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Dan Kildee Headshot

Federal Government Needs to Send a Clearer Message -- and a Strong One

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While forging their own solutions, neighborhoods, towns, cities and states alike are looking to the Federal Government for support in fighting the scourge of abandoned and foreclosed properties that are undermining blocks, neighborhoods and government coffers. Yet in the past month, rather than shed light, messages from Washington have been mixed, at best.

On the one hand last month the Obama Administration not only said that it would modify HAMP rules to aid an additional one million homeowners, a GAO report grimly documented a 50 percent rise in vacant properties in the last decade -- to more than 10 million in 2010. Yet, in the same month the Federal Housing Finance Agency (FHFA), sued Chicago over its vacant property ordinance, which mandates servicers to register and be responsible for the board-up and security of vacant homes caught in the limbo of the foreclosure process, saying that properties under the control of Freddie Mac and Fannie Mae should be exempt from regulation or penalty.

While these contradictory responses seem ironic, the situation is deadly serious. The federal government has tried through HAMP, NSP, HARP, and other programs to stem the tide of foreclosures. But as the GAO documents, the processes -- while well-intended and showing promise -- have not yet been adequate to stem the tide of foreclosures. With the future of their communities at stake, local governments have rightly taken defensive actions to ensure that someone takes responsibility for securing property and protecting the health and welfare of neighborhoods and their residents -- from the crime and collapsing property values that accompany abandonment and vacancy.

While the FHFA may protest the impact of Chicago's ordinance on Freddie Mac and Fannie Mae, which in many cases are the ultimate servicers, the GAO reports that it is just such ordinances and other local actions that carve a path forward out of the morass in which the nation finds itself -- actions that the Center for Community Progress has helped to forge or replicate because they work.

We know that local governments can and should use building code enforcement to prevent abandonment by making current owners responsible - or to ensure that they responsibly renounce their ownership so that others can step in.

For homeowners who are behind in their payments, we've seen the utility of community outreach and help from skilled counselors who are connected to the communities where they work -- with many families able to renegotiate their mortgages and make them affordable.

And we have documented the utility of land banks as a responsible receptacle for holding properties until they can be reused in a manner that help, rather than blight, communities when owners -- be they individuals, banks or secondary mortgage giants like Freddie and Fannie -- no longer wish to be responsible for property.

The bottom line is that communities are faced with growing costs from abandonment when they can least afford it and they are struggling to find creative ways to address the needs of government for revenue and communities for relief.

While the FHFA states the problem, the GAO report suggests the solution. Rather than sue those who are trying to take constructive steps to address abandoned properties, federal resources can strengthen communities' efforts to embrace best practices in code enforcement, land banking and rehab and reuse of abandoned homes and other properties. One approach creates jobs, neighborhood stability and safety -- and ultimately recovery. The other fosters only chaos and despair.

We will solve the challenges that we face not by saying "it's not our problem" -- as the FHFA does -- but only by looking to our neighborhoods, towns and cities for effective workable solutions. It is in the practices cited in the GAO report where federal dollars should be invested. This kind of wise federal funding will ultimately free Freddie, Fannie and the banks from "holding the bag" for vacant properties because there will be less of them -- and those that remain will be to communities as assets upon which we can build.