firm, Bank of America, Chase, Citi, Enterprise Foundation, Housing Partnership Network, Northern Trust, MacArthur Foundation, and Polk Bros. Foundation.

It’s the (local) economy

Many agreed that worsening joblessness – and a lack of job readiness – is the emerging issue underlying other problems, including mortgage failures.

But the employment problem is different for every neighborhood, said Susana Vasquez, which is why LISC-supported Centers for Working Families (CWFs) are tailored differently in each of the 15 Chicago communities they serve.

“Fundamentally it’s about meeting folks where they’re at,” she explained. “So we’re working with our partners to address the skills gap. There are jobs out there, so it’s painful when residents can’t be connected to those jobs. Each neighborhood requires different kinds of resources and different kinds of support.”

More information: www.mercyhouysing.org; chicagonsp.org; lisc-chicago.org

Foregoing foreclosures

Mon, 12 Sep 2011 12:00:00 -0600

Maximo “Max” Pagan and his wife, Gladys, were okay with their $1,600-a-month mortgage from lender HSBC … until their low introductory rate adjusted up, and until Gladys missed work due to spinal surgery.

“All of a sudden we’re looking at $2,500” said Gladys of the monthly on their tidy brick ranch near MidwayAirport. “That’s more than my husband’s retirement check. With food and utilities, and kids in school, we’re already living check to check.”

Max and Gladys Pagan hope to benefit from the proposed Mortgage Resolution Fund, due to ramp up this fall.

Photos by John McCarron

No wonder the Pagans are on an informal list of families started by Neighborhood Housing Services of Chicago that might benefit from a new program due this fall aimed at avoiding foreclosure and keeping working families in their homes.

It’s a simple concept—the proposed Mortgage Resolution Fund—though its implementation may prove anything but. The draft operating manual for this first-of-its-kind program is already 700 pages. But surely the need is there.

Balky lenders

Traditional lenders have been slow to modify mortgage terms and especially unwilling to reduce the principal owed, even in the face of broadly declining home values. Instead they tend to foreclose and take back the house. But with times this hard and qualified buyers getting scarce, properties sit empty for months, even years, often degrading into blighted hulks that endanger neighborhoods.

The federally-funded Neighborhood Stabilization Program, or NSP, managed here for the city by Mercy Portfolio Services, has had considerable success buying some of these REOs (a banking term for “real estate owned”), rehabbing them using local contractors, and re-selling them at a discount to credit-worthy buyers.

But it’s slow going. With so many single-family dwellings so long vacant, vandalized and stripped of valuable piping and wire, the per-unit cost to acquire and rehab can get out of line with the local market. That’s one reason Mercy Portfolio has focused increasingly on apartment buildings, which can be refit at a lower per-unit cost and sold into the stronger rental market.

Drops in a bucket

By late summer, nearly three years into the program, Mercy reports it has rehabbed, sold, or put up for sale or rent more than 700 housing units in 100 buildings.

Domingo and Ana Medina are being threatened with foreclosure by Bank of America, which bought their mortgage from the infamous Countrywide Financial.

But these successes are drops in foreclosure’s bucket. Over the past two years, Chicago borrowers have been hit with more than 20,000 foreclosure filings—more than triple the level before the crisis hit in 2007-08. And there’s no letup in sight. During the first six months of 2011 there were 26,681 initial foreclosure filings inCook County, the great majority against Chicago borrowers. So big is the backlog of homes on both the court docket and the real estate market that some lenders are simply “taking the keys” and not bothering to foreclose, thereby saving court costs, masking a degraded asset on their books … and sticking the neighborhood with yet another untended hulk.

So it’s little wonder cities like Chicago, and housing-savvy non-profits like Mercy Housing, NHS and LISC/Chicago, are looking for ways to break the spiral of decline by avoiding the foreclosure process altogether.

The new Fund

What may prove a national prototype is emerging here in Chicago called the Mortgage Resolution Fund. The concept’s initiators include Mercy Portfolio’s parent, Mercy Housing, plus three national non-profits: the Enterprise Foundation, the Housing Partnership Network and the National Community Stabilization Trust.

The effort got off to a fast start this summer when Gov. Pat Quinn and the Illinois Housing Development Authority (IHDA) chose to back the idea with $100 million obtained from a U.S. Treasury allotment to those states “hardest-hit” by the foreclosure epidemic.

“We began conversations about ways to avoid the foreclosure process shortly after NSP began operations,” said William Goldsmith, who directs Mercy Portfolio and will serve as president of the Mortgage Resolution Fund. He predicts lenders and loan servicers will be eager to sell delinquent mortgages to the Fund, rather than foreclose, once they pencil-out the numbers. Same goes for Fannie Mae and Freddie Mac, Goldsmith said, as those government-sponsored mortgage wholesalers look for ways to pare their swelling inventory of non-performing loans so as to reduce the ultimate cost to taxpayers.

The Medinas love their 51-year-old Cape Cod duplex, home to their two adult daughters--one a disabled military veteran--and their 9-year-old grandson.

Under one comparative model a typical lender would recover $75,000 on an unpaid loan balance of $200,000. This compares to recovering zero from the loan and losing an additional $5,000 by pursuing foreclosure, paying lawyers and court costs, and ultimately watching an empty house descend to near-worthlessness … all the while exposed to the legal liability of owning a dangerous hulk.

The Fund would buy that mortgage for $80,000 and issue a new mortgage to be administered by a consumer-friendly servicing agent. The loan’s principal would be lowered to reflect the home’s true market value; the repayment schedule extended; and the interest rate lowered to reflect today’s record-low rates. The new mortgage could then be sold to an investment house, such as Fannie Mae, restocking the Fund with capital to buy more troubled loans held by working families.

A “fresh start”

“Working” is the operative word, Goldsmith explains, because for the Fund to succeed its borrowers must have incomes sufficient to make those reduced monthly payments.

That likely describes Max and Gladys Pagan, according to Sonia Delgado, who has counseled the family at the Chicago Lawn/Gage Park office of NHS. “I truly believe,” said Delgado, “that with a fresh start they can afford their mortgage.”

Same goes for Domingo and Ana Medina, another of Delgado’s clients at NHS. They are being threatened with foreclosure by Bank of America, which took over the loan when it bought the now-notorious Countrywide Financial.

The Medinas desperately want to keep their Cape Cod-style duplex on the 5100 block of South Lotus Avenue because their two adult daughters—one a disabled military veteran—and their 9-year-old-grandson all call it home.

Like a lot of stressed borrowers they tried to modify their mortgage under the federal government’s Home Affordable Mortgage Program, or HAMP. But BofA would not let them advance beyond the “trial” phase and at one point, Ana claims, refused to accept their monthly payments.

Now the interest-only period of their mortgage has expired and the lender wants $2,562.82 per month toward their 7.64 percent, $313,441.44 mortgage.

“They don’t listen to you,” said Ana, who lost her job as a video tape duplicator four years ago. She lives now on a Social Security disability benefit plus Domingo’s meager pay working for a temp agency as a school janitor.

Getting a new, affordable mortgage through the Resolution Fund would be, she said, “the answer to our prayers.”

The new program will be welcomed, too, by those who’ve been in the trenches for years fighting the foreclosure menace.

“This is what we wished the banks to do all along,” said Jeff Bartow, executive director of the Southwest Organizing Project or SWOP, about the desperate need for principal write-downs and an escape from tricky, pop-up interest rates.

With the Greater Southwest Development Corp., SWOP has been a mainstay of LISC/Chicago’s New Communities Program on the city’s Southwest Side. Their “Keep Our Homes” project and REACH counseling center have become national models for neighborhood-based foreclosure-fighting.

Bartow is heartened, also, that Goldsmith and the Resolution Fund intend to accept nominations from neighborhood-based mortgage counselors such as Sonia Delgado and NHS … rather buy batches of failing mortgages that lenders are most eager to get off their books.

“We’re hoping they do it in a concentrated way,” Bartow said, explaining that the best part of the Mercy-run NSP program is that it targets neighborhoods that have clusters of foreclosures … yet still have potential to rebound if key buildings are saved. “We’re excited about it,” he said of the new Fund, especially if it employs the same targeted approach … and lets community-based groups like SWOP and NHS screen and nominate applicants.

Those having difficulty with mortgage payments and in danger of foreclosure are encouraged to contact Neighborhood Housing Services at 773-329-4185, English, 773-329-4181, Español, or e-mail foreclosureprevention@nhschicago.org

Pullman/Roseland NSP Open House Tour: Unique homes at affordable prices

Wed, 07 Sep 2011 12:00:00 -0600

Sixteen miles due south of Chicago’s downtown skyscrapers, overlooking the Bishop Ford Expressway and a golf course that was built on top of a landfill, sits the high rise U.S. Bank building, whose shadow falls on the Pullman and Roseland neighborhoods surrounding it.

Prospective homebuyers visit an open house in the Roseland neighborhood.

Photos by Bill Healy

It was there on a recent Saturday that a group of prospective homebuyers prepared to tour a handful of rehabbed houses in Roseland and Pullman that are now for sale to people of modest means. The formerly foreclosed and vacant properties had been acquired through the federally-funded Neighborhood Stabilization Program (NSP), which makes targeted investments on blocks that have been victimized by foreclosures.

The historic Pullman neighborhood, characterized by stylish row houses on leafy residential streets, had its roots in the late 19^th century, when Chicago was the bustling hub of a nationwide network of railroads. George Pullman created a railroad car that also allowed people to sleep comfortably. The so-called “sleeper cars” were in such high demand that Pullman built a town – named after himself – to house the workers who manufactured the railroad cars. A decade or so later, it was annexed by the City of Chicago.

In the past century, Pullman’s fate has risen and fallen on numerous occasions – labor strife, the demise of the passenger rail business, the general collapse of industrial manufacturing. Its historic streets and public buildings, including the Hotel Florence, have seen their ups and downs, too, as developer interest has waxed and waned.

