TO:                  Mayor Edward “Bud” Caulfield

                                    And

                        Members of the Lowell City Council

FROM:            Bernard F. Lynch, City Manager

DATE:             February  7, 2008

SUBJECT:       MOTION OF 1/22/08 BY MAYOR CAULFIELD

                        REQUEST THE MANAGER/DPD ADDRESS CONCERNS

                        RE: SUBSTANDARD HOUSING IN CITY

Troubled Properties

This definition applies to any property that may have a condition(s) that is causing a nuisance to a neighborhood.  “Troubled” could be a lack of adequate maintenance, overgrowth, overcrowding, repetitive police calls, long term vacancy, accumulation of trash, vandalism and unauthorized entry by youth or unwanteds, building not secured, or substantial fire damage that has not been addressed.  These properties may also include “abandoned” properties whose owners have let the property fall into disrepair, possibly prior to a foreclosure, and the responsible lender(s) are difficult to identify for the purpose of maintenance.  Abandoned may also include properties that are in probate without an heir identified which can be a long or indefinite process.

It is clear from past experience that a glut of foreclosed properties typically leads to issues of neighborhood stability.  In the last market crash of the early 90's, the Division of Planning and Development initiated various tracking mechanisms with the help of nearly all City Departments.  It was successful in keeping a handle on the inventory of "Troubled Properties" and vacant and abandoned buildings throughout the City.  DPD is reviving the Troubled Properties Database, which was last updated by the Neighborhood Planner in May of 2007.  This database tracks properties that are falling into disrepair, have had fires, or are the constant source of nuisance in a neighborhood.  Commercial and residential properties are carried on the list until they have been either demolished, if appropriate, or a renovation project has been completed.

In addition to reviving the database, the Troubled Properties Task Force, has formatted a letter and survey addressed to owners of substandard properties.  This strategy will serve to notify owners that the condition of their property has come to the City’s attention, ask them to fill out a survey that confirms ownership status, length of ownership, vacancy and plans for renovations.  It also asks owners to describe the reasons for vacancy and what assistance they might need to improve the condition of their property.  Eventually the owners are invited to meet with City Department representatives who will let the owner know of any incentives that may be available to assist with improvements to the property.  It is also an opportunity to inform an owner who is reluctant to make improvements that there are consequences for such actions.  Health, Inspectional Services, Fire and Historic may issue violations/citations for infractions of any local or state laws.  Property owners may also face liens for any necessary actions to correct hazardous conditions.  All the relevant City Departments initially mentioned will remain involved with reporting nuisances to the DPD for inclusion in the database when appropriate, following up with inspections where needed and regularly reviewing the list of properties with the Troubled Properties Task Force.

A current “Troubled Properties” list will be distributed upon completion of updating.  Since data is received from several departments we expect this update will be completed by the end of February.  In the meantime, the group will continue to meet and owners will be contacted. 

Foreclosures

The Northern Middlesex Registry of Deeds, directed by Richard P. Howe, Jr. just issued a Statistical Analysis of Foreclosures in Lowell during 2007, showing 283 incidences of home foreclosures in Lowell during this year.  Mr. Howe’s findings are further broken down to provide more detail and background on lenders and borrowers practices.  The conclusion is that foreclosures in Lowell are likely to continue to rise during 2008.  The report is available on the Registry web site.

In response to the increase of foreclosure activities, local housing advocates formed a Foreclosure Prevention Task Force in 2006.  The City is represented on this Task Force by members of the DPD Housing Staff including our Deputy Director/HOME Administrator, Director of Housing Programs, and HOME Program Assistant.  Meetings are regularly attended by DPD staff.  One of the first formal acts of the Task Force was the development of an informational brochure and Hotline.  The brochure was sent to hundreds of first time homebuyers who accessed various home buying assistance programs locally.  There was a good response to the information and contact was made through Community Teamwork, Inc. (CTI) to the network of local lenders willing to help in analyzing the status of homeowners in trouble.  The work of the Task Force continues and is reaching out nationally to programs being developed.

The Task Force realized how devastating sub-prime lending practices could be on homeowners when they first met in June 2006.  Since this meeting and other efforts a Process Subcommittee formed and has recently proposed that the Task Force join the national NeighborWorks 1-888-995-HOPE program.  The Coalition for a Better Acre (CBA) is represented on the Task Force and as well on the NeighborWorks network and will request that any loan with a zip code of 01850, 01851, 01852, 01853, and 01854 be coded by the National network and referred locally to the CBA.  To ensure that Lowell homeowners are referred to a local organization, the subcommittee recommends that advertising promoting the 1-888-995-HOPE hot line include a request to the homeowner for the name of their local organization.

The Process Subcommittee further describes the process as follows:

1.      Homeowner calls the 24-hour hotline and talks to a counselor.

2.      Counselor gathers information such as name, address, employment history, income, assets, credit history, property values and current loans along with present financial situation.  This session will last 45 to 60 minutes to allow counselor to assess situation.

3.      National counselor refers caller to local NeighborWorks agency.

4.      National counselor e-mails the details of situation along with information gathered to local NeighborWorks agency.

5.      Local NeighborWorks agency contacts the homeowner for appointment, homeowner discloses how loan was obtained and provides loan docs to local counselor.  Information is reviewed to determine if predatory lending practices are evident.  If there are, the local counselor will submit package to assigned MassHousing lender for the area.  If the financial package does not meet the program guidelines, the counselor will recommend other options, which may include, deed in lieu of foreclosure, short sale, bankruptcy, also a 93A letter could demand renegotiation with present lender when predatory lending is evident.  The package could also be referred to Attorney General’s office and/or Commissioner of Banks for assistance.

It is obvious that the work of the Foreclosure Task Force will be ongoing.  In the meantime, the addresses of Lowell foreclosure properties are available in the Statistical Analysis of Foreclosures in Lowell during 2007.  This will allow the Troubled Properties Task Force to track these sites while also reaching out to local, State and Federal Agencies for funding where available.  We are also reaching out to other large cities to share ideas about how best to deal with the foreclosure crisis.

Federal Funding

With respect to the availability and eligibility of Federal Funds to address the conditions of various properties a structured program aimed at assisting a viable owner, through preferably a loan program, would need to be developed for properties outside the City’s control.  Some incentives already exist and programs can be crafted as needs are identified.  Owners of residential property may need to meet income eligibility and commercial owners will need to commit to job retention.  HUD has indicated that our HOME funds may not be used at this time to assist foreclosed property owners, as the program was not developed for this purpose.  The Administration is tracking the Community Foreclosure Assistance Act of 2007, currently in Senate Subcommittee, that may provide federal funds to local communities for expenses related to the impact of foreclosures in the community.  The City Administration will continue to investigate any sources of additional funding to address the issues raised by this motion.