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News
Housing authority seeks funds to rehab homes : News : Oswego Ledger-Sentinel : Hometown Newspaper for Oswego and Montgomery, IllinoisHousing authority seeks funds to rehab homes
| County official has concerns over program's impact on assessments
| by Matt Schury
| 8/6/2009
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Find one, improve it and move on.
That's the strategy John Day, executive director of the Kendall County Housing Authority (KCHA), plans to take should the organization get federal funds to rehab dilapidated homes in the county.
"You buy it, you improve it, you sell it, you move on. That's the idea," Day said.
The agency applied for over $1 million in funds from the Neighborhood Stabilization Program (NSP) to fix up 20 homes. Day said they would then retain five homes to rent and sell the rest at cost.
"The idea is that one foreclosed house in a neighborhood can bring down the whole neighborhood, so let's get that house out of foreclosure, improve it and get it sold and occupied," Day said.
He added that they are renting a portion of the homes to meet a requirement under the program.
"One of the requirements under the program is that 25 percent of the money has to be spent on behalf of people who make no more than 50 percent of median income," Day said.
U.S. Census data shows the median household income for Kendall County in 2007, adjusted for inflation was $74,539.
"To be honest, people making less then 50 percent, it's very hard for them to be a homeowner," Day said. "Hopefully some day they'll become owners of those houses."
The program has two phases. Phase one came about last summer when Congress bailed out embattled lenders Freddie Mac and Fannie Mae. Part of the bill for that bail out included money to buy foreclosed homes. The second phase is similar, Day said, but the dollars will come from stimulus funds approved by Congress. Illinois received a total of $50 million under the second phase to be distributed to smaller areas like Kendall County.
The Housing Authority hopes to purchase and rehab 24 homes, rent six and sell the rest at cost. Day says the agency isn't going to go after homes that might need just a coat of paint.
"We want to take the worst property, and to be honest the good ones are all cherry picked," Day said.
For example, Day says if KHA buys the house for $100,000 and puts $25,000 into it, but FHA will sell it for $125,000
"A good real estate developer would then sell it for say $140,000," Days commented. "The late night TV thing where you buy a house, put a coat of paint on it and you flip it, that doesn't work that often but there are some who do that and they are getting all the good ones."
He said that people in the market might be willing to buy these lower priced homes
"Everyone is saying that people are waiting to jump. They are waiting for things to have bottomed, well this might help people to jump in," Day said.
He added that the program also includes flexibility in taking back mortgages.
The County Board discussed this issue at a recent meeting.
Board member Jessie Hafenrichter said she had concerns the program would have a negative affect on assessments for neighborhoods with one of these rehabbed homes.
"Which is going to put them in competition with other people who are trying to sell their homes and they are going to sell them at cost not at any kind of profit," Hafenrichter said.
"We are basically doing what got us in all of this trouble to begin with when you price the house low to get people in," board member Nancy Martin said.
Day said he understands the concerns but the Housing Authority will be careful about targeting areas.
"You have to be careful-if there are three foreclosures on one block you don't want to go in buy all three homes and then have the property sit there and nobody wants to buy them because there's three for sale," Day said.
The program, Day mentioned, only exists until 2013 and any money left then goes back to the federal treasury.
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