Tampa Bay Nonprofits Rehabbing Foreclosed Homes Under Federal Program
Industry Update
December 27, 2015
TAMPA — Tampa Bay nonprofits will get first crack at purchasing, rehabilitating and selling foreclosed houses owned by Fannie Mae and Freddie Mac under an expanded federal initiative that began this month.
Though foreclosure numbers continue to drop, between 700 to 1,200 foreclosed homes still remain in the Tampa metro area in need of rehabilitation and new occupants.
As part of the Neighborhood Stabilization Initiative, nonprofits in this area and 17 regions nationwide can buy the homes and get them back in shape.
The initiative, jointly developed by the Federal Housing Finance Agency and Fannie Mae and Freddie Mac, the government-sponsored mortgage lenders. is designed to stabilize neighborhoods hardest hit by the housing downturn. The nonprofits will partner with the National Community Stabilization Trust.
The impact of the program can be far-reaching, from helping those in need of a home to improving the property values of the neighborhood.
“The more foreclosures there are in a neighborhood, the more adverse effects they have on property values,” said Tim Wilmath, director of valuation for the Hillsborough County Property Appraiser’s Office.
“In most cases when a property is foreclosed, you almost always have condition issues,” Wilmath said. Run-down abandoned houses — some boarded up with the previous owners furniture and trash strewn across a weed-infested lawn grass — can devalue neighboring houses by as much as 25 percent, he said.
“The idea is to get these homes occupied again, with quick and certain sales,” said Megan Moore, special adviser to the director of the Federal Housing Finance Agency. “You don’t want communities of investors, but of homeowners and renters who have a vested interest. Each (non-profit) buyer may focus on specific neighborhoods or only first-time buyers or just on veterans. The one thing we are trying to do is get them occupied.”
One of the problems would-be home buyers have had through the entire housing downturn is competition with investment buyers, said Ernest Coney, CEO of the nonprofit CDC of Tampa. “We’re really excited about the program because it really will help offer more inventory, especially in the affordable housing space, which is drastically needed in the Tampa market.
“We found a lot of residents who were trying to purchase homes were getting outbid every time by investors,” Coney said. “This program will create an opportunity for residents to gain direct access.”
Here is how it works: A nonprofit gets notified that a house is available and then has 12 days to look at it and evaluate it and decide whether to purchase the house, which could either be rehabilitated or torn down.
According to RealtyTrac, a national real estate trend tracker, there are plenty to choose from. One in every 65 houses in Hillsborough County is in foreclosure. While that is a drop of 38.5 percent in a year, it is still high on a national scale. In Hernando County, one in 61 houses is in foreclosure. Pinellas County is faring the best in the region, with one in every 81 houses in foreclosure, down 42.9 percent from November 2014. Pasco is doing the worst, with one in every 54 houses at some point in foreclosure.
“We can purchase the home and go in and rehab the home to make it brand new and provide that to someone who is looking for a first-time home,” Coney said. “We are also a HUD-certified housing counseling agency, so we have a lot of people that have taken our classes (for first-time home buyers) and we know who will qualify” to buy.
For the CDC of Tampa, the goal is to get back what it puts into a house, he said, and to provide affordable housing.
Even if one of these houses is torn down, it will benefit the neighbors, Wilmath said. “Some of these houses are too far gone to rehabilitate, but by tearing them down, it removes a blighted property that could have been used for drugs or other illegal activity. Just removing it is going to have a positive impact on surrounding property values,” he said.
In Pinellas County, Community Land Trust will focus on purchasing these homes for resale to low and moderate income families, said Marquaz McGhee, the nonprofit’s housing services director. “A family that makes $37,800 is still able to purchase a house in Clearwater. That is 80 percent of the median income for the area.”
Even if the houses are advertised on the open market, he said, Community Land Trust can establish income requirements so that the houses only go to low- and moderate-income families.
Nicole Lytwyn, a 22-year-old recent University of Florida graduate, has already benefitted from a similar program Community Land Trust has been involved with partnering with the City of Clearwater. Lytwyn closes on a renovated house on Neptune Avenue Dec. 29.
“I was looking for eight months and I could not find any decent home in my price range,” Lytwyn said. “Everything was either almost condemned or because it’s a seller’s market, first-time homeowners can’t afford the prices.” Lytwyn said she’s in love with the house she is purchasing from Community Land Trust and believes others can benefit like she did from the expanded federal program.
“Especially people like me who are just starting out,” this will be a great program, she said.
McGhee said his agency hopes to purchase 15 houses in 2016 under the expanded federal program.
Already, Community Land Trust has been involved in such purchases and resales, including the house on Neptune Avenue. It had a leaky roof, needed a kitchen remodel and other upgrades, he said. It had numerous code violations. Now, it has a new owner who is a Clearwater native and vested in the community.
“We buy, then take out the cost of the land and up-front pricing. That house sold for $134,000, instead of $182,000,” McGhee said.
The houses being sold through the federal initiative have a value of $75,000 to $175,000.
“This is a federal program that actually works,” McGhee said.
Organizations interested in purchasing the foreclosed homes must first become a National Community Stabilization Trust community buyer, Moore said.
She called it a “great and unique opportunity” for all parties. The initiative was first offered as a pilot program in Detroit, Chicago and in Cook County, Illinois. “What we learned,” Moore said, “is that this can be replicated. We’ve seen in the pilots that this can work.”
In addition to the Tampa Bay region, the Neighborhood Stabilization Initiative has also expanded into the Miami-Fort Lauderdale-West Palm Beach metro area, Jacksonville and into the Orlando-Kissimmee-Sanford metro area.
Source: The Tampa Tribune
