Fannie Mae announced it has agreed to sell 44 foreclosed vacant properties to the Detroit Land Bank Authority as part of a partnership to stabilize neighborhoods in the greater Detroit area, which has seen a dramatic spike on the number of foreclosures in the last two years.
According to the announcement, 26 of the properties are slated for rehabilitation and 18 of them are scheduled to be demolished. Fannie Mae will also contribute funds to the demolition of those 18 properties as part of the agreement.
"Vacant properties are a strain on the neighborhood and can depress property values for other homeowners," said P.J. McCarthy, Fannie Mae's VP of alternative dispositions and real estate asset management. "We are happy to partner with the Detroit Land Bank Authority to help transform these properties into homes for local families, or new community spaces. It is our goal to continue to work closely with local organizations to help bring life back into these neighborhoods. We look forward to additional transactions with the Detroit Land Bank."
The agreement is line with the mission of the Detroit Neighborhood Stabilization Initiative (NSI), a pilot program developed jointly by the Federal Housing Finance Agency (FHFA), Freddie Mac, and Fannie Mae and announced by the FHFA in May 2014 as a way to stabilize neighborhoods in the areas most affected by the housing crisis. One of the goals outlined in the Detroit NSI is to match distressed properties with non-profit organizations that will develop or renovate those properties.
"This deal with Fannie Mae is a very important piece of the Detroit Land Bank's larger strategy to stabilize neighborhoods through our auction program, demolition, and side lot sales," said Kevin Simowski, executive director of the Detroit Land Bank Authority. "The Detroit Land Bank is working with multiple financial institutions on similar deals so we can address every vacant house in our target neighborhoods."
In a program similar to the Detroit NSI, Fannie Mae has partnered with the Cuyahoga Land Bank in Ohio since 2009 to help stabilize neighborhoods in Cleveland. That partnership has resulted in returning nearly 1,000 distressed properties back to productive use. Some of the properties were converted into bigger yards for neighbors, new homes, or community gardens.