Lending program helps homebuyers, neighborhoods
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posted by Bob at Sunday, January 11, 2009
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18 Comments:
Lending program helps homebuyers, neighborhoods
By Nicole Garrison-Sprenger
ngarrisonsprenger@pioneerpress.com
Posted: 01/10/2009 12:01:00 AM CST
It's a tough sell: Buy a rehabbed foreclosure in St. Paul's Dayton's Bluff neighborhood and help bring a devastated area back to life.
But it's just the pitch Jesse Ferden, 31, and his girlfriend Nikki Wickham, 27, were looking for. In September, the couple moved into their first home on Euclid Street, only blocks away from the lower-level duplex they had been renting.
"We like the neighborhood," said Ferden. "The houses are beautiful and we want to be there on the ground floor to help bring the neighborhood back."
Ferden and Wickham don't own their home — yet. Though they make a combined $96,000 — both work as pest-elimination services specialists with St. Paul-based Ecolab — the couple didn't qualify for a mortgage because of student-loan repayment problems and medical bill mishaps when they were younger.
Instead, they're working toward ownership through a new contract-for-deed program called Bridge to Success designed by a consortium of public, private and nonprofit partners.
The goal of the program is to repopulate foreclosure-ravaged communities in the Twin Cities urban core and help interested buyers earn their way to home ownership.
"It's about (getting) for-profits to lend in these communities again," said David Reiling, CEO of Sunrise Community Banks in St. Paul, one of the partners in Bridge to Success. "It's not impossible."
A contract for deed is a seller-financing tool that allows a buyer to make incremental payments
toward the ownership of a home.
In the Bridge to Success program, Dayton's Bluff Neighborhood Housing Services or Greater Metropolitan Housing Corp. are the sellers.
The two groups will finance up to $200,000 per home at a fixed interest rate of 7.5 percent. Buyers contribute a down payment of $2,000 or 2 percent of the purchase price, whichever is less. The Bridge to Success contract lasts three years, after which the buyer must refinance into a traditional mortgage.
The seller financing offered by the two groups is funded by loans from Sunrise Community Banks and the Family Housing Fund.
As a certified Community Development Financial Institution, Sunrise can garner deposits from corporations and organizations that want to invest in struggling communities. The bank is using that designation to attract deposits for Bridge to Success.
So far, Sunrise has attracted $2 million in deposits, primarily from organizations like the Minneapolis Foundation and the Calvert Foundation of Bethesda, Md. Reiling is confident he can boost the fund to $5 million within six months.
For each deal, Sunrise kicks in 80 percent of the funds. The Family Housing Fund contributes the other 20 percent via its Home Prosperity Fund, which was launched last year to help solve the Twin Cities' housing woes.
The Home Prosperity Fund today stands at about $16 million — thanks to contributions from Wells Fargo, U.S. Bancorp, TCF Bank, Thrivent Financial for Lutherans and Housing Minnesota — and another $10 million has been committed, said Lowell Yost, program director at Family Housing Fund.
Bridge to Success is not without critics.
"A lot of people look at the contract (for deed) with suspicion," said Gary Beatty of Greater Metropolitan Housing.
Some say that by allowing nontraditional buyers to qualify for homes, the program merely starts over the cycle that led to the mortgage meltdown in the first place, he said.
But there are protections built into the program, Beatty said.
For one, because of the two-loan structure — 80 percent from Sunrise and 20 percent from Family Housing Fund — a buyer isn't required to pay private mortgage insurance, which can tack on another couple hundred dollars to a monthly payment. That makes the payments more affordable.
The program also requires buyers to take homebuyer education and financial management courses. Ferden says the counseling piece has been invaluable.
"Everybody makes mistakes, and some mess it up more than others," Ferden said. "Unfortunately, we're one of those couples that had really bad credit."
Now, thanks to the counseling, they have a better handle on how to manage bills and expenses, he said. Without their good level of income and a strong history of paying their rent on time, they might not have qualified for the program, Ferden said.
"I'm glad (someone) saw we were good hard-working people and gave us a chance to live in a home."
