The Need for Affordable Housing:
Finding Solutions in the REO Crisis

May 01, 2009

The fallout from the mortgage meltdown has been most acutely felt in the nation's low- and middle-income communities, where families are losing their homes at higher rates and foreclosures are causing neighborhoods to deteriorate. An increasing number of loans are in distress, and lenders continue to hold on to properties they can't sell.

In response, the Milken Institute held a Financial Innovations Lab in February 2009 to explore mechanisms and strategies for addressing the issue. In particular, the Lab considered the challenge of foreclosed properties: Is there a way to finance the acquisition and disposition of these assets, while simultaneously providing affordable housing for low-income and middle-class families?

During this intensive workshop, various proposals were debated by a diverse group of experts from banks, foundations, community development organizations, research institutions, and federal, state and local governments. This report summarizes their ideas and approaches for rehabilitating abandoned and foreclosed properties, converting them to affordable housing that will stabilize communities.