County gets fed grant to buy & sell foreclosures

To be sold below market value to low and moderate income families

The economic and subprime mortgage crisis has caused a tidal wave of home foreclosures, leaving many vacant and decaying houses to destabilize neighborhoods. Now HUD funds are available under the Housing and Economic Recovery Act, signed by President Bush in 2008, to place lower and moderate income families in these vacant homes. Harris County has received a grant for $14.5 million to buy foreclosed homes in the county and sell them to eligible home buyers. The County’s title for their program is HOME, or Home Ownership Made Easy.

According to County Community Services Director David Turkel, Harris County and the City of Houston are considered entitlement communities, and do not have to compete for these HUD funds. The funding is calculated by a formula that is based on population and poverty levels, and are automatically allocated for a certain amount. The Act is very specific, he says, as to how the funds are to be used. They are restricted to buying foreclosed houses and putting those houses in the hands of low and moderate income families.

The HOME program has only been in operation about 45 days and it is already faced with the huge task of locating foreclosed homes. Mr. Turkel says Harris County has about 1000 home foreclosures a month, except for last July, when there was 4000.

“We now have a crises with real homeowners who are having their homes foreclosed because of unemployment,” Turkel says. There are other programs that address keeping owners in their homes, but our particular program only addresses a problem after the home has been lost.”

He says about $39 billion has been funded for the Neighborhood Stabilization Plan under the Act, with the County and the City of Houston receiving about $14.5 million each. He believes the County’s program has a better chance of stabilizing neighborhoods than the City’s does, since the vacant housing stock in the suburbs is newer and widely scattered. The vacant housing in the city is older and often clustered in blighted areas. “The County can buy some fantastic houses and sell them to families who would otherwise never be able to afford a class house. It doesn’t bring the neighborhood down, it brings the family up,” he says.

Mr. Turkel says the County makes an offer to the seller of a foreclosed home and most of the time the seller will accept. Then the County will sell the home for less than the purchase price to an eligible buyer under the program, reducing the price to whatever the buyer can afford. But the payment cannot be more than 33% of income.

To be eligible, total family gross income cannot exceed the income guidelines. The County also requires that the buyer have a credit score of 620 or more. The buyer must also obtain a home buyer certificate from a HUD education provider. The home is to be the primary residence, and the buyer must live in the home for at least five years. The buyer must be represented by a licensed real estate agent or attorney. Additional assistance may be available for the down payment and closing costs.

Harris County will soon have a website for the HOME program similar to the Multiple Listing Service that will allow buyers, sellers and real estate agents to view eligible properties for sale.

(The Banner, November 9, 2009)