Nicole Garrison-Sprenger can be reached at 651-228-5580.
This story is an indication of everything I have been saying for over 3 years. There NEVER was a REAL concern for the safety of renters. The REAL objective of this city's leadership was and is to DECREASE the low income housing stock.
Were the landlords who rent to low income renters targeted? You can bet your entire life savings on it! IT HAPPENED!
"REAL" low income folks will never occupy these vacant homes ever again.
Take away food and shelter from the poor and they will reward us with higher crime rates and over crowding issues in the housing they do find. The eggheads in city government initiated this hidden agenda, and the ignorant who voted for them are getting what they deserve.
And NO these poor folks do not find happy lives in the burbs where section 8 is available. Most come to realize there is transportation issues and social obstacles that are unbearable, and they move back to the city.
One of the landlords told me that the city told them in depositions that even when low income folks move out of the projects to the single family homes around town, they always wind up coming back to the projects because of the social issues in the neighborhoods. Anyone care to venture what those social issues are?
Most of these folks will never find a happy life anywheres because most of the people who profess to be helping them (city included) are just exploiting and using them for their own personal gain. These non profit do gooders and city elites don't give a damn where they wind up as has been evidenced with Rita, Nancy O, the renters Bob reported on over on the East Side Best Side Repke Side,. Just screw em over and ship em on to the next "service" they love to connect people with so that guy can be the one to tell there's no help or they don't qualify, etc. and then he gets to cut their throat again.....only without the guilt cause he's just trying to help. I from the gubberment and I here to help! Yeah right. Their here to rape, pilage and tax everything they can get their hands on. If you don't happen top know your rights or don't have the money to fight them, that's all the better.
Am I in the twilight zone here? (don't answer that, it's a rhetorical question...) You have a nice article on how people are getting help purchasing homes, and all the comments are about poor renters? huh? Did these comments get pasted into the wrong thread?
Maybe that's because it's rich renters making $100,000.00 a year while the low income ones are thrown into the cold streets so the city and their non profit partners (conspirators) can reap the development opportunities.
There is a good chance a low income renter once occupied the home this couple purchased.
"Most" of these foreclosed homes are in run down neighborhoods where low income citizens could find affordable private rental housing. The city's policy past and present, is to get rid of a big percentage of the affordable housing available to the lowest economic class of citizens.
NOW, the home is in the hands of folks who earn in excess of 96000 per year. Affordable housing to this city's leadership and these non-profits is for someone earning money like this couple. Would ANY of you consider this couple low income?
Most of these foreclosed homes that once housed low income folks will never again be occupied by this group. The city and their so called non-profits will see to that.
If a property investor purchases these foreclosed homes in these RED ZONE neighborhoods you can be rest assured he will be made to renovate the homes into something not affordable to the lowest economic class of citizens.
Sounds like a nice recipe for improving a city to some of you I bet. It isn't it is a DUMB idea. The thought is the lowest economic class will find affordable housing in the suburbs or even further away. That isn't always the case and even when these citizens move away from the inner city statistics show they usual return to the city for public transportation, work and other social issues.
These policies are forcing low income citizens into dangerous over
over crowding situation, as the lack of affordable housing increases. Have you ever lived in a crowded home? It is hell. Tensions build fast over time. Fighting over space, food and any thing else under the sun.
The crime rate will increase as these policies restrict more and more housing from the poor. The housing/crime strategy policies are spreading crime through out the city. The city condemns a home and puts a family out on the street who they deem undesirable.
Undesirable citizens to this city maybe a family who has one member or several members committing crime. The city raids the home. The police happen to have a code compliance officer on hand and code compliance the house to condemnation. Putting innocent family members out on the street and most of the time during these raids the police do not find any drugs or any evidence of criminal activity. But one thing for sure, the city put another home on the vacant list for pickings by vultures like this non profit.
In the mean time this troubled family who was condemned to the streets takes up housing in another neighborhood to start the cycle all over again. I would prefer the city arrest and convict criminals where ever they live instead of condemning them to the streets and spreading the problem around the city like cancer.
