Technical Note-Optimizing Foreclosed Housing Acquisitions in Societal Response to Foreclosures

• 成果类型: Article
• 署名作者: Solak, Senay; Bayram, Armagan; Gumus, Mehmet; Zhuo, Yueran
• 署名单位: University of Massachusetts System; University of Massachusetts Amherst; McGill University
• 刊物名称: OPERATIONS RESEARCH
• ISSN/ISSBN: 0030-364X
• DOI: 10.1287/opre.2018.1827
• 发表日期: 2019
• 页码: 950-964

摘要

A dramatic increase in U.S. mortgage foreclosures during and after the great economic recession of 2007-2009 had devastating impacts on the society and the economy. In response to such negative impacts, nonprofit community development corporations (CDCs) throughout the United States use various resources, such as grants and lines of credit, in acquiring and redeveloping foreclosed housing units to support neighborhood stabilization and revitalization. Given that the cost of all such acquisitions far exceeds the resources accessible by these nonprofit organizations, we identify socially optimal policies for CDCs for dynamically selecting foreclosed properties to target for potential acquisition as they become available over time. We evaluate our analytical results in a numerical study involving a CDC serving a major city in the United States and specify social return-based thresholds defining selection decisions at different funding levels. We also find that, for most foreclosed properties, CDCs should not offer more than the asking price and should typically consider overbidding only when the total available budget is low. Overall, comparisons of optimal policies with historical acquisition data suggest a potential improvement of around 20% in expected total impacts of the acquisitions on nearby property values. Considering a CDC with annual fund availability of $4 million for investment, this corresponds to an estimated additional value of around $280,000 for the society.