In an interesting experiment the Ford Foundation has created a new group to fight foreclosures in inner cities. The National Community Stabilization Trust will receive 50 million dollars to help cities and community groups to buy discounted foreclosed upon properties from banks. The goal is to rehab the properties and make them viable before they bring down local property values even further.
The idea is great, the choice of community groups and city bureaucracies is fraught with danger, but it is good to see some action being taken.
I would prefer to see the seed money go to unemployed builders and construction companies that already have the skills that are being underutilized right now. The return on the money and the impact would be much greater.
But I understand the National Community Stabilization Trust using the infrastructure they are already comfortable with.
The money, among the largest so-called program-related investments by a foundation, will go to a consortium of community-based nonprofits that will serve as a middleman between cities trying to rehabilitate neighborhoods and mortgage servicers looking to unload seized properties.
The consortium, called the National Community Stabilization Trust, hopes to simplify and accelerate this market, which can get bogged down when municipalities have trouble negotiating with financial institutions. It will work with state and local governments and other groups that have received special grants from the Department of Housing and Urban Development to buy and redevelop foreclosed homes. via WSJ.com.
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According to the WSJ only a market-based solution will work to clear what will probably be more than one trillion dollars in real estate.
It is certainly an interesting "experiment" as you said.