Historic row houses in the Pullman neighborhood have been rehabbed through NSP and are now available for sale to buyers of modest means.

In 2009, U.S. Bank took control of the mammoth office building on 111^th Street when it acquired Park National Bank. Park National folded after suffering devastating losses early in the financial crisis. The community bank had long-standing ties to various neighborhood organizations in and around Pullman. When U.S. Bank took over, its leaders vowed to stay active in building up the surrounding neighborhoods. They created the Chicago Neighborhood Initiatives, a non-profit agency that helps to spur economic development and growth in the area.

Today the neighborhood is on an upswing, thanks to two major building projects currently under construction - a multi-million dollar Salvation Army youth center and a Wal-Mart, both near 111^th Street.

It’s an exciting time for Pullman and neighboring Roseland with the prospect of investment and jobs.

Greenspace abounds in nearby Palmer Park.

At the NSP Open House, Alderman Anthony Beale (9^th) told the assembled crowd, “We’re so blessed to be continuing to move forward in this economy…I’m so excited about the potential of our community. I’m just busting out at the seams.”

Alderman Beale wasn’t the only person excited by the neighborhoods’ prospects.

Longtime Roseland resident Ruby Jones came to the NSP Open House with her sister. Ms. Jones is retired and lives in a small apartment in the neighborhood.

“I like Roseland,” she said. “I know a lot of people from having lived in the neighborhood for so many years. I feel comfortable here.”

“It used to be The American Dream was easier to obtain,” she added. “But nowadays it just seems like it’s harder. There’s so much uncertainty.”

Jones came to the open house mostly out of curiosity.

“I’m just looking for something that’s mine,” Jones said. “I had neighbors over my head that played loud music and people fighting and I just don’t want that anymore. I just want to be in a place [where] I got upstairs and down and I don’t have to worry about nobody over my head.”

Developer David Doig and 9th Ward Ald. Anthony Beale at the NSP Open House Tour.

Jones says she loved one of the houses she saw on the tour. It had an open floor plan and everything flowed from one space to the other. She was impressed with the huge bathrooms and the living room with a great big closet right when you walk in the door. Not to mention the ample storage and an upstairs washer and dryer.

A trolley carried potential homebuyers from house to house. Upon returning to the U.S. Bank building, the potential homebuyers were treated to a free lunch, with a sweeping view of downtown. Over lunch they listened intently as representatives from Neighborhood Housing Services and U.S. Bank offered advice to potential homebuyers.

Elia Reyes works for U.S. Bank where she oversees several loan officers, many of whom were in attendance at the open house. The loan officers offered encouragement and advice to interested parties.

“First time homebuyers need to understand the complexities of putting together their loan application,” Reyes said. “They need to have a good idea of what credit is and what options are available to them for restructuring their finances before purchasing a home.

“We work very closely with Neighborhood Housing Services to assist homebuyers. They do the homebuyer counseling and we partner with them to provide the right program for first-time homebuyers.”

Will Towns, of Mercy Portfolio Services, narrates the NSP Open House Tour.

Will Towns, the regional vice president for Mercy Portfolio Services, which with the City of Chicago administers NSP in Chicago, told the assembled crowd not to underestimate the importance of all these groups uniting in common purpose. In Pullman and Roseland alone, NSP works with Chicago Neighborhood Initiatives (the non-profit development arm of U.S. Bank), Neighborhood Housing Services, the City of Chicago’s Department of Housing and Economic Development and Mercy Portfolio Services.

“No one entity, no one institution, no one private developer can really change these neighborhoods,” said Towns. “But as a collection we can really have a positive impact.”

NSP houses for sale in Pullman:

10713 S. Cottage Grove Ave., 10742 S. Champlain Ave., 10744 S. Champlain Ave.

NSP houses for sale in Roseland:

49 W. 108th St.

NSP making a difference in Chicago Lawn

Thu, 04 Aug 2011 12:00:00 -0600

Chicago Lawn’s sturdy brick two-flats and bungalows, lined up like soldiers in a row, are the personification of a certain Chicago spirit – tough, resilient, humble and enduring. Good thing, too, because those buildings have stood up to a lot over the years – racial upheaval, unemployment cycles, and most recently a series of foreclosures that have left buildings on many blocks boarded up and abandoned.

A prospective buyer on a recent tour of NSP homes that are for sale in Chicago Lawn.

Photos by Bill Healy

But earlier this summer, Chicago’s Neighborhood Stabilization Program (NSP), through a community open house and barbecue, shined a light on its efforts to breathe new life into some of those blocks by acquiring and renovating vacant, foreclosed properties and selling them to qualified buyers of modest means.

The tour of six NSP properties started and ended at the Greater Southwest Development Corporation, on West 63^rd Street a few blocks west of Western Avenue. Groups of about 10 to 15 boarded a school bus and walked between the houses.

Sharon Banks brought her two children – Steven, an incoming high school freshman, and Summer, an incoming third-grader – to tour the homes with her. It was Summer who spotted the balloons outside an NSP property and urged her mom to find out what was happening. Banks, who works as a teacher’s aide at the local elementary school, not only got to view six unique houses, she also walked away with a gift card that she won as part of a raffle at one of the houses.

Earl Johnson was among the residents who greeted people on the NSP Chicago Lawn house tour.

Citibank sponsored the event and so at each house, prospective buyers were greeted by their representatives to talk about opportunities for financing the purchase of a home. They were joined by representatives from the City of Chicago and Neighborhood Housing Services of Chicago. Also on hand was Earl Johnson, who lives next door to an NSP property on South Rockwell. Johnson, who has made a name for himself by standing up to the gangbangers and drug dealers who plagued his block for years, chatted up potential homebuyers and assured them that Chicago Lawn was a great place to call home.

Vaniecee Warren is one such potential homebuyer. She saw a flier for the open house at the police headquarters near her current home in Chicago Lawn. She was tired of renting and wanted a yard of her own. And so she joined the tour group to research what was available through the NSP. She says she’s going to get to the point where she can buy a home eventually.

With a little help from the NSP, her dreams may be this much closer.

The interior of one of the for-sale houses.

NSP has so far acquired 20 properties in Chicago Lawn, comprising 48 units of housing. Most of the properties are single-family homes or two-flats that are, or will be, for sale. One building, at 2501 W. 63^rd St., is a 15-unit apartment building which will be available for rentals when renovation is completed.

Chicago Lawn NSP houses currently on the market (many already under contract) are:

6324 S. Campbell Ave.

6351 S. Campbell Ave.

6354 S. Rockwell St.

6405 S. Rockwell St.

6433 S. Talman Ave.

6501 S. Artesian Ave.

6408 S. Talman Ave.

6348 S. Campbell Ave.

6511 S. Maplewood Ave.

Points of light amid foreclosure funk

Mon, 18 Jul 2011 12:00:00 -0600

An apartment building at 6015 S. Indiana Ave. that's being renovated through NSP.

Home prices keep falling and mortgage foreclosures keep rising.

A new study on renters, meanwhile, counts 12,334 apartment buildings going into foreclosure during 2009-2010 and with them a whopping 37,726 rental units. Among the hardest hit, losing more than 200 rental buildings just during 2010, were: Humboldt Park (284), Logan Square (253), Little Village (231), Englewood (218) and North Lawndale (203.)

So if you’re looking for good news on the housing front this summer in Chicago, good luck. There isn’t much … but there is some.

The federal government is moving to improve its under-performing Home Affordable Modification Program (HAMP) by prodding mortgage lenders and servicers to move faster and even reduce balances owed to reflect the declining market. Meanwhile, the city’s Neighborhood Stabilization Program (NSP), managed by Mercy Portfolio Services, is restoring dozens of foreclosed and vacant homes and is having success selling them to new owners at affordable prices.

Sure, the HAMP and NSP efforts are but a trickle against foreclosure’s grim flood. But they’re a start. And every small victory has important lessons on how foreclosure-fractured neighborhoods can get back on their feet.

Melvin Bailey and crew at a two-flat in East Garfield Park.

Gordon Walek

East Garfield glimmer

Consider the three sturdy houses in East Garfield Park newly rehabbed by the Community Male Empowerment Project (CMEP) with help from the Garfield Park Conservatory Alliance.

CMEP leader Melvin Bailey says he recruited young men from the neighborhood to work alongside skilled tradesman on the rehab of 3352 and 3412 W. Walnut St. and 327 N. Central Park Blvd.

“The idea is to teach young men skills so they can move forward with their lives,” Bailey said. “Other young men in the neighborhood see our guys working a trade and they get the idea they could too.”

The Walnut Street houses already have been sold to mortgage-capable families on discounted terms set by Chicago’s NSP, and the Central Park building will go on the market shortly. A more complete description of the program—and a more detailed story on the East Garfield Park rehabs—can be found here.

“We’re 3 for 3,” said Bailey of the rehabs. “And we’re talking to some banks about scaling up … taking on more houses and turning this into a real training program.”

That would be a welcome win-win for Mike Tomas, the New Communities Program director at GPCA.

“This way the neighborhood gets more than just a fixed-up house,” Tomas said “You help youngsters learn along the way. Like everything we do in NCP, it’s a more comprehensive strategy.”

Federal help

Since inception in 2008 Chicago’s NSP program has been awarded a total of $169 million by HUD to buy and rehab from 2,000 to 2,500 lender-repossessed properties in 29 target neighborhoods. In the latest funding round East Garfield Park was designated an “area of greatest need,” meaning more funds and more rehabs for a neighborhood that was hit hard by a pre-crash speculative bubble.

Meanwhile, the Mortgage Relief Fund (MRF), directed by Mercy’s William Goldsmith, is negotiating with the U.S. Treasury Department for permission to buy delinquent mortgages from banks so as to avoid the lengthy foreclosure process. Better for MRF to keep viable owners in place, the reasoning goes, than allow vacant houses to slip into Illinois’ year-plus judicial foreclosure process, after which time many are stripped and vandalized beyond repair.

