Archive for the 'Repossessed Properties' Category

To find use for repossession houses that blighted neighborhoods and to reduce their numbers, the city of Oxnard will purchase them and turn them into affordable housing for low income families.

The Ventura County Board of Supervisors have also approved a similar plan which would allow the county to join the city in applying for the Neighborhood Stabilization Program grants to purchase abandoned and vacant repossession houses and rehabilitate them into affordable housing for low income families.

The county is overseeing the grant program for Oxnard and nine other cities, as well as other unincorporated areas. The communities within the area are hoping to secure about $2.7 million in federal grant money.

On its part, the city of Oxnard made a separate funding application amounting to $2 million. The Neighborhood Stabilization Program is part of the economic stimulus program and the Obama Administration is expected to boost the program with more funding.

Under the program, the grant can be used only to buy repossession houses that have been abandoned and vacant for 90 days. All recipient cities and counties are required to pay not higher than 85 percent of the appraised value of each property.

According to Deputy County Executive Officer Christy Madden, the restriction on the federal grant will make it difficult to counties and cities to comply with the March deadline for full disbursement of the funds.

She added that banks are swamped with interested potential buyers for foreclosed homes and there is a great possibility that financial institutions would not want to deal with local governments that want to purchase distressed properties at great discounts.

Local and state lobbyists are hoping that the restriction on the use of the federal grant would be removed.

Meanwhile, Board of Supervisors member Peter Foy, who voted against applying for the grant, pointed out that it is not a good investment move for the local government to purchase single-family repossessed homes.

On the other hand, supervisors who voted for grant application argued that the federal program is a good way to find foreclosed properties that can be converted into affordable housing for needy residents, including young people who just came out of foster care.

Initially, Oxnard city will purchase about eight repossession houses, convert them into affordable housing and sold them with a condition that if they will be placed on the market for sale within five years, it should be sold to another low income or moderate income family.

Foreclosed homes have been growing in numbers for the past month due to several issues related to subprime lending and the current financial crisis sweeping across the nation. This resulted to several vacant homes in city neighborhoods that are slowly deteriorating away due to blight.

Most of these foreclosed homes have unkempt lawns, broken or missing windows, damaged roofs and a backyard full of trash. Vandals and thieves have broken in, ripping out wirings from the walls and dismantling pipes.

This scenario has placed much concern to city officials as these vacant foreclosed homes are fast becoming havens for crime, drug addiction and prostitution. Homeowners remaining in these neighborhoods are also worried about these repossessed houses as their presence have brought home market values down way too low.

The problem would continue to worsen, as the initial estimate of 2 million from last year has now grown to 7 million homes in danger or in the process of foreclosures.

In Kansas City, a meeting was held between city officials, mortgage trustees and servicers in an attempt to putting a system in place to monitor and maintain these foreclosed properties. Large banks who own most of the reverted mortgages also attended and provided their assurance to the city officials and community members that they will work closely with the city in providing support in dealing with these properties. The banks and loan servicers have also committed to improve communication by providing contact persons and information as well as a monthly report on listings.

The meeting was a good start in facing this problem head-on. With the weakening of the economy and the expectation of mortgages to reset to higher rates, more families are expected to become delinquent in their mortgage payments. Aggravated by an increase in unemployment, these delinquencies will eventually translate to defaults and then foreclosures.