Bob, Bob, Bob....!!!!
These are foreclosures. They have nothing as in nothing to do with low income renters being forced out by the evil City doing inspections.
Most of the rentals that went into foreclosure went for one reason and one reason alone - THEY DON'T CASH FLOW!!!!
If you buy a house for $175,000 at zero down and 3% interest only for two years then you can afford to rent it for $1,000 a month for TWO YEARS!!! The time that you have before the balloon comes do and you have to actually pay principle.
This is what has happened in the real world BOB. All of the get rich quick by buying real estate guys can't flip their way out of these properties or refinance them. THEY DON'T CASH FLOW!!!
So, they have let them go back to the bank. And it has happened every where in the country.
It has nothing to do with Saint Paul or Saint Paul code enforcement.
What DBNHS CD program will do is help us get some people that over bought houses and went belly up, back into some houses that they will be able to make the payments on.
Geeez, Bob,.
JMONTOMEPPOF
Chuck Repke
Chuck, do you believe these homes will have a greater value after code compliances are done that ignore grandfathering laws?
I have to partially agree with your assesment Chuck. BUT, we can not forget this-
Most of us who are in the "know", have the knowledge many homes have gone through a shyster scheme of condemnation. We have the testimony over and over again by citizens who don't even know each other.
Bob.
There are thousands of vacant homes in Saint Paul, now.
In a big month, a realy big month the City will condemn 10 houses.
It would take the City a hundred years to have created as many vacants as there have been created by the housing bubble burst.
You know and I know that the smart guys sold all of there stuff before the balloon broke and they are back again buying at the bottem.
Its not my fault, nor the City's fault that you know "investers" that bought duplexes for $250,000 that they couldn't get $50,000 for today.
JMONTOMEPPOF
Chuck Repke
Chuck, you didn't have to insult me. :)
NOBODY, I know was dumb enough to buy into the real estate market leading up to this bubble. I know experienced investors. WE, are discouraged we don't have a chance as wise investors, to do what most of these homes need to be occupied! Paint and Carpet...
lol
Paint and Carpet and at least some copper pipe that connects the furnace to the gas line outside, and a few windows and maybe attached plumbing and a working toilet....
JMONTOMEPPOF
Chuck Repke
Chuck, 10 homes a month condemned how many women and kids did the city throw on the street with no plase to go? one person would be to many but it is more like hundreds all total.
Bob you a good man don't quit please for all us
"Most of the rentals that went into foreclosure went for one reason and one reason alone - THEY DON'T CASH FLOW!!!!"
They don't cash flow because of the citys illegal and expensive code regulations you fool!
And what caused them to be a forclosure is the city throwing out all the tenants.
12:42 DO THE MATH YOU BOOB.
These great houses that "investors" were buying at $175,000 on the East Side of Saint Paul two years ago, that were going up in price every week because of the bright boy spinners, were picked up for zero down and 3% interest only for two years. It was happening all of the time.
So, that short term, monthly payment of $450.00 plus $167 on the taxes is no problem if I can rent the joint for $1,000 a month.
IF and that is a big IF they can get them financed for the $175,000 the owe the bank on them at 5.5% over thirty years and $2,000 property taxes will run you $1,269.00 a month. Hmmm and that doesn't take in any costs I have keeping up the joint.
Now, where does the evil City fall into the numbers?
This is a national problem and has nothing to do with code enforcement.
JMONTOMEPPOF
Chuck Repke
2,024 vacant bldgs, mostly due to the RICO Activities of City St.Paul,DSI to justify their jobs and salary increases.
St.Paul on 7th and Bates looks like a WAR ZONE, loss of residents and tax base is NOT great economics. By info and belief 90% of the Cops and DSI Employees DO NOT LIVE IN THE CITY TAKING SALARYS,AND NOT PAYIN PROPERTY TAXES. REALLY BAD ECONOMICS
http://www.ci.stpaul.mn.us/index.asp?NID=2272
The city has SCREWED itself. Their strategy was to increase the housing prices, but now with the housing downturn, they are stuck with all those empty houses.
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