Saving Neighborhoods: One home, one block at a time

REALTORS® Play a Key Role

By IAR Local Governmental Affairs Director Brian A. Bernardoni

Talking to Chicago REALTORS® Mabel Guzman and Zeke Morris about their role in the City of Chicago’s Neighborhood Stabilization Program (NSP) is kind of like asking a proud parent about their child; expect a lot. Part of that comes from their deep commitment to the industry but also their passion for rebuilding some of Chicago’s communities hardest hit by foreclosure.

“An NSP deal feels different than your average real estate investor as a client,” said Guzman with Century 21 S.G.R., Inc. and president-elect of the Chicago Association of REALTORS®. “We have a different sense of hope, anticipation and the energy you feel when you know a family will be living here soon. NSP has given REALTORS® in Chicago the opportunity to show our business at its very best.”

The Neighborhood Stabilization Program is a nationwide effort authorized under the Housing and Economic Recovery Act (HERA) of 2008 providing nearly $4 billion in grants to states and local governments to purchase and redevelop foreclosed and abandoned properties. A second round of funding was approved under the American Recovery and Reinvestment Act of 2009 providing grants to states, local governments and nonprofits on a competitive basis.

The City of Chicago NSP grant program focuses on 25 south and west side communities with boarded-up buildings. The federal NSP funds will allow the city to buy and rehab more than 1,400 foreclosed and vacant properties in order to protect public and private investments in those neighborhoods. The city chose the 25 areas of greatest need from its 77 official community areas based on local foreclosures and sub-prime loans.

Morris, a REALTOR® with Keller Williams Realty C.C.G. who served this past year as Public Policy Chair for the Illinois Association of REALTORS®, says: “We developed a team approach and through hard work we will soon see that communities that were written off won’t be. I am very proud of this. We have a unique opportunity to go back into the communities and to empower them to be part of the ­revitalization—from church groups to community ­organizations. It shows ­REALTORS® have hearts.”

The Chicago NSP program is coordinated by Mercy Portfolio Services, Inc., a subsidiary of the Denver-based nonprofit Mercy Housing Inc. Among the many partners in the venture are representatives from the City of Chicago, the Illinois and Chicago Associations of REALTORS®, HUD, and several nonprofit organizations.

Relying on REALTOR® Expertise

Early efforts by Mercy and the city were primarily organizational, and concerns were raised that the task was perhaps too daunting in that $55.2 million must be spent before September of 2010 to fulfill the grant. Reacting positively to the concerns raised, starting in mid-March, discussions were initiated between Chicago REALTORS® and Mercy Portfolio Services to act as an intermediary connecting banks and loan servicers that control foreclosed homes to an approved list of developers and contractors who—for set fees, not price markups—will rehab the properties for resale.
For most REALTORS®, handling multiple transactions is what they do; but for a group like Mercy, it was unchartered ground. During the two-hour meeting Mercy came away with a new understanding of how arduous and bureaucratic the acquisition of REOs looked like in Chicago but also the value of using multiple REALTORS® in assisting them with the project.

As a first step, the Chicago Association of REALTORS® (CAR) and its volunteer leadership worked with Mercy to initiate a pilot program with a comprehensive indexing of the Auburn Gresham community, one of the 25 targeted areas. Guzman and Morris canvassed six blocks where nearly three dozen properties were identified. A report detailing the buildings and surroundings was given to Mercy for their review. From small single families to large multi-unit buildings the diversity of board-ups was significant. Many of the buildings were near small parks, businesses, churches and schools. Vacant lots were also identified and charted for use by Mercy.

Ultimately, after seeing the scope of work provided by the first pilot, it was decided that REALTORS® were best situated to assist Mercy and the City of Chicago. Mercy then began the process to develop a Request for Qualifications (RFQ) for real estate licensees as well as for other professionals including developers, appraisers, and board-up companies among other roles. The Chicago Association had a major role in developing the concept, drafting and distributing the RFQ to its members and maintains a visible role on the Chicago NSP advisory board.

How NSP Chicago Works

• Pre-qualified REALTORS® review properties in a community and provide a report to Mercy.
• Mercy reviews the property report for approval. Price is the driving point. (For example, units with more than $50,000 in rehab costs stemming from mold, kitchen problems, and disrepair may not make the cut. However Mercy has proven to be innovative in working with REALTORS® so if the building in question is one which will make a positive impact on the community—a deal may be facilitated.)
• REALTORS® begin negotiations with banks.

With the funds expected to be fully allocated this year in advance of the September 2010 deadline, it’s no surprise that the National Association of REALTORS® and the Chicago ­Metropolitan Agency for Planning (CMAP) see merits utilizing ­REALTORS® within the Chicago NSP as a road to success.

• Setting the Stage for Future NSP Grants