In Hampden County, a regrettable record was set during fiscal year 2007-2008: 1,027 properties were foreclosed on during the 12-month period, almost double the number from the previous year, according to a report released by Registrar of Deeds Donald Ashe in July.
Two-thirds of those foreclosures—a total of 691—took place in Springfield. That's no surprise, given the statistical realities. Springfield is the region's largest municipality. It's also one of its poorest, with 25 percent of its population living below the poverty line, according to 2007 figures.
Springfield is known for the beauty and historical character of its housing stock, the basis of its "City of Homes" nickname. But when some of those homes are in crisis, it creates ripples that affect the entire city—from families who lose the biggest investment they're likely ever to make, to renters who are displaced when their landlords are foreclosed on, to neighborhoods scarred by boarded and abandoned buildings.
Too often, foreclosed properties "have become eyesores, potential fire hazards, and a haven for gang- and drug-related activity," Ashe noted in his report on the 2008 foreclosure figures. "Unfortunately, the unsightly and potentially dangerous properties have reduced property values and are causing neighborhoods to deteriorate."
Jose Rubero estimates that he goes through a box of tissues every day or two, offered by the handful to the distraught people who come to his office looking for help to save their homes.
Rubero works for the Springfield office of the Neighborhood Assistance Corporation of America, or NACA, a non-profit group with about 30 branches around the country. NACA has, in its own words, "been in the forefront of fighting discriminatory and predatory lending" since its founding in 1988 in Boston. NACA uses high-pressure public campaigns to target lenders it considers unscrupulous or otherwise culpable in the mortgage crisis. It also works with low-income people, offering home-buying counseling and low-interest mortgages to "members" who pay a $20 annual fee and also agree to support NACA's mission.
These days, much of NACA's energy is focused on its Home Save program, which helps homeowners at risk of foreclosure renegotiate the terms of their mortgages. To NACA, it's an issue of justice. The foreclosure crisis, the agency maintains, was created by greedy lenders (and their enablers on Wall Street) who led homebuyers to believe they could afford to buy pricier homes than they really could, dangling before them affordable teaser rates that would balloon within a few years. In many cases, Rubero maintains, borrowers were deceived at closing—promised fixed-interest rates while their loans were really variable, for instance.
Rubero rejects the notion that individual borrowers could have, and should have, resisted the bait and made more prudent long-term decisions. "The rest of the world wants to say it's these people's fault. But ten and a half million people can't be wrong," he said, referring to the number of homes across the nation that NACA estimates are at risk of foreclosure.
Rubero does more than hand out tissues; he also urges clients to take the power behind their grief and channel it productively—namely, to the executive suite of whatever company holds their mortgage. "I take that emotion and these problems and very easily, point blank, have them take it out on the CEO's office," he said.
Recently, Rubero said, he worked with a single mom of seven who was about to lose her house. Rubero urged her to contact the CEO of her lender, leaving a series of voicemails and messages about her situation over the course of one day. In the meantime, Rubero said, he repeatedly called the office, urging the lender to accept a restructured payment plan put together by NACA.
"The relentless advocacy does work," Rubero said; by the end of the day, the lender agreed to reduce a lump sum owed by the woman from $16,000 to $4,000, and to cut her monthly payments by even more than NACA had suggested. But Rubero wasn't claiming complete success. The homeowner had two weeks to raise the money for her initial payment, and he wasn't sure she'd make it. "I'm afraid to call her," he said. "Because $4,000 is still a lot to come up with."
Just behind situations like this woman's lies another layer of crises to come, Rubero warns. He sees many families who are able to stay current on their mortgage payments only by making deep cuts elsewhere: opting not to refill expired medications, visiting food pantries or applying for food stamps to cover their groceries, applying for fuel assistance or simply going without heat. But with winter coming and the cost of necessities remaining high, there's only so long those strategies will work. "Just because they're making their payments doesn't mean they're not struggling," Rubero said.
Rubero works largely with families; to qualify for the Home Save program, a homeowner must live in the mortgaged property and cannot own other real estate.
But in Springfield—where about half the 61,000 houses are occupied by renters—a large portion of the properties facing foreclosures are rental properties. "The investment market has certainly taken the biggest hit in Springfield," said city realtor Kevin Sears, of Sears Real Estate. "If there's any good news out of it, you're not seeing owner-occupied single-family units being foreclosed on at the same rates."
Of course, Sears added, people are hurt by multi-unit foreclosures, too. "Families are being displaced—the same tenants who in some cases were paying their rent," he said.
And that puts added pressure on the city's rental market. "On a daily basis we get calls from folks looking for apartments," Sears said. But it can be hard to help them when their previous landlords have all but abandoned their properties, as is too often the case. "Once an owner starts going to foreclosure, they just stop communicating with everyone," making it tough for former tenants to offer new landlords references showing they paid their rent on time or were good tenants, Sears said.
