Cities Struggling With Foreclosures

Each year, the city of Boston sends a small team of workers out into neighborhoods where they go door to door, visually inspecting residences to compile a census of homes that appear abandoned. Last fall, when these abandonment surveys were tallied up, the city noticed a particular trouble spot: Hendry Street in Dorchester, which contained a long row of homes whose owners had fallen victim to the foreclosure crisis.

Nobody likes having a foreclosed home in the neighborhood. But having multiple abandoned buildings in such close proximity—particularly in a part of Boston known for crime and drugs—is especially bad news. It's a problem that's affecting many big cities across the country, and one more way in which the subprime mess isn't just an accounting abstraction but a growing social problem. By last fall, police were getting dozens of calls about crimes on Hendry Street. In early February, Boston Herald reporter Laura Crimaldi wrote a prominent story about the neighborhood, calling it "a blighted urban ghost town," with 13 abandoned homes clustered around a single block.

Four days after the Herald story appeared, Boston Mayor Thomas Menino and a small army of city workers showed up for a visit. "This is a cancer that we have in our city that's taking over a neighborhood," Menino said at a curbside press conference. "We will not tolerate this." In the days that followed, city workers boarded up the abandoned properties. They power-washed gang graffiti off the buildings. They swept clean the trash-filled lots. They towed abandoned cars.

Back at City Hall, the mayor convened his newly established "Foreclosure Intervention Team" in a windowless basement "war room," where walls were lined with maps highlighting foreclosed properties in all of the city's neighborhoods. Housing experts, police and social workers compared notes. For properties that were already foreclosed, staffers called loan servicers and tried to work deals so the homes might someday be reoccupied. For homeowners who are behind on their mortgages but aren't yet foreclosed, workers educated them about the array of city programs that might help, including foreclosure counseling, free legal services or referral to a city-approved refinancing company.

Walking down Hendry Street this week, Patricia Canavan, chief housing adviser to Boston's mayor, and Shiela Dillon, deputy director for housing at the Boston Redevelopment Authority, point to some progress they've made in the weeks since Menino's motorcade swept in. The abandoned buildings are secured, with plywood covering every opening. There's a new concrete barrier blocking access to a parking lot behind some buildings, which area residents say had turned into a chop shop for car thieves. And during NEWSWEEK's visit, street cleaners and transit police cruised the area repeatedly.

For many of the houses on this block, the mayor's aides know the full story of what led to the foreclosure. One home, they said, was inhabited by a mentally ill man who inherited the property from his mother but couldn't care for it. After the bank seized it, he began living on the back porch, with his clothes and belongings strewn around the yard. Another woman owned her triple-decker free and clear, but borrowed nearly $300,000 to do some much-needed renovations. Today the outside of the home features new windows and vinyl siding, but the contractor disappeared without completing the interiors, leaving the apartments unrentable and the landlord unable to cover her new mortgage. "[This work] is really retail," Canavan says, describing how they've gone door to door talking to residents about their situations.

The biggest advancement involves moves that aren't apparent on the street. The city is close to completing purchases of four adjoining houses on Hendry Street, each containing three apartments. At the height of the boom, these buildings changed hands for nearly $500,000 apiece. It's a number that seems unimaginable for homes in such a crime-riddled neighborhood, but it's a sign of just how insane property investors became for a few years. Led by Dillon, the city has cut deals with lenders to buy the homes, typically spending less than $70,000 per building. Within weeks it plans to ask for bids from developers who'll gut and rehab the buildings, then sell them to someone who intends to be a live-in landlord. "We want to keep them occupied, and we want to keep this neighborhood occupied," Dillon says.

Boston is hardly the only city attempting to deal with neighborhoods that are riddled with foreclosed homes. Cities like Detroit and Cleveland have grappled with the issue for years. As the foreclosure crisis has spread, more cities are confronting the problem. The Boston Globe recently reported on how Providence, R.I., is considering levying heavy fines against the owners of buildings that are chronically vacant. Worcester, Mass., is eyeing a plan under which the city would appoint property managers for abandoned buildings, with bills for this service going to the owners. Both plans seek to increase the carrying costs for the banks and lender servicers that hold title to foreclosed properties, giving them more incentive to unload the properties more quickly.

Bruce Marks, chief executive of Neighborhood Assistance Corporation of America and a longtime homeowners' advocate, praises Menino's work on Hendry Street. "What he's doing is the right thing to do--to put pressure on the services to sell those [properties] to owner-occupants and to maintain them." Overall, though, Marks gives Boston middling grades for its response to the foreclosure crisis, pointing to cities like Trenton and Ft. Lauderdale as working more aggressively to help homeowners who are facing foreclosure but are still in their properties.

Despite those efforts, Marks says more cities are likely to face the types of problems that Boston has encountered on this block of Dorchester. "Hendry Street is an example of the future of communities," Marks says. "You're looking at a street where either half the houses are in foreclosure or are abandoned, and it's going to be the picture of American communities throughout this country."

If he's right, the city workers who nail up the plywood that keeps squatters out of these empty homes had better begin stockpiling nails.