Abandoned houses everywhere, abandoned houses all over the country. Detroit, Chicago, Phoenix, Nevada, Florida, California all have houses boarded up and ripped to shreds by the former owners and vandals
I drive though Las Vegas and see neighborhoods that were once beautiful and filled with life now reduced to Ghosts Towns. No more new shiny cars in the driveway. No more happy children playing in the streets – just a bunch of foreclosure signs. It breaks your heart.
Congress passed the Housing and Economic Recovery Act in 2008. They gave cities and counties $4 billion to buy up unwanted foreclosed properties through community block grants. The $4 billion wasn’t enough to solve the problem so they gave them another couple million.
Local officials hooked up with investors and non-profit organizations and started buying and fixing up bank owned properties so they could sell them to marginal income or low income families through Government backed FHA loans. This program would breathe new life into the blighted neighborhoods and the sun would shine on Main Street once again.
If you want a good deal on a foreclosed home go talk to the city because they cut a real sweet deal with the banks to get first dibs on the REO portfolios.
Cities front nonprofit housing organizations as middleman to acquire these abandoned and foreclosed properties. The nonprofit sets the deals up for the city by bringing buyer and lender together. What a way to get rid of the blight and solve the tax problem.
The National Community Stabilization Trust, a nonprofit organization has established ties in 120 markets to give cities a first crack at purchasing properties in designated markets at a 10% to 15% market discount on REOS.
When banks begin to release REO’S Cities have up to two weeks to snap them up before they hit the market. The NCST has that two week exclusive period to purchase houses located in community development zones designated for federal funding.
The NCST has become a clearinghouse and works with all the big banks making deals to buy properties designated for federal funds.
There is a problem. Many of these homes that are being purchased by Cities are not being sold but rented. The renter is normally subsidized by the Government through a Section 8 Program or other Government assist program. The renter pays a token amount and the Government picks up the rest of the tab so how does this help the tax base? When a purchase is made the buyer signs an agreement to give up 50% of their equity to the City when they sell the property. The end result is clear. If the homeowner stays in the house forever, doesn’t care about heirs or equity it might be okay.
If the buyer is looking for an investment through this program its okay as long as they know and understand they have bought in with a fifty-percent partner named Uncle Sam. What this program does is convert private ownership of property to Government entities which continue to fill their coffers. Enjoy your Government Home and welcome to the wonderful world of change.
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