Even before the current foreclosure crisis, Springfield was plagued by absentee landlords who showed little concern for their buildings or neighborhoods. During the last real estate boom, Sears said, "People from out of the area started snatching up multi-families, paying record levels." Sears recalls getting calls from investors in Boston and New York who couldn't resist Springfield's low real estate prices. But all that investment activity led to inflated prices, and when the owners realized they couldn't charge the Boston and New York rents they needed to maintain their properties and support their mortgages, many of them simply walked away.
Sheila McElwaine knows all too well what absentee landlords and abandoned properties can do to a neighborhood.
On a recent chilly afternoon, McElwaine offered an informal tour of some of the most blighted blocks in Forest Park, where she's been tracking problem properties for almost 20 years. Certain streets—Leyfred Terrace, Noel Street, Commonwealth Avenue—now have clusters of boarded and burned-out buildings that threaten the character and stability of the entire area. On Leyfred, a "For Sale" sign sits on the lawn of a charming, well-maintained house unhappily situated two doors down from one burned-out building and across the street from a couple more that are boarded up.
Some of the houses have been foreclosed on; others have simply been abandoned by their owners, who've stopped paying taxes or maintaining the properties. Some shabby houses are still occupied, either by legal tenants or squatters. Others are vacant, with boarded-up doors and windows that don't necessarily dissuade drug dealers or thieves looking to strip the old houses of copper piping and other fixtures they can sell.
The neighborhood has also seen a recent spate of arson, including a series of suspicious fires on Commonwealth Avenue. Last winter, a three-story multi-unit house on the corner of Sumner Avenue and Daytona Street was gutted by arson; almost a year later, it stands empty and boarded. Until the fire, McElwaine notes, Sumner Avenue—a main thoroughfare into Forest Park's busy "X" district—had been intact, free of abandoned and boarded houses.
Foreclosures are not a new problem for the neighborhood, McElwaine said. But they're more common now, and they're harder to deal with. In the past, concerned neighbors could use public records to identify the local banks that owned problem properties and then put direct pressure on them to clean them up.
"We used to be able to say, 'Oh, BayBank has that mortgage, or Community Savings Bank in Holyoke.' You could call them up or threaten to picket them, and you could get somewhere," McElwaine said.
These days, the mortgage holders are likely to be national or international banks with little if any connection to the city. "What the hell is Deutsche Bank doing owning some dump on White Street?" McElwaine asked. "That's mind-boggling. "
"Now," she added, "the banks that own the places might not even know they own them."
There was one notably bright spot on McElwaine's tour. On Dickinson Street, next to the community garden where neighbors grow potatoes and artichokes and day lilies, a once-foreclosed and vacant property is showing signs of life. New owners recently bought the building—a modest multi-family house that previously had been one of the neighborhood's "problem properties"—and are busily renovating it, with plans to rent out its five units.
Others could follow their lead, according to Sears. "The flip side of the dramatic increase in foreclosures is the opportunity that's being presented for people to buy properties for 50 or 60 or 75 cents on the dollar," he said.
And, Sears added, he's seeing many of these buildings being bought by local, experienced landlords. "The majority of them require extensive work, so these local landlords are pumping money back into the economy," he said. "It's a good sign for the neighbors when they do this. What we need to do is hope they put in good tenants."
Carl Dietz, Springfield's director of housing and neighborhood services, agrees that the foreclosure crisis offers opportunities, both for investors and new homebuyers. To that end, he said, City Hall has made its first-time home-buyer program—which offers income-eligible buyers financial and technical assistance as well as access to reduced-rate mortgages—a priority.
"Springfield is a great place to live, and this is a great opportunity for people to see what the city has to offer," Dietz said. Apparently it's an opportunity many are eager to take. In October, City Hall announced that 87 families have bought homes through the program so far this year. And it's not just the buyers who benefit; when a vacant home is bought—not by an absentee landlord, but by someone who intends to live in and maintain the property—the whole neighborhood gets a boost, both in spirits and in property values.
Earlier this fall, the city received $2.6 million from the U.S. Department of Housing and Urban Development to address the blight caused by the increase in foreclosures. The money, which comes from HUD's $4 billion Neighborhood Stabilization Program, can be used by the city to purchase and redevelop foreclosed properties. According to Dietz, the city could use the money to demolish blighted properties, rehab salvageable houses or fund home-buyer programs. The money could also be used to create a "land bank" in which the city temporarily holds and maintains the property until it can be redeveloped, stabilizing the neighborhood in the process. How far the money will go will depend on which options the city pursues, Dietz said.
But new homeowners and investors looking to rehab properties could be hampered by pressures on the credit market. "The concern that I have is if the financial markets flatten and credit gets tightened beyond a reasonable level," Sears said. "That will slow the process [of getting] the capital needed to buy these properties and fix them up and make good places."
Back on Dickinson Street, Sheila McElwaine is cheering the efforts of the new owner of the house next to the community garden. "I hope it works out for them," she said, watching as workers installed new siding on the house. "But who are they going to rent to? I wonder about their ability to do what needs to be done."
If the owners can't find good tenants, or can't make the investment work financially, the property could end up, once again, a nightmare for the neighborhood. "We've seen this cycle before," McElwaine said.
