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Stabilize Neighborhoods

Since the crash of the housing-market in 2008, cities across the United States have been forced to deal with abandoned homes, deteriorating neighborhoods, and falling property values. It is estimated that each foreclosure costs municipalities $34,000 in direct costs such as inspections, police and fire calls, and unpaid bills. A nearby foreclosure can also reduce the value of surrounding homes by more than $200,000 in aggregate value. A few key policies so far have been successful in stemming the tide of foreclosures or address homes already in foreclosure.


The best way to address abandonment is to prevent it. Local governments can set up early warning systems to track property and neighborhood-level data that can signal disinvestment and deteriorating neighborhoods. In states that rely on courts for the foreclosure process, mandatory mediation programs that bring together homeowners, banks, and attorneys can help families stay in their homes. To protect homeowners and tenants from foreclosure, cities should fund foreclosure-prevention counseling, using Community Development Block Grants or other resources.


Once a foreclosure occurs, cities should take steps to ensure that these properties do not become further blighted or attract crime. Several cities require vacant properties to be registered, sometimes with a substantial fee or ongoing charges. Cities should also ensure that the responsible party - typically a bank - performs upkeep on the home. Cities can also take a more active role in addressing tax-foreclosed or code-violating properties. By acquiring properties, a local land bank can rehabilitate them to serve the community’s development goals, restoring land for public use or subsidizing responsible private ownership. Not only can such policies prevent near-by homes from losing value, but they also reduce crime and other negative effects of abandoned property. 

Preserving Homeownership: Foreclosure Prevention Initiatives, Katie Jones, Congressional Research Service, May 14th, 2015. Read more.

Study Finds Racially Diverse Suburban Communities Growing Faster than White Suburbs, University of Minnesota Institute on Metropolitan Opportunity, July 20th, 2012. Read more.

Watch These American Cities Segregate, Even As They Diversify, Emily Badger, The Atlantic Cities, June 25th, 2012. Read more.

Foreclosure Counseling Outcome Study, U.S. Department of Housing and Urban Development, May 1st, 2012. Read more.

Managing Foreclosures and Vacant Properties, Mark Perlman, National League of Cities, May 1st, 2012. Read more.

Pocket Neighborhoods’ For Sustainable Suburbs, Kaid Benfield , January 3rd, 2012. Read more.

Has Foreclosure Counseling Helped Troubled Homeowners?, Neil Mayer et al, Metropolitan Housing and Communities Center , January 1st, 2012. Read more.

Foreclosure Mediation Program Funding, RSI, January 26th, 2011. Read more.

Land Banks as a Redevelopment Tool , Dan Kildee, September 1st, 2010. Read more.

Mortgage Foreclosure Prevention Efforts, Kristopher Gerardi and Wenli Li, Federal Reserve Bank of Atlanta, January 1st, 2010. Read more.

Stabilizing Neighborhoods Impacted by Concentrated Foreclosures, Ivan Levi, NeighborWorks America, October 1st, 2009. Read more.

The Impacts of Foreclosures on Families and Communities, G. Thomas Kingsley, Robin Smith, and David Price , The Urban Institute , May 1st, 2009. Download a PDF of this article.

Transforming Community Development With Land Information Systems, Sarah Treuhaft and G. Thomas Kingsley, Lincoln Institute of Land Policy, January 1st, 2008. Read more.

The Cost-Effectiveness of Community-Based Foreclosure Prevention, Roberto G. Quercia et al, Family Housing Fund, December 8th, 2005. Read more.

A Guide for the Creation and Operation of Local Land Banks, Frank S. Alexander, Local Initiatives Support Corporation, April 1st, 2005. Read more.

Foreclosure Mediation Programs by State, National Consumer Law Center. Read more.

Minneapolis, MN, created in 2001 a Neighborhood Information System using a Federal Technology Gran. The system that tracks property, Census, crime, and education data in several neighborhoods, and allows the city and its partners to identify and address problematic trends.


Madison, WI, has a citywide Neighborhood Indicators Project which provides key characteristics and indicators at the neighborhood level. The project is also an attempt to “democratize” data that already exist in some form but might otherwise remain difficult to use and access. The city has also used funding from Community Block Grant Development (CDBG) to address foreclosure prevention and neighborhood stabilization projects.


In Sonoma County, CA, the Community Development Commission administers a Housing Rehabilitation Loan Program that provides financial assistance to low-income occupants and home owners, to make necessary repairs to their dwellings.


Chula Vista, CL, has implemented an abandoned-property registration program that requires deed holders to register with the city within 10 days of transfer from a family to a bank. The deed holder is then required to maintain the house consistent with how other homes in the neighborhood are maintained.


Philadelphia, PA, operates the Philadelphia Residential Mortgage Foreclosure Prevention Program. As part of the program, certified housing counselors assist homeowners to negotiate a more affordable mortgage payment with their lender. Free legal assistance is also available if necessary.


The board of Cook County, IL, has authorized a mediation program administered by the local circuit court in conjunction with the Illinois Housing Development Authority, the Chicago Bar Foundation, and other organizations. They are working with legal aid groups and housing counselors to provide free assistance to homeowners who have received a summons to court.


Another mediation program was implemented in Cuyahoga County, Ohio. The program aims to minimize case processing time, save costs and expenses and to prevent adverse social consequences of vacated and abandoned houses in the community.


Allegheny County, PA, established in 2009 a Residential Mortgage Foreclosure Program in collaboration with private sector entities. The primary objective of the program is to provide a single unified process for the amicable resolution of mortgage foreclosure proceedings through court intervention, counseling, and conciliation.


Schenectady, NY, has used block-grant funding to offer foreclosure-prevention counseling through local nonprofits.


Philadelphia, PA, funds foreclosure counseling through multiple channels. The primary funders are the City of Philadelphia’s Office of Housing and Community Development (OHCD), the Pennsylvania Housing Finance Agency (PHFA), and the U.S. Department of Housing and Urban Development (HUD). Between 2009 and 2013, the OHCD and the PHFA have each approved 25 agencies for foreclosure counseling in Philadelphia, while HUD has approved 20.


Because predatory lending has been a large contributor to the foreclosure crisis, the “Don’t Borrow Trouble” program initiated in Boston, MA, as early as 1999 was taken nationwide by Freddie Mac. The campaign includes public awareness, consumer education, and access to counseling and loan restructuring.


In 2013, Miami, FL, has filed suit against Bank of America, CitiGroup, and Wells Fargo alleging violations of the Federal Fair Housing Act by engaging in predatory mortgage loans to minority residents, resulting in a rash of foreclosures. In September 2015, the 11th Circuit Court of Appeals overturned a lower court's decision to dismiss such lawsuits by the city against Bank of America, Wells Fargo and Citigroup Inc. The case is currently discussed in the U.S Supreme Court.


Cleveland, OH has experimented with boarding up windows of abandoned homes with decorated boards. These boards are meant to indicate would-be thieves that someone has invested in the home and is keeping a watchful eye on it.


Mariah Young-Jones