Charlotte officials hope a new federal grant will help them put homeowners and renters in as many as 100 homes left vacant by foreclosures.
The city is the state's worst-hit by the mortgage crisis, according to census and real estate data collected by the U.S. Department of Housing and Urban Development. Because it has such a high concentration of foreclosures and subprime mortgages, Charlotte is in line to get $5.4 million to help stabilize its neighborhoods. Other N.C. cities must apply to the state for their share of the $3.2 billion HUD is distributing to local governments across the country.
If HUD approves Charlotte's plan, officials want to help nonprofit organizations purchase 50 bank-owned or abandoned homes in areas hit hard by foreclosures. Some of the money also would help low-income private buyers with down-payments and renovation costs involved in purchasing up to 50 more bank-owned homes.
The goal of the program is to rehabilitate houses that have become blights on the neighborhoods around them. Charlotte has seen more than 8,000 foreclosures this year. Some of the most dramatic impacts of the mortgage crisis are evident in newer starter-home communities in the northwestern parts of the city. There, homes less than 5 years old have been boarded up and vandalized. Crime has risen, intruding on what were once quiet suburban subdivisions.
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A start in Peachtree Hills
Some rehabilitation work has begun in Peachtree Hills, a community off Interstate 77 where about a third of the 147 homes have been through foreclosure or been owned by a bank since 2003. Self-Help, a Durham-based community development organization, has purchased 11 homes there and hopes to buy 14 more as part of a $3.4 million pilot program. The organization is lining up qualified low-income buyers, some of whom will participate in a lease-purchase program.
As the homes in Peachtree Hills were picked off by foreclosures in recent years, the community struggled with vandalism, thefts from vacant houses and even two deadly shootings. But the impact of Self-Help's work is making a mark. In October, the organization had renovated a few homes and planted new grass. Surrounding homeowners are taking the cue, keeping their lawns neat and getting involved, said Evan Covington Chavez, the program's director of real estate development.
“There's definitely an uptick in the number of people who are getting together to talk about the neighborhood,” she said.
With the federal grant money, the city plans to help local organizations Habitat for Humanity and the Charlotte Mecklenburg Housing Partnership purchase bank-owned properties. The city is authorized to buy land, but would prefer to leave the real estate deals to the nonprofit groups, said Richard Woodcock, deputy director of the city's Neighborhood Development Department. Self-Help, which also runs a credit union, will provide loans.
“We would rather have them do it since they're already up and running,” Woodcock said.
The city will focus on 11 areas: Barrington, Druid Hills, Grier Heights, Lakewood, Lincoln Heights, Peachtree Hills/Grass Meadows, Reid Park, Thomasboro/Hoskins, Windy Ridge/Todd Park, Wingate and Washington Heights.
Money has stipulations
The federal money comes with strict rules and must be used within 18 months of the grant approval, which is expected early next year. It can be used to buy only vacant land or either abandoned or bank-owned homes. Homeowners who end up with the properties must make 120 percent or less of the city's median income, which is about $64,000 for a family of four.
One stipulation in particular worried some involved in the grant application: The property must be purchased at 85 percent of its assessed value, on average. That means the bank must agree to sell the property for less than it's worth.
“It's difficult to ask the banks, who are already taking a haircut, to take even more of a haircut,” Covington Chavez said. She also pointed out that discounted prices would pile on each other – one would impact the property sales that followed, depressing values in the neighborhood and making the banks take an increasing loss.
City officials and heads of the nonprofit organizations said that because the program is largely untested, it is hard to say how far it will go to improve Charlotte's neighborhoods.
“It really depends on what the market is and what the banks are willing to take for these properties,” said Bert Green, executive director of Charlotte's Habitat for Humanity. But he said it was a start.
“It's an attempt to come into these neighborhoods, where people have invested a significant amount of money, and keep these foreclosures from eroding their investments,” he said.
The city's Neighborhood Development department is seeking public comments on its plan, which will go before City Council Nov. 24. The application can be found at: www.charmeck.org/Depart ments/Neighborhood+Dev/Home.htm.