City will use stimulus funding to rehab, sell homes

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August 18, 2009

The program expected to fix 30 properties.

By Scott Smith The Kokomo Tribune Tue Aug 18, 2009, 10:53 PM EDT

Kokomo city officials are finalizing plans on a $2.18 million project to rehab and sell foreclosed homes, a program expected to put median-income families in affordable homes.

Funded through the federal stimulus package, the Neighborhood Stabilization Program should pay to rehab and sell about 30 homes in Kokomo, city community specialist Jerry Meiring said Tuesday.

A portion of the money, no more than 10 percent, will go toward hiring a developer to administer the program, Meiring said.

The Kokomo Board of Public Works & Safety is expected to award that contract at today’s meeting, Meiring said.

“The idea is to get rid of the subprime mortgages and replace them with regular mortgages that stabilize the neighborhoods,” he added.

To qualify for the rehab program, a home must be foreclosed, it must have been vacant for at least 90 days, and it must sit within the designated stabilization area, Meiring said.

Foreclosure rates and the condition of the foreclosed homes were both factors in setting the stabilization area, which broadly speaking, encompasses everything inside city limits apart from the south side.

The Stabilization Program grants can be used to acquire property, to demolish or rehabilitate abandoned properties, and to offer down payment and closing cost assistance to low- and moderate-income home buyers.

Additionally, “land banks” can be created to assemble, manage, and dispose of vacant land for the purpose of stabilizing neighborhoods and encouraging re-use or redevelopment of urban properties.

More than a third of homes for sale in Howard County are coming on the market through foreclosure.

The Howard County Sheriff Department has handled an average of about 67.5 home foreclosures per month so far this year. That is about 10 percent more than last year’s average of about 61 foreclosures per month.

In previous years, before the bottom dropped out of the housing market, Howard County would see about 10 foreclosures per month.

“They’re just popping up everywhere,” Howard County Sheriff Marty Talbert said in a June interview. “You’re seeing them in some of the nicer, more fluent neighborhoods because this economy has failed across the spectrum. It’s not only affecting the blue-collared neighborhoods, but also the white-collar neighborhoods.”

A quarter of the NSP money must be set aside to provide housing for those making less than 50 percent of the median family income. Meiring said that money will probably go toward rehabbing rentals.

The rest of the money will go toward rehabbing single family homes, to be sold to those making somewhere between 100 percent and 120 percent of the median income. Buyers will be required to complete pre-purchase counseling.

Each home is expected to be sold for somewhere around $65,000, and some of the money may be made available to help qualified homeowners with closing costs. The rehabbed homes must be sold for a maximum of 1 percent less than fair market value, he added, and the city will inspect the homes before they can be sold.

“We’re trying to target homes that will be a little easier to rehab, and won’t require a whole lot more investment,” Meiring said. “We want to keep the costs down for the buyer.”

• Scott Smith is a Kokomo Tribune staff writer. He may be reached at (765) 454-8569 or via e-mail at scott.smith@kokomotribune.com

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