"We know there's a very large swath of families that are working that are underwater and can no longer afford this mortgage," Goldsmith recently explained to the Chicago Tribune.

Mortgage mods via MRF would be a welcome addition to those being negotiated—or not negotiated—under the federal government’s Home Affordable Modification Program (HAMP.) More than 4.5 million mods have been applied for nationally since program launch in 2009, but as of this April only 1.5 million had been finalized. Many blame lenders—who are paid to modify mortgages with easier terms—for not following up with some applicants and giving others the runaround. Doubtless the slow economy also plays a role, with folks losing their jobs even as home values slip below the balance owed.

The government recently ordered lenders to provide a single “point of contact” for customers seeking to modify, and the Treasury has begun publishing a monthly report card on how lenders are performing.

In its report through April of this year Treasury officials gave Wells Fargo, JPMorgan Chase, Ocwen Loan Servicing and Bank of America grades of “needs significant improvement” and declared them ineligible for HAMP cash incentives until corrective measures are taken.

Large numbers of foreclosures continue to reflect a generally fragile economy.

John McCarron

Market stalled

But no amount of blame-naming is going to stem the foreclosure tide unless the economy, and especially the housing market, turns around. The Illinois Association of Realtors recently noted that, although home prices tend to reach their annual peak in the May-June buying season, home prices in the Chicago area are from 9 to 15 percent lower than one year ago. With sales volume off by 26 percent year-over-year, and with so much foreclosed and otherwise “overhang” inventory, the Realtors predict, at best, a flat housing market for 2012.

RealtyTrac, the Web-based information service, counted 33,508 city residential properties in some stage of foreclosure as of the end of May 2011. The Southwest Side’s 60629 zip code that includes Chicago Lawn led all neighborhoods with 144 foreclosures filed just in the month of May.

Renters routed

As bad as the situation is for struggling homeowners, the new study by the Lawyers’ Committee for Better Housing LCBH) reminds that things are even worse for limited-income renters. During 2010, according to the report, Chicago was losing 123 apartment buildings per week to the foreclosure menace.

And new laws designed to give renters an early warning, along with a grace period to find another apartment, were widely ignored by both landlords and by lenders doing the foreclosing. LCBH found many landlords failed to notify tenants of an impending foreclosure, as required by law, and even kept on collecting rent after losing control of the building. Many foreclosing lenders, meanwhile, fail to honor still-valid leases and frequently use “constructive eviction” tactics—such as no maintenance, utility shutoffs and take-it-or-leave-it “cash-for-keys” offers—to clear buildings so as to limit their liability.

Among the 20 neighborhoods LCBH says lost more than 10 percent of their apartments to foreclosure over the past two years are: East Garfield Park (17.3 percent), Englewood (14.6 percent), Humboldt Park (14.3 percent), Washington Park (13.5 percent), North Lawndale (12.9 percent), South Chicago (12 percent) and Chicago Lawn (10.6 percent).

LCBH, a recent grantee of LISC/Chicago’s Foreclosure Response Fund, has made the full report available online.

For more information:

Renter’s rights—LCBH’s Mark Swartz 312.784.3520

NSP—William Towns 312.447.4609

Foreclosure counseling—Neighborhood Housing Services 773.329.4185.

Now’s the time to buy? In Humboldt Park, answer may be yes

Tue, 17 May 2011 12:00:00 -0600

It was a blustery April Saturday in Humboldt Park – rainy, cold and in no way conducive to a walking tour of houses for sale, particularly when buyers remain few and far between.

Prospective buyers board the trolley for a tour of Humboldt Park NSP houses.

Photos by Gordon Walek

But that didn’t stop more than 100 home owner wannabes from making a combination trolley/walking trek of five formerly vacant, foreclosed Humboldt Park houses that have been renovated through the Neighborhood Stabilization Program (NSP) and are now for sale to buyers of modest means.

NSP, the federally-funded effort to breathe new life into vacant foreclosed properties and to help rebuild stable, vibrant neighborhoods in Chicago and nationwide – has so far acquired, rehabbed, and put a for-sale sign in front of 28 houses throughout the city. Those in Humboldt Park are among the crown jewels.

Not only are they charming, affordable and solidly-built (many date to the early days of the last century), but they’re on some uncommonly attractive Humboldt Park streets.

Consider, for example, the 3500 block of W. Le Moyne. It’s lined with trim,

Tom Greenan and Constance Purches visit houses on the NSP tour.

tidy, two-story detached single-family houses, all with flat roofs. Among them is 3518 W. Le Moyne, whose crisp, white painted brick exterior is consistent with the bright, clean renovated three-bedroom, two-bath interior. The block, and the house, would be equally at home on a street in, say, London.

The adjacent blocks are no less interesting. Instead of flat-roofed, Georgian houses, some boast the steeply pitched roofs of brick Chicago cottages, all perfectly lined up like soldiers at attention, with their uniform heights and setbacks suggesting that the neighborhood evolved from thoughtful planning and design.

“This area is nice,” said Constance Purches, who’s thinking about moving back to Humboldt Park, where she lived years ago when her kids were in public schools. Purches currently owns a house in Englewood, but wants to buy a two-flat on the North Side with her 26-year-old daughter, Rachel. She’d take one apartment, Rachel the other.

Because she’s looking for a two-flat, the Le Moyne property didn’t interest her nearly as much as a frame, three-story NSP building at 1636 N. Spaulding. It includes an apartment on the first floor, with the second and third floors duplexed into a particularly large second apartment.

“I loved that one,” she said, adding that if she purchased it with her daughter, she’d take the spacious two-story apartment.

Also on the tour, which stopped at 536 N. Avers, 3417 W. Hirsch, and 3339 W. Le Moyne in addition to the houses mentioned above, was Tom Greenan, an Albany Park resident and realtor who was getting the lay of the Humboldt Park (and NCP) real estate landscape.

Cardigan Shipman, the Mercy Portfolio Services consultant who organized the tour, offers directions.

“They’re nice and clean and in move in condition,” he said. “And the prices are right. It’s the whole package…you employ people who fix these houses up. That creates jobs. And Uncle Sam is helping. And then you have city-approved realtors, lenders and developers. You know it’s going to be done right and that there’s some accountability.”

NSP is designed to help low- and moderate-income people buy houses and in the process prevent neighborhoods from sliding into the blight that often results when multiple foreclosures afflict a block. Of the 28 NSP houses that have been placed on the market in recent months, four have been sold and seven are under contract.

“It doesn’t surprise me that NSP houses are moving quickly,” said Greenan. “For first time buyers, it’s a one-stop shop.”

NSP houses are not limited to first-time buyers, but certain guidelines apply, such as the purchaser’s household income can’t exceed 120 percent of area median income. And a down payment of $1,000, or one percent of the purchase price (whichever is larger), is required.

All of the potential buyers at the April 16 open house, organized by Mercy

Interested buyers participated in "introduction to home buying classes" prior to the tour.

Portfolio Services, which is administering NSP in Chicago, and sponsored by PNC Bank, were also treated to an “introduction to home buying classes” workshop, presented by Neighborhood Housing Services and Latin United Community Housing Association.

"I wanted people to believe they could buy a home when they left this event," said Cardigan Shipman, a realtor and consultant for Mercy Portfolio Services who organized the open house tour. "And I believe the groups on my tour did."

Apparently so. The houses at 1636 N. Spaulding, 3417 W. Hirsch and 3339 W. Le Moyne are already under contract.

Shipman said a series of events in North Lawndale, Chicago Lawn, Auburn Gresham, Pullman and Hermosa designed to publicize NSP houses on the market are being scheduled for the months ahead.

New Pisgah rescues foreclosed homes

Tue, 08 Mar 2011 12:00:00 -0600

The “mission” of New Pisgah Missionary Baptist Church, in Auburn Gresham, goes way beyond shouting distance of its physical facility on South Racine Avenue. The church’s community service organization is playing a major role in addressing the foreclosure issue that’s bedeviling Auburn Gresham and many other Chicago neighborhoods. Through the federal Neighborhood Stabilization Program, it’s currently rehabbing six vacant, foreclosed houses comprising 14 homes or apartments in Auburn Gresham and one 7-unit building in South Shore.

Workers for New Homes for New Pisgah, the development arm of New Pisgah Missionary Baptist Church, rehab a foreclosed home.

Photos by Bill Healy

New Pisgah works through the church’s community service organization as a sort of general contractor, farming out most of the physical labor to sub-contractors.

“The dream of doing these houses was my dad’s,” said Stan Smith, whose brother Wayne is the church’s pastor. “As a church you can do certain things on Sundays and with the church members, but he had a desire to do something in the community.”

New Pisgah was started in 1966 by their father, the Rev. Sylvester Smith. According to Stan, their dad said, “I want to provide good housing that’s affordable where low-income folks can get in. And if there are programs with subsidies or help with the down payment those are the programs I want to go to. I want to be able to help someone get into housing.”

Since the early 1990s, New Pisgah has built a nursing home for seniors and a day care center, which is attached to the church at 8130 S. Racine. Stan and Wayne’s sister run the day care and the nursing home is staffed by church members. (They have another brother and sister as well.) They’re also in the process of building another housing facility for seniors, this time on South Halsted Street.

The interior of an Auburn Gresham house New Pisgah is renovating.

Through NSP, New Pisgah hopes to rehab 70 units of affordable housing in the next five years, many on Auburn Gresham blocks where the renovation of even a couple houses could make the difference between the area rebounding or sinking further into isolation and disrepair. Additionally, the church is involved with a state program that trains young men as apprentices, the first step to becoming more seasoned construction workers. The church claims to have contacts with many excellent local plumbers and carpenters, many of whom are out of work. NSP is putting them back on the clock.

“NSP is an unbelievable opportunity for people in our community,” Stan says. “It’s just a strong message of giving back by the government that says, ‘We haven’t forgotten you. We still cherish you.’

