The program, which is in its third round of financing, provides low interest loans to developers to refurbish and resell the city’s foreclosed homes. PNC Bank, Guaranty Bank, BMO Harris Bank, Deutsche Bank and U.S. Bank have contributed.
Minneapolis-based U.S. Bank contributed $500,000 to the newest fund, which was started in 2008 when the city received an American Recovery and Reinvestment Act grant. Milwaukee has since received two more grants to fund the NSP, totaling more than $34 million.
But there are 1,600 bank owned foreclosures and 1,100 city owned foreclosures in Milwaukee. So the program needed additional rehabilitation funds, said Maria Prioletta, redevelopment and special projects manager for the City of Milwaukee.
“NSP2 officially now in terms of our grant funds, we’ve spent all of them,” she said. “This gives us an ongoing source of funding or financing to continue our foreclosure activity.”
The additional capital will allow the NSP to continue its work in funding foreclosure rehabilitation. To date, the organization has helped fund the acquisition, construction or rehabilitation of 14,000 housing units.
The loan fund has a three year term, during which time the NSP plans to make 40 to 50 loans to qualified developers.
The loan pool expedites the redevelopment of foreclosed properties while spreading the risk among banks.
“It took a lot of cooperation and a lot of private-public collaboration to make it happen,” said Lisa Glover, executive vice president of community affairs at U.S. Bank. “We took a leadership role in helping the city just figure out how to do this.”
U.S. Bank launched a $1 million Community Restoration Fund in 2011 to dovetail with the NSP funding by providing short-term capital for foreclosure work in heavily affected neighborhoods. U.S. Bank has committed $15 million in mortgages to qualified borrowers in the NSP target area through 2015.
Milwaukee-based Maures Development Group LLC is putting the finishing touches on the first home refurbished with a loan from the fund.