Milwaukee wants to team up with the real estate industry to redevelop foreclosed homes, but the partnership could fail before it starts if banks do not give up the property.
Local banks are easy to deal with, but it is difficult to negotiate with national banks to buy individual foreclosed homes when those banks are handling thousands of foreclosures, said Mike Ruzicka, president of the Greater Milwaukee Association of Realtors.
â€œ(The banks) are unprepared for this,â€ he said. â€œThe banks are laying off thousands of people, so the people that you are dealing with, you donâ€™t know if theyâ€™ll be there next week.â€
That could pose a problem for Milwaukee, which on Friday sent out a request for qualifications asking developers to volunteer by April 6 to work with the city on large-scale redevelopments of foreclosed properties.
The Commonwealth Companies, Fond du Lac, might answer Milwaukeeâ€™s call, but the development companyâ€™s vice president, Christopher Jaye, has reservations.
â€œIt sounds great to do, and itâ€™s a worthwhile endeavor,â€ he said. â€œBut I think the mechanics of getting control of the property is one large hurdle.â€
In its RFQ, the city reported there are 1,900 bank- and city-owned foreclosed properties in Milwaukee and 4,700 open foreclosure filings being processed by the courts.
Acquiring properties is a problem because national lenders control many of Milwaukeeâ€™s foreclosed houses, said Maria Prioletta, redevelopment and special projects manager for the cityâ€™s Department of City Development. Milwaukee is working with the National Community Stabilization Trust, a national conglomerate of housing organizations, and wants the trust to be a go-between linking the city to national banks, she said.
The city will spend some of the $9.2 million it received from the federal government to buy foreclosed properties, which could be used for some of the partnerships with developers, Prioletta said.
Re/Max Lakeside is trying to find buyers for 280 bank-owned properties in 10 counties in southeastern Wisconsin, and half of those homes are in the city of Milwaukee, said Mark Kivley, broker and owner of Re/Max Lakeside, which has offices in Shorewood, Milwaukee and Hartford. He said the foreclosure situation will not improve until banks abandon the idea of foreclosing on properties and instead ask brokers to sell the property on behalf of homeowners.
Under those deals, the banks agree to accept the proceeds of the sale and write off the mortgage even though the sale prices are less than the homeownersâ€™ debt.
Both Ruzicka and Kivley said the cityâ€™s search for developer partners is a good idea, but still only a small move in the midst of a large problem.
â€œItâ€™s not the silver bullet,â€ Ruzicka said. â€œBut if it gets 100 or 200 (foreclosed properties), thatâ€™s a step in the right direction.â€