“People talk about the paperwork. But I don’t see that as a hindrance, I just see that as a process, a task. Because everything else in this program is so fair. They give us money for security. They didn’t have to do that. They could have said, ‘It’s on your own,’ or ‘Figure it out.’ But everything they do is fair and generous.”

Rev. Wayne Smith at an Auburn Gresham building that New Pisgah is rehabbing.

“We take a house and really turn it around and improve the neighborhood,” said Rev. Wayne Smith. “That shows the neighbors that somebody’s trying to fix up the community and I think that goes a long way.”

“I think it inspires people,” Stan says. “Now we got to figure out the sales portion. We gotta be able to get the people in the community into these houses.”

They’ve started marketing the houses through the church and have put 5,000 flyers in Sunday bulletins and in storefronts around the neighborhood. And they’ve been getting the word out to other churches in Auburn Gresham, too.

Rev. Wayne Smith, left, and his brother, Stan.

It’s been slow going so far, but there are reasons for hope. Months ago Stan talked to a woman who worked in the loan department at a local bank. She was interested in buying a house but was worried that she was going to lose her job. Now, he says, she’s finally feeling secure in her job, and can start considering buying a home again. And with any luck, she’ll buy a local home, developed by a local institution.

On West Walnut Street the scenery looks a little brighter

Thu, 17 Feb 2011 12:00:00 -0600

The solid red brick two-flat at 3352 W. Walnut St., in Chicago’s East Garfield Park neighborhood, isn’t the only building on the block for sale. Nor was it the only one in need of serious rehab. Like plenty of others throughout the neighborhood – throughout the city, for that matter – 3352 had fallen into foreclosure, vacancy and disrepair.

The brick two-flat at 3352 W. Walnut Street, which was rehabbed through the Neighborhood Stabilization Program.

Photos by Gordon Walek

But you wouldn’t know it from the celebration that occurred in the building in late January, when representatives from Chicago’s Neighborhood Stabilization Program (NSP), the City, and local community organizations gathered to publicize the fact that 3352 is now in tip-top shape and on the market.

It’s one of a handful of two-flats and single-family homes that NSP – the federally-funded effort to breathe new life into vacant foreclosed properties and to help rebuild stable, vibrant neighborhoods in Chicago and nationwide – has so far acquired, rehabbed, and put a for-sale sign in front of. With its gleaming hardwood floors, energy efficient appliances and subsidies for low- and moderate-income buyers, 3352 and other NSP houses seemingly have a leg up on competing buildings on the market. Indeed, of the 16 NSP buildings that have been renovated and offered for sale, two have been sold and six more are under contract.

That’s good news for Mercy Portfolio Services, the nonprofit that’s administering NSP in Chicago, and the many developers, construction workers, property managers and community organizations that are preserving fine urban housing stock in struggling neighborhoods.

The NSP houses on West Walnut are a welcome sight for Mike Tomas, who

Mike Tomas, NCP director at the Garfield Park Conservatory Alliance, at a news conference announcing the new NSP houses on West Walnut Street.

heads up LISC/Chicago’s New Communities Program in East Garfield Park. During the celebration at 3352, he noted that significant changes have occurred in the neighborhood since a 2009 shooting outside a nearby liquor store, which injured several people. That event galvanized residents and local groups to help shut down the liquor store. Since then, calls for police department service have gone down, a new multi-million dollar restaurant and culinary training center is opening nearby, and more than 150 local youth participated in an anti-violence basketball program last summer.

“And now, we have new affordable homes for families – homes that previously were vacant and boarded up,” Tomas said.

Talk to Melvin Bailey, meanwhile, and you can’t help but share his optimism. Bailey, whose nonprofit Community Male Empowerment Program hires local residents to rehab buildings, just sold the first home he rehabbed through NSP (at 3412 W. Walnut St.) and is confident 3352 will go the same way.

Bailey takes pride in pulling kids off the street and putting them to work as apprentices to tradesmen. He’s big on rhetoric but he walks the walk, too. For the 20-plus young men involved with the Community Male Empowerment Program, the demand for work outnumbers actual jobs. So even though they may face adversity, they’re expected to work and to hear their boss out when he talks.

Melvin Bailey, center, in the living room at 3352 W. Walnut St.

“I try not to have a mentoring session with them every day but I just can’t help it,” said Bailey. “Every time I see them I have something to say. It just comes out. And they listen. They listen. I tell them: Look at my background. I once was you guys – single-parent household, same ill-effects that you guys were facing. I didn’t grow up next to a doctor or a lawyer or a person that had a job.

“And now they’re learning how to paint, roof, frame, drywall, man…I’m trying to show them they don’t have to do negativity to earn a living.”

Bailey’s group is two months out from finishing another house, this one across the street from the Garfield Park Conservatory. And he’s branching out, too. CMEP is negotiating for two houses on the South Side – one on Marquette and another on Indiana.

“West Side, South Side - It doesn’t matter where we have to go to change lives,” Bailey says. “We’re afflicted with the same thing – unemployment. I went door to door and I was telling the young guys as soon as we got there.”

“With each house they’re getting quicker. And once they learn the trade they can take that with them for the rest of their lives.”

When his crew met the young woman who bought the house they had just finished, Bailey said, “She stays three blocks over so they gave her a warm welcome. And I said to them: ‘You see what happens with hard work? She purchased this house. The dream is alive. It can happen for you too.’ We just have to get away from that negative thinking. We gotta get that positive attitude.”

“If we continue working hard, someone will notice. Someone will say, ‘How

A number of community organizations are involved in marketing the new NSP homes in East Garfield Park.

can I help?’”

Bailey says he often meets people who tell him, “I’m unemployed, I don’t have any education.” And he said his response to them is the same every time: “If you don’t have any education, let’s get an education. Don’t let your past dictate your future.”

That spirit that says “We will either find a way or make one” existed long before Melvin Bailey came along. But he’s living out the message loud and clear every day on the West Side.

Watch a WTTW Channel 11 report about Melvin Bailey's NSP work.

A Q&A about buying an NSP house

Mon, 24 Jan 2011 12:00:00 -0600

Who can buy a house through the Neighborhood Stabilization Program?

You must meet several requirements before you can qualify to take part in the NSP: First, your income has to fall below a certain threshold. This income ceiling depends on the number of people living in your household. For a family of four, for instance, the household income has to be less than $90,100.

You do not have to be a first-time homebuyer. However you must contribute a down payment of $1,000 or 1 percent of the home’s purchase price (whichever is greater).

You have to be able to get a 30-year “fixed rate” mortgage from a participating NSP lender as well as attend 8 hours of housing counseling.

And you cannot owe money to the City of Chicago.

This is only a partial list of requirements. For a full list, visit www.chicagonsp.org .

Q: Can I buy a house through the Neighborhood Stabilization Program and then flip it?

A: No - The new home must be owner-occupied and there are restrictions on selling it within a certain period of time after buying it. Also the idea of flipping houses goes against the spirit of the program, which is meant to help stabilize neighborhoods by making it easier for people in the middle class to invest in homes over a length of time.

Q: What will I learn in the required housing counseling class for NSP homeowners?

Crystal Kimbrough is the first NSP homebuyer in the Chicago area. She says the class “teaches you how to be a savvy homebuyer as well as how to manage your home.”

“You learn the contract process, the inspection process,” she said. “When you’re buying a home you want to make sure you have it inspected. Don’t just move in and not have it inspected. You also learn about insurance and tying your insurance into your mortgage because you have to have your home insured and you want to tie all those costs in together.”

Kimbrough took the class twice because of a rule that says you have to purchase the property within a year after taking the class. She doesn’t regret taking the class two times but understands other people might not feel the same way.

“And then - most importantly – [the class taught me about] being financially savvy,” Kimbrough says. This means that even though you just purchased a brand new home and may want to fill it up with new furniture to match, you don’t, because you likely won’t be able to afford it. “Take your time,” Kimbrough said. “This home deserves a beautiful décor. I’m not going to rush and buy the first furniture I see.”

“Be humble and be patient and purchase it when you can afford it. You know? Don’t go out and acquire new debt. That’s very important.”

And the number one thing Kimbrough learned in the class was to “Get an inspection! You don’t know what’s hidden in these homes. It could devastate you financially.”

How long will it take from the time I sign up until the time I’m in an NSP house?

It depends. For Kimbrough, the process – from finding a house to financing the house to moving in - took more than a year to complete.

Was there an excessive amount of paperwork to buy a home through the NSP?

Rose Hughes, Kimbrough’s realtor, says, “You know when you’re working with the government you gotta do extra paperwork. It’s red tape, so get used to it. If you want to get something, you gotta deal with the red tape. Just mentally be prepared.”

Kimbrough says homeowners need to persevere. “Hang in there,” she says. “They were asking for information constantly, constantly. It was like every day: I think we’re here. Then: You need this, you need that. Because they’re dealing with the Department of Housing and Urban Development, a federally-funded program, they’re going to require documentation above and beyond what your lender is requiring for documentation.”

“It was like I was faxing things in daily,” Kimbrough says. “I was not sure what kind of loan I was going to get in the beginning. Later when we realized it was going to be an FHA loan – they needed an FHA certificate and an amendatory form, signed, a waiver of some sorts.”

You might be surprised at how personal some of the paperwork is. Married or divorced? “Your marital situation matters. Bank statements, check stubs, tax returns.” All of these things are among the paperwork that Kimbrough had to turn in.

Kimbrough says: “Just look at the goal, because if it’s something that you want, it’s going to work out in the end.”

Hughes: “You have to provide them whatever it is they ask for. And they do ask for a lot.”

Kimbrough: “And if they ask for it again, you have to do it again.”

What things should I take note of when touring an NSP property?

Everything. Note the square footage of the interior, as well as the property. Note the type of heating and cooling the house uses, the age of the property, everything.

And branch out. When she was looking for a house to buy, Kimbrough went to all the neighborhoods where there are NSP homes until she found the one she liked.

