City’s Bank Owned Foreclosures Prevention

by on Foreclosure Help

A new strategy will be adopted by officials of the city of Richmond in California as part of their proactive stance in preventing bank owned foreclosures from becoming blights in neighborhoods.

City officials have decided to purchase foreclosed homes, rehabilitate and sell them to interested homebuyers. They will establish the nonprofit Richmond Neighborhood Stabilization Corporation that will use about $3 million from federal funding to purchase repossessed houses at a discount.

However, officials know that the allocated $3 million is not enough to solve the bank owned foreclosures crisis in the city which is one of the cities in Bay Area severely affected by foreclosures. They hope to purchase and rehabilitate several homes, but it will be just a small portion of the estimated 2,300 distressed properties in the city.

City Councilman Jeff Ritterman remains optimistic about the program but admits that the effort will barely scrape the surface of the foreclosure problem.

Redevelopment housing director Patrick Lynch said that the city is the first in the Northern California region to launch this kind of program. He said that several neighboring cities have already contacted Richmond to see if they can participate in its campaign to purchase abandoned, vacant and bank owned foreclosures in their areas at bargain prices.

Richmond would follow the framework establish by the Housing and Recovery Act. It would link into national organizations that have formed partnerships with almost 90 percent of lenders and banks, according to Lynch.

This network of organizations will provide the city with listings of bank owned foreclosures. Richmond officials will visit these foreclosed properties and negotiate for their sale price. Properties that are on top of the city’s purchase list are those abandoned and vacant houses near parks, schools and new infrastructure.

According to Lynch, some properties are escrowed at about $50,000, while others are pegged at $100,000.

City officials have option to renovate and sell the houses to families or redeveloped, placed them in land banks or demolish them.

Meanwhile, the Richmond chapter of the Association for Community Organizations for Reform Now believes that establishing a nonprofit is an important component for a community land trust, which involves the city purchasing bank owned foreclosures, selling them to families while retaining control of the property.