City of BostonThomas M. Menino, Mayor

Department of Neighborhood DevelopmentEvelyn Friedman, Chief and Director

BOSTON’S ANTI FORECLOSURE STRATEGY

Strategy Components:Strategy Components:

PREVENTIONPREVENTION

INTERVENTIONINTERVENTION

RECLAMATIONRECLAMATION

BOSTON’S ANTI FORECLOSURE STRATEGY

PREVENTIONPREVENTION

INTERVENTIONINTERVENTION

RECLAMATIONRECLAMATION

BOSTON’S ANTI FORECLOSURE STRATEGY

PREVENTION

1999: Don’t Borrow Trouble

FORECLOSURE RATES 1996-2007

0.00%0.50%1.00%1.50%2.00%2.50%

HOME CENTERBUYERS

OVERALL MARKET

PREVENTION

PREVENTIONResidential Foreclosures in Boston 1990-2007

PREVENTION

INTERVENTION

RECLAMATION

BOSTON’S ANTI FORECLOSURE STRATEGY

INTERVENTIONBoston Home Center ForeclosurePreventionTransit Ads, 2006

INTERVENTIONForeclosure Prevention AssistanceForeclosure Prevention Assistance

Mayor Menino With Foreclosure Prevention Client At Servicers WorkshopMayor Menino With Foreclosure Prevention Client At Servicers Workshop

1125

897

500

600

700

800

900

1000

1100

1200

2008 Through Aug

Foreclosures Without Prevention AssistanceActual Foreclosures

INTERVENTIONImpact of Foreclosure Prevention on Overall Foreclosure Rate

0

200

400

600

800

1000

1200

2006 2007 2008 to Date

Cumulative Clients ServedCumulative Homes Saved

PREVENTION

INTERVENTION

RECLAMATION

BOSTON’S ANTI FORECLOSURE STRATEGY

Percentage of Residential Stock Facing Foreclosure 2007

Includes Condos and 1-4 Family Homes

Neighborhood Impacts of Foreclosures

NEIGHBORHOOD# of

residential properties

Projected 2008

Petitions

% of Housing Stock

Roxbury 6,160 406 6.6%Mattapan 5,149 260 5.0%Dorchester 14,343 630 4.4%East Boston 5,088 220 4.3%Hyde Park 7,324 242 3.3%Roslindale 7,249 150 2.1%South Boston 7,440 118 1.6%Jamaica Plain 6,712 82 1.2%Charlestown 4,415 36 0.8%West Roxbury 9,219 66 0.7%Allston/ Brighton 12,118 78 0.6%Central 5,342 22 0.4%South End 6,141 24 0.4%Back Bay/ Beacon 8,895 28 0.3%Fenway/ Kenmore 2,540 4 0.2%Citywide 108,135 2,366 2.2%

PROJECTED FORECLOSURE IMPACTS, 2008

RECLAMATION

RECLAMATION Foreclosures Deeds By Property Type

2008 through 9/15

Condominiums% Stock 18%% Deeds 25%

1-Family% Stock 12%% Deeds 10%

2-Family% Stock 14%% Deeds 22%

3-Family% Stock 18%% Deeds 40%

All Other Property Types% Stock 38%% Deeds 3%

Bank-Owned Homes in Boston

September 2008: 982

0.8% of Boston’s1-4 & Condo Housing Stock

RECLAMATION

RECLAMATIONPHYSICAL CONDITION OF BANK-HELD PROPERTIES

IN BOSTON

As of July 2008, Includes 857 of 936 REO Properties

69%

10%

21%

Fair-Good: 594

Abandoned: 84

Deteriorating: 179

RECLAMATION

3-Part Strategy

1.Targeted Action In Hot Spots2.Distressed Property Redevelopment3.Homebuyer Strategy

RECLAMATION1. Targeted Action in Hot Spots

Mayor Menino surveys foreclosed homes in Hendry Street neighborhoodMayor Menino surveys foreclosed homes in Hendry Street neighborhood

Measure of Foreclosure Impact FIT Area

% Of Citywide

Rate% Stock in Foreclosure 11% 367%% REOs Distressed 100% 370%

LANGDON FIT AREA

% Stock in Foreclosure 3%% REOs Distressed 31%

CITYWIDE FORECLOSURES 2007-Date

Measure of Foreclosure Impact FIT Area

% Of Citywide

Rate% Stock in Foreclosure 26% 867%% REOs Distressed 85% 274%

HENDRY FIT AREA

Measure of Foreclosure Impact FIT Area

% Of Citywide

Rate% Stock in Foreclosure 20% 667%% REOs Distressed 35% 113%

DACIA FIT AREA

RECLAMATION1. Targeted Action in Hot Spots

RECLAMATION2. Distressed Property Redevelopment

21 Hendry Street21 Hendry Street

Distressed31%

Fair-GoodFair-Good69%69%

Distressed REO Distressed REO InventoryInventory

September 2008September 2008

RECLAMATION2. Distressed Property Redevelopment

City City NegotiatesNegotiatesSingle orSingle orBulk Bulk purchasespurchasesfrom from lenderslenders

City City transfers transfers acquisition acquisition rights to rights to pre-pre-qualified qualified developersdevelopers

Rapid one-Rapid one-stop gap stop gap funding funding investment investment by City (if by City (if needed)needed)

Developer Developer completes completes renovation renovation & markets & markets at agreed-at agreed-upon price upon price to to homebuyerhomebuyerss

Sale to Sale to homebuyerhomebuyer.