What’s something people always forget to ask about?

Hughes: “A lot of time people neglect the lights.” Take the time to learn where all the switches are, Hughes says.

Would you recommend that a friend buy a home through the NSP if they qualified?

Hughes: Absolutely. “You’re putting a little bit of your money down but really it’s getting you whatever help you need to be subsidized for your situation.”

What if I don’t want a home in Chicago? Does the NSP operate in other parts of the region as well?

Hughes: “In our local area it’s in Cook County, Chicago, Cicero has one. DuPage County has a program. Some of the things are dissimilar about what the requirements are. So if you’re gonna go to DuPage they might have a different down payment requirement but pretty much most of the guidelines are in check with each other. You want to make sure you find out what the details are though.”

What advice would you give to potential homebuyers?

Kimbrough: “Go to the NSP website. Take the home-buying class. It takes about a month – one class per week for four weeks. Pursue it. Fill out the application. It’s very much worth it. The NSP process takes away certain obstacles by providing subsidies and home-buying assistance for the middle class.”

“You have to make sure everything is transparent. When I thought I was finished faxing everything in I had to fax more in. Whatever they ask you for, just provide it. There’s nothing to hide. Just go along with the program. And keep every document, every e-mail in the event that somebody needs something.”

If I’ve read through everything and still have questions, who should I call?

Cardigan Shipman is the home buyer facilitator at Mercy Portfolio Services. He can be reached at cshipman@mercyhousing.org or 312-447-4500.

Kimbrough said, “The NSP was very responsive. Cardigan Shipman was great. And when Cardigan went on vacation, Mr. William Towns was excellent with communication and follow-through.”

NSP funds help create energy efficient bungalows

Tue, 04 Jan 2011 12:00:00 -0600

The 7600 block of South Cregier looks like many others in the city’s South Shore neighborhood.

Handsome single family homes – mostly bungalows – line the street. Modest but well maintained lawns are the norm, and an impressive number of residents have lived here for decades.

But what separates this block from others can’t be seen from the street.

A bungalow on the 7600 block of South Cregier Ave., the rehab of which includes new energy effcient features.

Photos by Bill Healy

Twenty-three homeowners on South Cregier have gotten grants of up to $5,000 to improve the energy efficiency of their homes. These bungalow owners are cutting their energy usage by as much as one-third.

They’re doing it by any number of ways: Preventing air from leaking out of their homes, or replacing existing insulation and heating systems. This saves money by reducing utility bills and drastically reduces the environmental impact of owning a home.

Grants to improve energy efficiency were furnished by the Historic Chicago

The Historic Chicago Bungalow Association's Mary Ellen Guest, with Will Towns, Mercy Portfolio Service's VP who helps manage the NSP program in Chicago.

Bungalow Association with money it received from the Illinois Clean Energy Community Foundation.

What’s more, the Bungalow Association recently completed renovations on a model “green bungalow,” paid for with partial funding from the Neighborhood Stabilization Program.

This model home at 7622 S. Cregier Ave. showcases all the ways a bungalow can become more energy efficient.

Rain barrel? Check. Solar panels? Check. New insulation and drywall? Check.

The list goes on.

Lisa Thompson is the real estate agent charged with selling the model house

The front room at 7622 S. Cregier Ave., before renovation.

on Cregier.

Her favorite efficiency is the insulation. “It’s almost like your home is wrapped by a blanket,” she said. And with wintertime arriving, that’s going to save real money for homeowners, she added.

Thompson said there is an executed contract for the model bungalow on South Cregier but since it’s still early in the home-buying process, she was reluctant to name names. She would say that there were multiple offers on the house.

The front room after renovation.

That’s good news given that the NSP has acquired another house on South Cregier, across the street from the current model bungalow.

Mayor Daley recently toured the bungalow – which was renovated through a partnership which included Genesis Housing Development Corporation and Mercy Portfolio Services, among others.

Daley is keen on improving energy efficiency for personal reasons: The

The kitchen, before renovation.

mayor grew up in a bungalow in the city’s Bridgeport neighborhood and knows firsthand how it feels to live in a home of this type. And bungalows make up a third of the city’s single family housing stock, according to the Bungalow Association. That’s roughly 80,000 bungalows in Chicago alone.

With these grants and the model home, homeowners can retain the charm of owning an older bungalow but get all the savings associated with more modern efficiencies.

As Daley said: “You can’t build buildings like this anymore.”

The kitchen after renovation.

Woman’s search for perfect house: an NSP property in Oakland

Tue, 07 Dec 2010 12:00:00 -0600

Crystal Kimbrough’s search for the perfect house began three years ago, when she met Rose Hughes, a realtor with a gentle smile who was relatively new to the world of real estate.

Kimbrough, who works from home, was looking for a house where she could be comfortable 24 hours a day. She wanted to live in a neighborhood where she could feel safe and in a house with enough room so that her three children wouldn’t feel overcrowded.

Crystal Kimbrough, left, and her realtor, Rose Hughes, outside the South Side rehabbed home Kimbrough recently purchased through the Neighborhood Stabilization Program.

Bill Healy

Hughes showed Kimbrough several houses and on two occasions they thought they’d found the right one. But contracts on both houses fell through and the two took a hiatus from working together.

Then Kimbrough’s brother, who lives in Atlanta, told her about the Neighborhood Stabilization Program (NSP), a federal effort to help towns and cities tranform empty, foreclosed properties into attractive new residences. Now Kimbrough, with Hughes at her side, has become the first Chicago-area homebuyer to purchase and move into a house that's been rehabbed through NSP.

And this is where their journey has led them: A turn-of-the-century, Victorian-style row house in the city’s Oakland neighborhood. The house, on South Lake Park, is near the Metra train tracks, across the street from a quiet park, and just a few blocks from Lake Michigan.

“When I came in here I knew this was the home of my dreams,” Kimbrough said during a recent tour of the house, which is bright and spacious.

“Immediately I saw the property and I was like, ‘This is it. This is what I want.’”

What she wanted turned out to be a house whose story reflects the tumultuous real estate market in recent years. According to real estate tax data, the property sold for $735,000 in 2007, and sold again in early 2008 for $675,000. It subsequently went into foreclosure and was vacant. Mercy Portofolio Services (which administers NSP in Chicago) bought it for $134,900 in December 2009, rehabbed it, and sold it to Kimbrough for $235,986.

Kimbrough had been living in the house for only two weeks when

The Victorian rowhouse has many fine features, including detailed woodwork and hardwood floors.

Bill Healy

she opened her doors to an inquiring reporter, but already she was imagining herself years into the future. In the backyard, she pointed to an imaginary path leading out to her new two-and-a-half car garage.

“We’re gonna do grey bricks to blend in with the Victorian greystone,” she said. Hughes, who has become Kimbrough’s trusted advisor, smiled as she too imagined the path.

But Hughes is realistic about what it took to get to this point.

“You know when you’re working with the government you gotta do extra paperwork,” Hughes said.

“As this thing grows…they have to get everything tightened up.”

NSP uses funds from the U.S. Department of Housing and Urban Development to get empty, foreclosed properties, such as Kimbrough’s, back on the market.

“Because you’re dealing with HUD, a federally-funded program, they’re going to require documentation above and beyond what your lender is requiring for documentation,” Kimbrough said.

“You have to provide them whatever it is they ask for. And they do ask for a lot.”

Kimbrough is very happy to be in a beautifully rehabbed house that will be comfortable and affordable for her and her children.

Bill Healy

Since Kimbrough was one of the trailblazers of the NSP locally, she had to be patient while her bank learned the rules and regulations surrounding the program. She said that while she waited, the NSP representatives from Mercy Portfolio Services were incredibly responsive and helpful. She also said that future NSP homebuyers will have an easier time now that they have standardized things.

To qualify for the NSP, Kimbrough was required to attend eight hours of a home-buying class where she learned about contracts, inspections and insurance. She also had to prove that her income fell below a certain threshold, which is based on the number of people in her household.

Now that she’s settling into her new home, however, many of those concerns have faded into the background.

“The floor plan is open, which I love,” Kimbrough said, waving her arms toward the tall ceilings. She and Hughes continued to think out loud about ways to improve the house and the features that they loved - the wood floors, the recessed lighting, the kitchen with a full granite backsplash.

And Kimbrough showed off one of her favorite things to do in the new house: Opening up her bedroom blinds and watching as the sun fills the room with light.

Chicago gets new NSP funds

Tue, 05 Oct 2010 12:00:00 -0600

The boarded-up 46-unit apartment building at 6015 S. Indiana Ave., vacant for the last four years, has cast a pall over a section of the Washington Park neighborhood that in other respects is showing signs of new life. Up the street, the St. Edmund’s Redevelopment Corporation is building new affordable housing. And thanks to that activity, and Chicago’s Neighborhood Stabilization Program (NSP), the 6015 building is about to get a new lease on life, too.

In mid-September, Mayor Richard M. Daley used the building’s courtyard as a setting to announce that Chicago has been awarded an additional $15.9 million from the federal government to continue its fight against foreclosures through NSP.

Mayor Daley announces new NSP funding in a news conference at 6015 S. Indiana Ave.

Bill Healy

“Chicago has received $168 million [total] in Neighborhood Stabilization Program funding, which is more than any local government in the United States of America,” Daley said.

With money from the U.S. Department of Housing and Urban Development, NSP has gotten dozens of foreclosed properties back into the hands of developers, creating a path for re-occupancy by renters and homeowners.

The city received $55 million in the first round of NSP funding – all of which has been obligated – and $98 million in the second round. NSP funds have been used to clear dangerous buildings and to buy 85 properties to-date in targeted neighborhoods.

Ellen Sahli, who as 1st Deputy Commissioner for the City of Chicago’s

Ellen Sahli with Mayor Daley in front of 6015 S. Indiana Ave. in the Washington Park neighborhood.

