Program Helps People Buy Foreclosed Homes
Patrick Molloy sits in his new house in Clarkston, which he bought with the help of NSP funds (Photo by Jennifer Guerra)
by Jennifer Guerra
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The federal government doled out nearly $4 billion towards the Neighborhood Stabilization Program last year. The program was designed to stabilize communities hardest hit by foreclosures. Michigan got more than $98 million in NSP money. As part of our Facing the Mortgage Crisis series, Michigan Radio’s Jennifer Guerra checks in with one county to see how it’s spending its NSP money.
Patrick Molloy and his wife, Patricia, moved into their new house this past September. They bought it with the help of a program in Oakland County that uses $17 million of NSP funds to put eligible people in foreclosed houses.
The couple had been down on their luck for a while. Patrick had lost his high paying job three years ago, and then he had a spinal cord injury that forced him into early retirement.
“We struggled through for about 3 years,” says Molloy. “Last February we saw the announcement of this county program that could put us in a home, we never thought we’d be in the position to own a home again. This program did it.”
Molloy says what makes the program so great is that everybody wins.
“My wife and I clearly are big winners in this,” explains Molloy. “The county itself wins because all of a sudden all these foreclosed properties are active on the tax rolls again. The neighborhood wins because this place is no longer in danger of falling apart because nobody lives here and takes care of it.”
Here’s how the program works: Oakland County never owns any of the homes. Someone like Patrick Molloy goes out and puts a bid on a house. If it’s accepted, he has to qualify for 51% of the mortgage. The county is responsible for the rest of the mortgage.
“Our portion of the money is a loan,” explains Gordon Lambert, chief of operations for the county’s Community & Home Improvement Division. “It’s 0% interest deferred, which means the person or the couple would not have to pay back until they no longer own the property or it’s not their primary residence. So it could be 1 year, 5 years, 10 years, 30 years, 50 years before they would have to pay us back.”
In order to qualify, you cannot already own a home. You need a good credit score, and you cannot have filed any bankruptcies or foreclosures within the last 3 years. Also you cannot make more than 50% of the average median income.
There was a category for people with higher incomes, but the county got more than enough applications for that program and isn’t accepting anymore.
Everyone who goes through the program has to meet with a HUD certified housing counselor like Margaret Harris. She’s there to help make sure that all those bad loans that got us into this foreclosure mess in the first place don’t happen again.
“Generally when you go to get a mortgage,” says Harris, “a lender will look at a ratio. What you make on a monthly basis, your gross pay, not your net, they’ll take 31% of that to determine how much you can afford to pay in a mortgage payment every month. That’s kind of a broad number because that doesn’t include all of your other expenses,” like whether or not you for day care, or if you buy a pack of cigarettes every day, or if you have credit cards you’re trying to pay off.
Harris takes everything into consideration and then works with you on a realistic budget to figure out how much you can comfortably afford for a monthly mortgage payment.
Sarah Blower is going through the process right now. She put a bid on a new house for her and her daughter, Sydney.
If all goes well, she’ll close on the house next week. Blower cannot wait. They’ve been living in her parents’ house for the last 5 years.
“finally have a chance to get a really nice home,” exclaims Blower, “something that my daughter and I feel we both deserve and something I never felt I could get on my own. I hope that other people are given this opportunity as well.”
30 people have bought homes with Oakland County NSP money so far. The county hopes to help another 80 or so before the money runs out and the program ends next September.
Contact Jennifer Guerra at guerraj@umich.edu
One response so far
I am with a mortgage company American Home Mortgage Serving Inc. They are charging me 11.25 interest and 4 years the have gotten $30.000 in interest alone. I have puy in for a modifacation 4 times and each time they let them expire and I have to reapply. I had to go back to school and work to survive. I am 66 and disable and I have in over a year faxed the close to 30 piecies of information and they still want more and more. I had my medications company change and now I have to pay $500 or more for it. I thnk it is wrong for them to do this to me can you help me because I have no where else to go. I have owned my house since 1983.
Thank You