$50 Million from Ford to Buy Foreclosure Properties
May 4th, 2009 by 
Joseph Smith
In the midst of bankruptcy news in the auto industry, Ford turns out some good news.
The Ford Foundation has announced its commitment to help neighborhoods blighted by foreclosure properties nationwide by providing cities with a $50 million investment fund to be used for buying foreclosed properties, fixing them and selling them to families that can afford to buy and maintain them.
The $50 million funding will be given to a nonprofit consortium called National Community Stabilization Trust, which will work with city officials and mortgage servicers and other financial institutions holding foreclosure properties.
The trust will also work with other organizations that have received grants from the Housing and Urban Development for the purchase and redevelopment of foreclosure properties.
With a $3 million investment from MacArthur Foundation, the Ford trust hopes to start buying foreclosure properties in over 100 cities before the year ends.
The trust plans to encourage large financial institutions, including Bank of America, J.P. Morgan and GMAC Financial Services, to sell to the trust their foreclosure properties at discounted prices. By working with the Ford trust, these financial corporations could save marketing, holding and property maintenance costs and at the same time help neighborhoods deal with abandoned foreclosure properties.
The Ford Foundation, with $9.5 billion in assets, is the second largest philanthropy in the country after the Bill and Melinda Gates Foundation. It hopes the stabilization trust project will attract more investments from the private sector and bring the total investment fund to about $400 million.
Compared to the number of foreclosure properties nationwide, Ford says its investment is minimal, but it says the success of the project could encourage other foundations and institutions to launch similar initiatives.
In contrast to a grant, the Ford funding will be provided as an investment fund to be repaid within ten years at the low rate of 1 percent. Ford Foundation officials said they have been making similar investments for many years, but the $50 million is the biggest investment they had committed to a new project.
Luis Ubinas, president of the Ford Foundation, said the project is risky, but he contends only a marketplace solution can clear up the estimated $1 trillion worth of foreclosure properties across the country. If successful, the Ford marketplace solution will become a model for other market-based community projects.
Aside from the stabilization trust, the Ford Foundation also plans to spend $100 million more in housing programs in the next several years.