Gordon Walek

Department of Community Development oversees the daily activities of NSP, has an eye for details. Following the news conference, she pointed out the building’s ornate and intricate overhangs and balconies – features rarely seen in today’s newer developments.

“These are big, huge buildings,” she said, “and if we don’t tackle these it doesn’t matter what we do with that building across the street.”

Commissioner Sahli said NSP funds are used to build on investment that’s already taking place in communities across the city. The Washington Park neighborhood is a target for NSP funds in part because of the work being done by St. Edmund’s Redevelopment Corporation.

Over the past 20 years, St. Edmund’s has rehabbed several apartment buildings in the area between 55th and 63rd streets, from King Drive to State Street.

Next door to the apartment building on South Indiana, St. Edmund’s is currently working on stimulus-funded construction of 53 units in six different buildings.

New construction of affordable apartments by St. Edmund's Redevelopment Corporation, up the street from 6015 S. Indiana Ave.

Gordon Walek

It’s that construction, Sahli says, that prompted the city and Mercy Portfolio Services, which is administering NSP in Chicago, to invest funds nearby. The thinking is that St. Edmund’s buildings will enhance the appeal of the renovated apartments at 6015 S. Indiana. And vice versa.

“And so in that spirit, as we’re trying to leverage existing investments, we saw this handsome building that’s been vacant since 2006 as a perfect NSP candidate

Chicago Amendment to the NSP 1 Substantial Amendment

Thu, 22 Jul 2010 12:00:00 -0600

The City of Chicago is amending its NSP 1 Substantial Amendment allocation priorities. This amendment will be posted for a 15 day public comment period. Please note that comments will be collected through August 5, 2010. A summary of comments will be forwarded to the Department of Housing and Urban Development for review. The amendment can be accessed by downloading the document here.

New houses, local jobs make for better neighborhoods

Mon, 19 Jul 2010 12:00:00 -0600

“When you gonna come work for me?” Melvin Bailey shouts at a young man walking down Homan Avenue on the city’s West Side. “We got orientation coming up next week.”

The young man’s pants are sagging (a look Bailey says is unacceptable in the working world but which he seems willing to overlook for the time being). He’s been talking with this particular young man for months and is now ready to give him a shot at a job.

A girl pushing a stroller walks next to the young man.

“I didn’t know you had a shortie,” says Bailey. All the more reason, he says, to come work for him.

This isn’t the first time he’s recruited from off the street.

Melvin Bailey and workers at a house on West Walnut Street.

Gordon Walek

In 2002 Bailey started the Community Male Empowerment Project (CMEP) as a way to put ex-offenders and hard-to-reach youth to work. “I pull up on the corner and talk to anybody,” he says.

Recently he’s been rehabbing houses as part of Chicago’s Neighborhood Stabilization Program (NSP) and recruiting local residents to do the work. CMEP is typical of the housing developers, appraisers, asset managers, demolition contractors, real estate professionals, specifications writers and title companies that, through Mercy Portfolio Services (the nonprofit which manages NSP) and the City of Chicago, are engaged in acquiring and renovating hundreds of foreclosed, vacant properties throughout the city. In addition to providing high quality, affordable housing and stabilizing neighborhoods affected by the foreclosure crisis, the program is putting many local people to work.

A few minutes before the encounter on Homan, Bailey was standing on the back porch of a house he’s working on near the Garfield Park Conservatory. He pointed at the porch next door and shook his head. He was going to hire a young man who lived there, he says, but “I didn’t get to him in time. He was killed.”

It’s that kind of tragedy - wasted talent - that compels Bailey to keep going.

When Bailey, 43, was growing up on the West Side, he wasn’t all that different from the young people he sees on street corners today. He got into some trouble, he says, though he doesn’t say exactly what kind. He messed up and realized he had to right things.

Now, he says, “I wanna be a role model - to show that you can make a change but that it comes with a lot of hard work.”

He hopes the CMEP can prove that people are willing to work, if given a chance.

“Nothing’s easy in life,” Bailey says. That’s why his young recruits start off through a transitional program called Touch N Go Cleaning, picking up garbage from major streets and vacant lots in the neighborhood. They're paid $8 an hour until they can show that they’re ready to be employed at a higher level.

Once they’ve proven themselves, Bailey pairs them up with a tradesman, and they begin an informal apprenticeship. He’s got roofers, plumbers, painters, and carpenters on his payroll. All of them, he says, love showing other people how to do what they do.

He knows quality is important when it comes to rehabbing houses. So he makes sure his employees recognize that with every beam and nail, “Our name is on the line.”

Bailey’s got his share of challenges, too. Construction projects come with budgets, he says, and that means, “You can only hire so many people.”

All the paperwork has to be right as well. He’s received help from the

Melvin Bailey in a house he renovated on West Walnut.

Gordon Walek

University of Chicago’s Mandel Legal Clinic, and law firms like Mayer Brown and McDermott Will & Emery. The paperwork can be a hassle, but if you want to be successful, he says, it’s just something you’ve got to do.

And it’s hard because he doesn’t always get a break. His job occupies his time seven days a week. “It doesn’t stop when you’re trying to change things.”

But, he says, “Wherever there are young men and women who need opportunities I’ll be there.”

Reaching out to the neighborhoods

Mon, 21 Jun 2010 12:00:00 -0600

Residents and members of community organizations discuss the Neighborhood Stabilization Program at a meeting on the South Side.

Gordon Walek

Who’s hiring carpenters to do the work?

How do I find out about buying a house?

Is there a rent-to-own program in NSP?

How do we nominate a problem building for the program?

The questions came hot and heavy following a special briefing for about 75 interested neighborhood leaders held last month (June 21) in the first-floor assembly room of Chicago Police headquarters at 3510 S. Michigan Ave.

“We’re here to explain any number of ways you can maximize this NSP opportunity for your neighborhood,” said Marva Williams, a senior program officer at LISC/Chicago who invited representatives from community organizations throughout the city to attend the event.

“You can identify foreclosed properties in your community,” she suggested. “You can identify qualified buyers for houses… or renters for multi-family buildings. You can help market your neighborhoods to the public by gathering information on schools and shopping. But most of all, you can keep on doing what you’re doing to make your neighborhoods a better place to live.”

The City of Chicago's Katie Ludwig answers questions about the Neighborhood Stabilization Program.

Gordon Walek

Stepping up to provide details on the NSP effort were Katie Ludwig, finance manager for the city’s Department of Community Development, and Will Towns, vice president of Mercy Portfolio Services, which administers the program for the city. They were joined by Livia Villarreal, who directs the Southwest REACH Center in Chicago Lawn, an effort to help avoid foreclosure there … and keep track of foreclosed buildings with an eye toward rehab and resale.

Ludwig and Towns led off with overviews of how the program is unfolding. They explained that the first NSP-rehabbed properties are just now going up for sale, nearly 18 months after Mayor Richard M. Daley first announced the federally-funded program in January of 2009.

Towns said acquisition of lender-repossessed properties turned out to be more complex – and frustrating – than many had expected at the outset.

“It is a difficult process,” Towns said. “When we started this program I thought it would be easier. We had $100-plus million (federal) dollars. Banks have properties they don’t want. They should sell them to us so we can move forward. But that has been anything but the case. A lot of times the bank tells us they don’t own the property even though the title and research says they do. Other times our appraisal says it’s worth “A” and they think it’s worth “B” because they’re talking to someone down in Texas who has no idea what’s going on in South Chicago.”

“But things are coming together,” he said, “with our partnership with the city, with everyone working together, talking to the banks, bringing them in, making them responsible.

Mercy Portfolio Service's Will Towns describes the finer points of NSP.

Gordon Walek

“If you do own it,” Towns said of the city’s message to banks, “then board it up, clean it up, get the trash out. Do these things to show you’re a respectable neighbor and committed to this community. And if you’re not willing to do that, then the least you can do is donate it or sell it to someone who is.”

Despite the difficulty of identifying owners and executing purchases, Towns ticked off impressive NSP progress to date:

3,400 dwelling units identified in targeted neighborhoods;
More than 1,000 units appraised and cost-estimated;
Purchase offers extended on more than 800 units;
295 units acquired – both houses and apartment buildings – in 78 properties;
Rehab work in progress on 24 units with the first sales beginning this summer.

Given the enormity of the problem (some 3,500 Chicago properties were foreclosed just during the first quarter of 2010) the scale and pace of the city’s NSP effort may seem inadequate to some. But Ludwig reminded that, despite the difficulty of acquisition, Chicago, which received $55 million initially, already has obligated 70 percent of that first award compared to a national average of 57 percent.

That likely means other participating jurisdictions are facing the same acquisition problems … and not solving them as expeditiously. This sets up the possibility, said Ludwig, that Chicago might get extra federal funds “recaptured” from those cities, counties and states that are unable to mobilize and spend their allocations by the 2013 deadline.

Chicago Lawn’s Livia Villarreal had several suggestions for the assembled neighborhood leaders about how to nominate properties to NSP and how to help market properties once they’re rehabbed.

“I’m here to tell you NSP does work,” said Villarreal, who also directs the LISC/Chicago-supported Center for Working Families run by Greater Southwest Development Corp.

The Neighborhood Stabilization Program has acquired and rehabbed homes on blocks such as this in South Shore.

“We started meeting with NSP in March. We brought out all our partners to the meetings – NHS, CAPS, local banks, our 15^th Ward alderman. NSP purchased eight properties in our area and ours will be the first to go to sale. We recently did two activities: a meet-and-greet at a neighborhood restaurant in May for anyone who wanted to know about NSP; then just two Saturdays ago we had a walking tour. We started with an open house at Greater Southwest, then guided tours to the five properties that were ready to be seen.” (See “NSP houses hit the market”)

“These properties are beautiful!” Villarreal enthused about the finished bungalows and two-flats near Marquette Park. “They are in move-in condition inside and out. Price-wise you can’t do any better than an NSP property. And it’s so uplifting for our neighborhood. The fact that NSP wanted to work with our community means a lot. The buzz is out there. We’re very excited.”

