"First Look" Program Gives Communities a Heads-Up on Foreclosed Homes

The federal government is giving local jurisdictions first crack at the foreclosed homes in their communities. How will this new program work and will it benefit the housing market?

One of the newest ideas to help the mortgage industry is the “First Look” program, which is a program designed to give communities a chance to by foreclosed homes and properties before they go on the market. The plan was announced on Wednesday by Shaun Donovan, the Housing Secretary. It is part of an overall redevelopment offer to help cities revitalize and do something positive with the many empty homes that are scattered throughout their community.

The First Look program will give local governments a look at the available foreclosed homes before the lists are released to other organizations and to the public. The local governments will also be able to buy these foreclosed homes with a one percent discount. The program is designed to speed up the removal of the foreclosed homes from bank lists, but vacant homes are also bad for property values in the neighborhoods in which they are located. As a result, the First Look program should also help revitalize neighborhoods and bring market values of homes up.

The First Look program is just one program in the Neighborhood Stabilization Program which has allocated about $7 billion to local governments to help revitalize their ailing communities. However, much of those funds have gone unspent because local governments do not have as much control over foreclosed homes and other factors that could revitalize their communities. Craig Nickerson, the President of the National Community Stabilization Trust, said the revitalization process cannot be successful unless the organization can control all factors involved.

There are only a handful of lenders that account for about 75 percent of the foreclosed homes on the market. Those lenders include Chase, Wells Fargo, Bank of America, Citibank and Freddie Mac. However, according to officials, only about 20 percent of these foreclosures will go through the First Look program. Some communities may not even be able to participate in the program because they will not have enough time to enter into these contracts by the time they receive their money. Nearly 150 of them will have less than 30 days to use the money they receive as part of the Neighborhood Stabilization program. If they don’t spend it by the deadline, their funds will be frozen or even taken away from them. This is a problem for many local governments who need more time and wish the program was available to them months ago so they could get a better headstart on buying the foreclosed homes.

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