Formerly foreclosed upon, newly renovated homes might sit vacant as a result of stricter credit standards following the foreclosure crisis. That's the concern reflected in a survey conducted by NeighborWorks at a recent meeting in Philadelphia.
Two dozen non-profit organizations representing $740 million in Neighborhood Stabilization Program funds were polled.
“The concern is real and it is across the board,” said Thomas Deyo, Deputy Director of National Initiatives and Applied Research at NeighborWorks America.
“A handful of non-profits have forged effective relationships with local and regional first mortgage lenders, but the majority of non-profit real estate businesses that are in these communities never anticipated that the credit market would be so tough for their homebuyers.
“Lenders are right to be prudent with credit to avoid the kind of crisis from which the housing market now is emerging,” he added, “but the pendulum has swung a bit too far. And to make revitalized neighborhoods a reality, it has to swing a little bit back the other way.”
Many of the non-profits attending the seminar also have homeownership education programs and have worked with homebuyers to ensure they understand the responsibilities of homeownership. Based on a review of the homeowners who've fallen into foreclosure the past few years and are receiving foreclosure prevention counseling, a minority ever had homeownership education or counseling.
“Homebuyers who go through these programs are excellent mortgage risks,” said Patrick Morrissy, Executive Director, Housing and Neighborhood Development Services Inc., in Orange, N.J.
“We want these homes sold to a buyer who can keep the home for the long-term. But mortgage financing — while not impossible — has become increasingly difficult for low- and moderate-income homebuyers to obtain.”