Questions followed and several community leaders shared ideas and experiences about ways to get the most from NSP.

Angela Hurlock, executive director of Claretian Associates in South Chicago, said her group nominated two of the three buildings now being worked on there. “This program can work,” said Hurlock, “and we can work with it.”

Illinois Association of Realtors weighs in on NSP

Mon, 14 Jun 2010 12:00:00 -0600

Last fall, Brian Bernardoni, in a publication of the Illinois Association of Realtors, described how realtors are involved in the Neighborhood Stabilization Program. See the story here.

NSP houses hit the market

Tue, 08 Jun 2010 12:00:00 -0600

There’s the smell of fresh paint on the walls in the entryway of 6405 S. Rockwell. But Karry Young, the developer who’s been remodeling the single-family home in Chicago Lawn, is pointing past the paint job, at the wooden molding.

“That oak,” he says, “puts so much personality in a house.”

Over the past three months Young and his crew have installed new insulation, plumbing, heating and air conditioning at the Rockwell house. The previous tenants had turned it into an illegal two-flat – complete with separate stairways and furnaces – and Young’s crew had to do significant construction to get it back to a single-family home. They’ve redone everything imaginable. But they wanted to maintain the personality of the original house and so instead of tearing down the molding they fixed it up.

Detail of oak molding in Chicago Lawn house renovated by Karry Young, the developer.

Bill Healy

It’s that attention to detail that has potential homeowners excited about the Neighborhood Stabilization Program (NSP).

Young is working on several houses in the Chicago Lawn neighborhood, all of which had been foreclosed on, were bought with federal dollars and found their way to him through Mercy Portfolio Services, the city’s non-profit partner in the NSP. The Chicago Lawn houses are among the first NSP homes in the city to go on the market.

A week after Young was showing off the house on Rockwell, he was two blocks away, at Garifuna Flava, a Caribbean restaurant on 63rd Street. This time he was among an eclectic group of developers, potential homeowners and area residents who gathered to hear a presentation on the NSP houses.

“Think about them not as rehabbed but as renewed properties,” Mercy’s Will Towns told the 40-plus people who turned out for the event. They came for a variety of reasons.

A liaison to the Chicago Police Department spoke, as did representatives from

Young with one of his workmen.

Bill Healy

Neighborhood Housing Services of Chicago and the Southwest Organizing Project.

Celine Black grew up in Chicago Lawn and has lived there her whole life. She came to reassure potential homeowners that this is a great place to raise a family. “I’m not going anywhere,” she told the crowd. “I’m a diehard.”

Soon it was time for questions from the audience.

What kind of warranty is there on the houses? (A one-year complete warranty.)

Will someone be able to show me how to use the energy-efficient appliances being installed in the homes? (Yes.)

What other areas of the city are involved with the Neighborhood Stabilization Program? (Twenty-five neighborhoods in Chicago – many of them hard hit by foreclosures.)

Then came a question that raised more than a few eyebrows.

Can I buy a house and sell it right away? (The answer is yes, although there are caps on the price that it can be sold at.) But the point of the Neighborhood Stabilization Program, the presenters reminded the audience, is to rebuild strong, vibrant communities, not to make a ton of money.

When the questions were complete, everyone – developers, potential homeowners, community organizers and neighborhood residents – began talking to each other.

Jacqueline Pointer lives at 67^th and Honore and said the houses all around her are boarded up. She came to ask “What do I need to do to help get it started on my block?” She got the business card of someone from Mercy Portfolio Services who promised to stay in touch.

Cora Hunter and her 17-year-old son live across the street from an NSP house at 64^th and Rockwell. One day she stopped the construction workers at the house and started asking questions. Now she wants to become one of the first homeowners through the NSP. “We’re working out the details,” she said.

And then there’s George Havelka, a retired banker, who grew up in Chicago Lawn and came to learn more about the program. The housing stock in the neighborhood was built to last forever, he said, so long as there are families living in and maintaining the houses.

And what does he make of the NSP’s attempts to rebuild the community? “This is exactly what the neighborhood needs,” he said.

On June 12, tours of the Chicago Lawn NSP houses will be available from noon to 4 p.m. For more information, see this flyer.

Developer Request for Qualifications

Mon, 22 Mar 2010 12:00:00 -0600

Click here to see NSP's Developer Request for Qualifications.

Hearing from the ’hoods

Tue, 16 Mar 2010 12:00:00 -0600

Chicago is off to a fast and effective start with its novel program to stabilize neighborhoods hit hardest by mortgage foreclosures. Yet the spread of board-up blight continues to inflict pain – and fray tempers – in the neighborhoods.

This contrast between the program’s solid performance and mounting local frustration with vacant buildings was much in evidence at a public hearing held March 11, 2010 before the City Council’s Committee on Housing and Real Estate.

Ellen Sahli, center, and Ald. Ray Suarez at the City Council hearing regarding the Neighborhood Stabilization Program.

Photos by Gordon Walek

To start, city officials running the Neighborhood Stabilization Program (NSP) listed several major achievements since the program launched in February 2009 with an initial federal grant of $55 million:

Nearly half of these initial funds had been committed, with 205 dwelling units acquired from foreclosing lenders and another 98 due to close in 30 to 60 days.
A stable of more than 40 developer/contractors – many owned by minorities and virtually all employing substantial number of minorities – has been assembled and several already have begun work on the first batch of acquisitions.
Some 1,522 vacant units have been identified for future acquisition across the city’s hardest-hit neighborhoods, meaning they’ve been worked up with a price appraisal, an estimation of rehab work required, and a financing plan for eventual resale at affordable prices to qualifying buyers.
Most important, the city’s methodical approach recently helped it win an additional $98 million from a second, more competitive, round in which only 56 of 480 applying locals received grants from the U.S. Dept. of Housing and Urban Development.

Inventing a workable process
This early progress was achieved, officials said, even though nothing close to NSP had ever been attempted. There is no off-the-shelf organizational model for buying, rehabbing and reselling some 2,500 bank-foreclosed dwelling units, many of them stripped by thieves of all piping, wiring and fixtures.

“This program is the first of its kind in the country,” said Ellen Sahli, first deputy commissioner for housing with the city’s Department of Community Development. “There was no infrastructure, no way to do this at scale quickly. An essential amount of work had to be done to lay the infrastructure and to comply with federal regulations. We needed appraisers, spec writers, board-up and clean-up services, property managers. We are now in a very good position to move forward.”

More than 100 members of the public attended the hearing in Council Chambers. So did a dozen aldermen whose wards contain census tracts deemed eligible for the program; or in their view, should have been eligible.

“I have over 1,200 foreclosed properties in my ward,” testified Ald. Sharon Denise Dixon (24th), whose North Lawndale neighborhood had yet to see its first purchase-and-rehab. “I have open buildings. I have dingy dirty empty lots. I don’t understand. My numbers hit … I have five or six foreclosed properties on my own block. So you cannot tell me these other communities are more needy than Lawndale.”

Aldermen Pat Dowell (center) and Ariel Reboyras at hearing in City Council council chambers.

Where’s ours?

Dixon acknowledged North Lawndale was included in the first round of NSP funding and that soon “four properties are to be purchased, maybe five.” Her main complaint was that North Lawndale – one of the most disinvested neighborhoods of the city – fell off the list in the city’s successful bid in the highly competitive second round, or NSP2.

Part of the reason, say those familiar with the process, is that North Lawndale was awash in abandoned buildings before the foreclosure tsunami hit. Federal program guidelines favor communities that can be stabilized by restoring newly foreclosed dwellings to an otherwise healthy housing stock.

“Not all vacant and boarded-up properties are eligible under this program,” Sahli said when challenged on the point.

Ald. Fredrenna Lyle (6th) complained her South Side ward had been overlooked. “There’s not one property on this list in the 6th ward. I am absolutely devastated. I can’t tell you how angry I am.

“I see a pattern that is very distasteful to me,” Lyle continued, asserting the city favored neighborhoods where private charitable foundations have made investments in community development.

Sahli promised “to work with you” and admitted Lyle’s Greater Grand Crossing neighborhood, while eligible, may not have gotten much early attention because “we started where we could get some traction.”

Regardless, the 2,000-2,500 vacant, foreclosed units that NSP expects to return to productive use in the next three to five years are a drop in the bucket of the larger foreclosure problem. In 2009 alone, foreclosure actions were filed against more than 22,000 city dwellings including hundreds of apartment buildings.

Others who testified complained some of the program’s chosen developers have not performed well in the past, or haven’t hired enough African-Americans, especially from neighborhoods where the work is being done.

Mike Tomas, of theGarfield Park Conservatory Alliance, testified that the NSP program will benefit his neighborhood.

Kudos, too

But developers like Karry Young, whose award-winning KLY Development is rehabbing NSP houses in Chicago Lawn, presented a different picture.

“We’re creating jobs for the community,” testified Young, whose 50 employees – all earning union-scale wages – are almost all African-American and almost all from Chicago or close-in suburbs.

Leaders of community development organizations also had good things to say about NSP’s fast start in their neighborhoods.

Mike Tomas, of the Garfield Park Conservatory Alliance, said his group, like several others in LISC/Chicago’s New Communities Program, has been working with the city to identify clusters of foreclosed properties, especially those near schools, whose rehab and resale would do the most good.

He said the city NSP staff, and that of its hired program administrator, Mercy Portfolio Services, “have been responsive, engaging and supportive.”

“To date the city has acquired seven units in East Garfield Park,” Tomas said, “and together we hope to continue to improve the quality of life, not just in East Garfield, but across the West Side.”

Several aldermen also expressed support of the program.

“Thank you for the team you’ve put together and for all your hard work, coming down to the community, explaining the program, surveying the neighborhood,” said Ald. John Pope (10th), whose ward includes the hard-hit South Chicago neighborhood. “This is a great opportunity not just to create housing but to get rid of nuisance buildings, to get people working and to learn a trade.”