Homeownership Path: City Acquisition ModelHomeownership Path: City Acquisition Model

RECLAMATION2. Distressed Property Redevelopment

Federal Funding Role

City City NegotiatesNegotiatesSingle orSingle orBulk Bulk purchasespurchasesfrom from lenderslenders

City City transfers transfers acquisition acquisition rights to rights to pre-pre-qualified qualified developersdevelopers

Rapid one-Rapid one-stop gap stop gap funding funding investment investment by City (if by City (if needed)needed)

Developer Developer completes completes renovation renovation & markets & markets at agreed-at agreed-upon price upon price to to homebuyerhomebuyerss

Sale to Sale to homebuyerhomebuyer.

Homeownership Path: City Acquisition ModelHomeownership Path: City Acquisition Model

11 Coleman Street:11 Coleman Street:City negotiated price of $30K/unit, City negotiated price of $30K/unit,

Rights now transferred to Contractor-Developer Rights now transferred to Contractor-Developer

RECLAMATION2. Distressed Property Redevelopment: City Acquisition

RECLAMATION2. Distressed Property Redevelopment

Developers and NPOs are pre- qualified for State acquisition loan fund

Developers purchase properties using State loans, staying within HUD price limits

Rapid one-stop gap funding investment by City (if needed)

Developer completes renovation & markets at agreed-upon price to homebuyers

Sale to homebuyer.

Homeownership Path: Private Acquisition ModelHomeownership Path: Private Acquisition Model

RECLAMATION2. Distressed Property Redevelopment

Federal Funding Role

Developers and NPOs are pre- qualified for State acquisition loan fund

Developers purchase properties using State loans, staying within HUD price limits

Rapid one-stop gap funding investment by City (if needed)

Developer completes renovation & markets at agreed-upon price to homebuyers

Sale to homebuyer.

Homeownership Path: Private Acquisition ModelHomeownership Path: Private Acquisition Model

RECLAMATION2. Distressed Property Redevelopment

Prequalified Prequalified developerdevelopergets gets property property from City from City with with approval for approval for affordable affordable rental rental housinghousingDeveloper Developer privately privately acquires REOacquires REOpropertyproperty

Property soldProperty soldwith with affordability affordability covenants to covenants to qualified qualified rental rental operatoroperator

Rehab workRehab workcompletedcompleted

Request &Request &approval for approval for gap gap financingfinancingfrom Cityfrom City

Property Property retained by retained by developer developer withwithaffordability affordability covenantscovenants

Affordable Rental PathAffordable Rental Path

RECLAMATION2. Distressed Property Redevelopment

Federal Funding Role

Prequalified Prequalified developerdevelopergets gets property property from City from City with with approval for approval for affordable affordable rental rental housinghousingDeveloper Developer privately privately acquires REOacquires REOpropertyproperty

Property soldProperty soldwith with affordability affordability covenants to covenants to qualified qualified rental rental operatoroperator

Rehab workRehab workcompletedcompleted

Request &Request &approval for approval for gap gap financingfinancingfrom Cityfrom City

Property Property retained by retained by developer developer withwithaffordability affordability covenantscovenants

Affordable Rental PathAffordable Rental Path

Mayor Menino welcomes would-beMayor Menino welcomes would-be

homebuyers to the REO Trolley homebuyers to the REO Trolley TourTour

RECLAMATIONRECLAMATION3. Homebuyer Strategy3. Homebuyer Strategy

Distressed31%

Fair-Good69%

Distressed REO Distressed REO InventoryInventory

September 2008September 2008

Marketing MaterialsMarketing MaterialsFor WorkshopFor WorkshopOn How To Buy aOn How To Buy aForeclosed Foreclosed PropertyProperty

RECLAMATIONRECLAMATION3. Homebuyer Strategy3. Homebuyer Strategy

Homebuyer participates in REO tour and identifies properties of interest. Completes training workshop

City connects homebuyer to ‘REO Specialist’ to track down property sellers and availability of properties.

City provides rehab analysis before offer made.

Negotiation, with help from REO Specialist. Offer accepted.Specialist helps buyer get to closing

Purchase-Rehab using City-supported specialized bank loan product.

RECLAMATIONRECLAMATION3. Homebuyer Strategy: Acquisition/Rehab3. Homebuyer Strategy: Acquisition/Rehab

Homebuyer participates in REO tour and identifies properties of interest. Completes training workshop

City connects homebuyer to ‘REO Specialist’ to track down property sellers and availability of properties.

City provides rehab analysis before offer made.

Negotiation, with help from REO Specialist. Offer accepted.Specialist helps buyer get to closing

Purchase-Rehab using City-supported specialized bank loan product.

RECLAMATION3. Homebuyer Strategy: Acquisition/Rehab

Use of Federal Funds

CHALLENGES AHEAD

1.1. Neighborhood Stabilization Neighborhood Stabilization Investment not Eligible for Federal Investment not Eligible for Federal FundingFunding

2.2. Availability of CreditAvailability of Credit3.3. Engaging Good Developers & Engaging Good Developers &

ContractorsContractors4.4. Servicer CooperationServicer Cooperation

City of BostonThomas M. Menino, Mayor

Department of Neighborhood DevelopmentEvelyn Friedman, Chief and Director

BOSTON’S ANTI FORECLOSURE STRATEGY