As the final pages of our most recent "Foreclosures and Short Sales in the Twin Cities Housing Market" report demonstrates, the scourge of lender-mediated properties has affected some areas of the metro more than others. Brooklyn Center has unfortunately ranked fairly consistently near the top of the list of areas with high lender-mediated market share.
Quite understandably, the city would rather see these often-vacant properties be utilized and, preferably, by home owners instead of renters. We can debate the relative merits or lack thereof of cities attempting to get rid of rental properties until we're blue in the face, but regardless, the city is now taking a proactive approach to the issue.
Brooklyn Center has taken the rather unprecedented step of putting together a fund of roughly $1,000,000 (you read that right, six zeroes following a one) to encourage prospective homeowners to swoop in and buy vacant homes. The cool million will be distributed to 100 applicants and help them take care of down payments and closing costs. In exchange, the applicants agree to live in the property as their primary residence for five years. If they leave early, they have to pay the money back.
While city-funded home ownership programs are nothing new, and especially not in this day and age, this is probably far and away the most aggressive plan we've seen locally. Minneapolis' Advantage Loan Program offered similar incentives but with a far smaller overall fund.
The Star Tribune serves up an interesting articleon the project, complete with quotes from our VP of Public Affairs, Bill Gerst on the potential risks:
Gerst noted that a possible problem for the city and Minneapolis, which has a similar housing program, is that in many cases the home buyer makes no down payment investment because that is covered by the $10,000 incentive for many of the foreclosed, low-priced homes.
"Zero-down payment mortgages are not in favor now," Gerst said, "because some people who get those mortgages could lose their job or something happens. They can't make the payments and the city gets the house back."
Excellent point, Mr. Gerst. All in all though, this has to be seen as a "positive, proactive" program (to use Bill's words) that represents some excellent opportunities for home buyers interested in living in Brooklyn Center.
The program kicks off March 1st. There doesn't appear to be anything up on the BC website just yet about how to apply, but there hopefully will be soon.
Comments