Ald. Ray Suarez (31st), chairman of the housing committee, said his panel would continue to monitor NSP and include its progress in the city’s quarterly affordable housing reports.

Chicago NSP update

Thu, 11 Mar 2010 12:00:00 -0600

At a public hearing in Chicago City Council chambers on March 11, 2010, Ellen Sahli, First Deputy Commissioner of the Department of Community Development, provided a status report of Chicago's Neighborhood Stabilization Program. Download it here.

Laying a stable foundation

Sat, 06 Feb 2010 12:00:00 -0600

Ophelia Cage knows all too well the damage – physical and psychic – that a foreclosed and vacant house can do to a neighborhood. She lives next door to an empty bungalow at 6324 S. Campbell Ave. and, after two years of calling the cops and shooing away kids, she’s delighted someone is rehabbing the still-sturdy brick home for a new family to buy.

“I’m hoping it’s a new day,” said Ms. Cage. She’s a meter-reader with the city’s Dept. of Water

Karry Young and workers in Chicago Lawn.

Photos by Alex Fledderjohn

Management and “reads” her own street better than most. “I was thinking of moving,” she said of the constant nuisance that is living alongside a magnet for metal thieves, vandals and squatters. “Now I think I’ll stay.”

What the city-savvy Ms. Cage may not know is the complex public-private partnership newly created to identify, buy, rehab and resell hundreds of foreclosed homes such as 6324 S. Campbell.

There’s no off-the-shelf model for Chicago’s Neighborhood Stabilization Program (NSP). Yet barely a year after the city got word it was getting $55.2 million in first-round federal funding, the City of Chicago and its non-profit program manager, Mercy Portfolio Services (MPS), have created a nimble system for buying and recycling hundreds of foreclosed homes and apartment buildings.

And it actually works, albeit with several tweaks and fine-tunings. By the end of January 2010, MPS had acquired more than 100 units of housing in its 25 targeted neighborhoods. And several – like 6324 S. Campbell – already have been conveyed to developers whose crews are busy rehabbing them according to carefully-drawn specifications. Another 217 units are “under contract,” meaning they’ve been professionally appraised by MPS, and that the owners – often a bank or a bank servicing agent – have agreed to sell for a bit less than appraised value. Why less? Because property values are still declining while their carrying costs are rising. It’s a buyers’ market.

Trailblazing initiative
“This had never been done before,” said Darlene Dugo, MPS’s vice president for acquisitions. So much of the program’s first year was spent building a multi-partner team of real estate developers, appraisers, structural engineers, lawyers, sales agents and so forth.

Young has acquired several Chicago Lawn buildings through the Neighborhood Stabilization Program.

Even with 17 years of experience in the Chicago office of Fannie Mae, Dugo describes the NSP process – with all its due diligence, federal and city requirements, plus the legal strings of foreclosure – as “pretty labor-intensive.”

“There were no models,” she said. “So our first job was putting in place a process. You could say it’s a trailblazing initiative.”

The gruesome economy, ironically, has worked in MPS’s favor. It’s also a buyers market for professional services, which has allowed Chicago’s NSP to get up and rolling with a full-time staff of just half-a-dozen professionals. For example, major lenders such as Bank of America, Citibank and Chase Bank generally have been more than willing to part with their REO (real estate owned) inventories in the 25 neighborhoods. Developers and contractors, moreover, up against the near-collapse of private sector activity, have bid aggressively … even though NSP only reimburses for pre-specified costs plus a fee of 10 to 15 percent. So far more than 40 competitively-selected developers and contractors, both private and non-profit, are in place. Other real estate professionals, from transaction lawyers and property appraisers to listing agents and security providers, have been similarly motivated … and price-competitive.

William Goldsmith, president of MPS, said Chicago’s quick mobilization likely influenced the U.S. Department of Housing and Urban Development’s (HUD) decision to award a second-round grant of $98 million.

“HUD focused on who can get the funds, and the product, out the door in an affirming way,” he said of the Jan. 14 announcement. He also pointed to Chicago’s strategy of focusing on specific neighborhoods, and on problem clusters within those neighborhoods, rather than a scatter-shot approach driven by which properties are easiest to acquire.

New but veteran team
Another factor behind Chicago’s quick response was the city’s extensive experience working with private developers and non-profit groups on affordable housing.

Typical is Karry Young, whose Karry L. Young Development, LLC., is overseeing work on 6324 S. Campbell. He is a veteran of the city’s New Homes for Chicago program and has won awards for affordable houses and two-flats his firm has built in nearby Englewood.

“We’re no strangers to this area,” said Young of the adjacent Chicago Lawn neighborhood, where he’s doing “gut” rehab on three buildings besides the one located next to Ophelia Cage. He says he wants 15 or 16 more. He’s also comfortable working with Neighborhood Housing Services of Chicago, the venerable citywide non-profit that has nominated problem REOs – like 6324 S. Campbell – for early attention.

With headquarters on East 75th Street, Young has been able to tap into local job training and placement programs. He said his company employs 75 men and women – nearly all minorities – covering virtually all the residential construction trades. This helps the city and MPS meet their minority set-aside and local hiring commitments. And because federal funds are used, his workers earn “prevailing” (or roughly union-scale) wages.

Finding buyers
In part because of prevailing wages, and because all rehabs must conform to city building codes plus NSP goals for energy efficiency, the cost of redevelopment may well exceed the going price for bungalows and two-flats in neighborhoods such as Chicago Lawn or Englewood. In other words, finding mortgage-ready buyers may prove more difficult than finding developers or contractors.

The derelict bungalow on South Campbell, for instance, was purchased for $19,000 from now-defunct IndyMac, one of the nation’s more active sub-prime lenders. But specifications and estimates prepared by MPS consultants show it will require $180,527 worth of labor and materials to restore the property to code-compliant, saleable condition.

When completed, the renovated homes and two-flats will be highly energy efficient.

“Look at these bedrooms,” said Young as he showed a visitor the scale of work required to bring a battered 1913 bungalow up to 2010 standards. “There’s no closet. And you couldn’t put a queen or king-sized bed in here if you tried. Look at the exterior walls. There was no insulation. None. There’s really nothing to save in these houses other than the framing and exterior brickwork. Everything of value has been stripped out.”

So the work will be extensive and the question quickly becomes: Who’s going to pay more than $200,000 for a 1,381-square-foot bungalow – albeit a masterfully restored bungalow – in blue-collar Chicago Lawn or Englewood? Especially when federal rules specify that a qualifying family of four cannot make more than $87,000-a-year, or 120 percent of the Chicago area median.

Developing bargains
But again, the Chicago/MPS partnership comes into play. The program is piecing together a menu of subsidies that will write-down purchase prices, reduce closing costs, and lower the loan interest rates paid by qualifying buyers.

Contributing partners include Community Investment Corporation, Local Initiatives Support Corporation/Chicago, Chicago Community Land Trust, the National Community Stabilization Trust, Self-Help Ventures, and Neighborhood Housing Services of Chicago. In addition, the Chicago Housing Authority (CHA) is providing $16 million, plus some of its federal project-based rent vouchers, toward purchase of 200 NSP units for rental to its qualifying tenants.

The city also plans to dovetail NSP’s work with its own five-year plan (2009-2013) for investing more than $2 billion in affordable housing. City Hall will employ some of the same levers and techniques used in its “Find Your Place in Chicago” program that subsidizes home purchases in the mixed-income communities that are replacing the CHA’s demolished high-rises. Families who want to learn more about buying an NSP-rehabbed home – and the various subsidies available – are urged to contact Cardigan Shipman at cshipman@mercyhousing.org Once qualified, prospective buyers are also asked to attend a free, day-long counseling and advice session. Nobody wants the new owners to be overwhelmed or to repeat the cycle of foreclosure.

Certainly not Ophelia Cage, who waits hopefully for the kind of next-door neighbor who will help keep a watchful eye on Campbell Avenue, and maybe even join her as a police beat representative to the city’s CAPS program.

“It’s about time,” summed up Ms. Cage: “I can't wait.

Neighborhood Stabilization Program latest news

In Logan Square and Hermosa, home buyers on the hunt

NSP: Where it's been, where it's going

Mayor hails first fruit of foreclosure fight

Chicago NSP helps fill demand for affordable rental housing

NSP rentals in Washington Park

What Chicago can learn from other locales, and vice versa

Moving Forward Together

Cuts = targeting

Redefine “scale”

Rehabs for rent

It’s the (local) economy

Foregoing foreclosures

Balky lenders

Drops in a bucket

The new Fund

A “fresh start”

Pullman/Roseland NSP Open House Tour: Unique homes at affordable prices

NSP making a difference in Chicago Lawn

Points of light amid foreclosure funk

Melvin Bailey and crew at a two-flat in East Garfield Park. Gordon Walek East Garfield glimmer

Federal help

Large numbers of foreclosures continue to reflect a generally fragile economy. John McCarron Market stalled

Renters routed

Now’s the time to buy? In Humboldt Park, answer may be yes

New Pisgah rescues foreclosed homes

On West Walnut Street the scenery looks a little brighter

A Q&A about buying an NSP house

NSP funds help create energy efficient bungalows

Woman’s search for perfect house: an NSP property in Oakland

Chicago gets new NSP funds

Chicago Amendment to the NSP 1 Substantial Amendment

New houses, local jobs make for better neighborhoods

Reaching out to the neighborhoods

Illinois Association of Realtors weighs in on NSP

NSP houses hit the market

Developer Request for Qualifications

Hearing from the ’hoods

Where’s ours?

Kudos, too

Chicago NSP update

Laying a stable foundation

Melvin Bailey and crew at a two-flat in East Garfield Park.

Gordon Walek

East Garfield glimmer

Large numbers of foreclosures continue to reflect a generally fragile economy.

John McCarron

Market stalled