Mitigating the Mortgage Crisis

The city is still pursing a lawsuit against national mortgage lenders as part of its response to area foreclosures, says city CFO Robert Lipscomb.

Lipscomb and a team of public/private partners went before the City Council yesterday to update them on local plans to mitigate the mortgage crisis.

Co-chairs of four committees presented several strategies to the council, including job fairs, a sort of monster.com for Memphis residents, and asking the Postal Service and MLGW for information on vacant homes.

(Inside baseball alert: My colleague John Branston and I talk a lot about how many foreclosures and vacant homes there are, exactly. County assessor Cheyenne Johnson, who is co-chair of the committee looking to MLGW, has one number. RealtyTrac and other data services have others, and it's very confusing, b/c it just doesn't seem like anyone really knows.

Johnson's committee, the IT and fiscal planning committee, says that the postal service knows when a house is vacant and MLGW knows when they get a cut-off notice and they're trying to collect as much data as they can.)

The city and county also are expected to receive a combined $14 million in Neighborhood Stabilization Funds from the federal government.

Housing and Community Development deputy director Beverly Goines said the city expects the neighborhood stabilization contract to come from HUD within the next 30 to 60 days. Within 30 days of getting the contract, the city will execute its program.

I think we might have talked about this program before. More than once.

Council member Barbara Swearengen Ware asked Goines if the program is going to help homeowners whose houses have been foreclosed on: "[If] they desire to be back in their homes, is that money available to them?"

"They would have to be able to qualify for a 30-year fixed-term loan and it would probably be difficult to do if you already had a foreclosure," Goines replied.

"So this program will not help a person who has lost their home?" Ware persisted.

"It might help them in terms of a rental property, but not home ownership," said Goines.

The money is really intended to shore up neighborhoods (thus the name). It's not going to help Joe Schmoe who just got kicked out of his house.

I'm not sure this was the way to go. It seems it might be a good idea to try to keep people in their own houses instead of letting them get kicked out under a foreclosure procedure, buying the house, renovating it, and reselling it. I mean, first question: Reselling it to who?

But under the federal guidelines, the city and county are only allowed to use the money in very specific ways. They're allowed to use the funding to acquire land for a land bank, for instance, but they're not allowed to use it to maintain the land in the land bank.

The city plans to acquire and rehab about 145 vacant homes with help from local community development corporations.