California's Riverside County has been one of the most punished
areas in the U.S. housing crash and now local leaders are among the
first in the nation with a program to buy foreclosed homes and sell
them back to young families.
The city of Riverside is using money recently made available by the
Obama administration to help communities lure buyers back to areas hit
by a wave of foreclosures.
In recent weeks, Riverside began leveraging more than $6.5 million
in federal Neighborhood Stabilization Program funds, added to its own
redevelopment money, to purchase houses in the worst shape, fix them up
and sell them to mostly first-time homebuyers. Other cities, like
Chicago, are considering similar plans.
Where a lot of communities are trying to figure out how to spend
the money, or offering purchase funds or down-payment assistance, we're
actually very hands-on with our program, said Eva Yakutis, the housing
and neighborhoods manager in Riverside, California, a working-class
community of 300,000 about 60 miles east of Los Angeles.
We're making the purchase, we're overseeing the rehab, we're
overseeing the sale of the properties. We're at the forefront of most
cities or counties.
California's Inland Empire, made up of Riverside and San Bernardino
counties, suffered some of the highest foreclosure rates in California
during the housing meltdown, leaving behind thousands of boarded-up
homes in blighted neighborhoods no longer attractive to young families
even as prices dropped.
About 4,000 of Riverside's 60,000 homes are in foreclosure and twice
that number are considered to be at risk. Some 28,000 owners, or 1 in
27 Riverside County homes, defaulted on mortgages in the first quarter
of the year, 35 percent more than a year earlier.
Home prices, which were plummeting, have leveled off, thanks in part
to bargain hunters and speculators -- but those aren't the buyers
coveted by communities seeking to rebuild. To address those concerns,
Riverside's program limits its participants to households with a
combined income of $74,000 or less.
'BACK TO PRODUCTIVE USE'
You want to have stable, healthy neighborhoods, and part of that is
home ownership or stable residents who are there to stay, Yakutis
said. And from that you get strong schools. You get diminished crime.
It's all related.
Chicago is moving forward with a similar program, identifying
foreclosed properties that could be purchased, renovated and prepared
for sale, city spokeswoman Molly Sullivan said.
Buyers' incomes must not exceed 120 percent of the area's median
income, about $90,000 for a family of four. This is about stabilizing
neighborhoods, Sullivan said. Getting vacant, foreclosed properties
back to productive use.
The plan is to rehab up to 2,500 foreclosed homes in the Illinois city over the next three to five years.
Glendale, Arizona, a Phoenix suburb where many homes have gone into
foreclosure, plans to use the bulk of its $6.1 million from Washington
to acquire and rehabilitate foreclosed and abandoned homes, provide
assistance to qualified buyers and develop rental housing for seniors.
When you have an abandoned home or series of abandoned homes, they
can become an attractive nuisance, Erik Strunk, community partnerships
director, said of the plan, which is expected to kick off in early
There's also the maintenance issue, he said. The family was a
victim of foreclosure. Now there's no one living there, so now you have
the weeds starting to grow up, the door to the rear yard is unsecured.
You may have a green pool here and there. It's demoralizing, it
threatens neighborhood stability, and it will lower property values.
The Phoenix suburb of Avondale is helping with downpayments and
closing costs to buyers of foreclosed homes. They also are providing
federal funds to carry out repairs, such as fixing broken windows,
replacing wiring and appliances stripped from empty houses.
Spokeswoman Gina Ramos Montes said the program will attract families back to the subdivisions.
What I am hoping to see in the next few years is that we really
have owner-occupied homes in a lot of these foreclosures, she said.