Wednesday, October 8, 2008

Local Relief For National Housing Hangover

Don't count on new federal bailout measures to quickly trickle down to your neighborhood. Instead, struggling home owners should consider local assistance that is available right now.

by Broderick Perkins
© 2008 DeadlineNews.Com
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Deadline Newsroom - Don't expect the federal government to have all the answers for the economic crisis that's really hitting home.

Real estate is a local state of mind.

With its legislative lethargy, shotgun approach for bailing out Wall Street and the slow, plodding bureaucracy that will administer Washington, D.C.'s economic cures, federal relief efforts will take a while to trickle down to Main Street.

Fortunately, there's growing evidence some housing needs are being met right down the street -- on the real front line in the housing crisis. Metropolitan areas are trying hard to put the brakes on the American Dream deferred.

That's because the housing crisis isn't only affecting those who lose homes, "…but also by their neighbors, communities, municipalities. Policy makers also understand the importance of helping buyers stay in their homes so that they can build equity and contribute to the stability and fiscal health of their communities, towns, states and nation, according to the Pew Charitable Trust's "Defaulting on the Dream" an analysis of the current housing crisis and state-level responses.

The Brookings Institution also recognized the significance of the local market dynamic more than a year ago in what could be considered the framework for the United Metros of America.

The report, "Blueprint For American Prosperity" underscores how a detached federal government, embroiled in political partisanship and burdened by procedural procrastination has often proved ineffectual, if not impotent, when it comes to addressing the national penchant for prosperity.

The blueprint says more and more often, large metropolitan areas, not the federal government, are at the forefront of social change, quickly addressing housing policies, sprawl, sustainable development, education, immigration, infrastructure, energy independence, technological innovation, global warming and a host of other pressing social concerns.

Perhaps no where is that more true than on the home front. In many cases, struggling home owners need look no further than their own backyard community for relief.

• Hearkening back to WWW II industrialist Henry J. Kaiser's affordable housing communities, Chicago's Metropolitan Planning Council offers an Employer-Assisted Housing program that includes 60 employers offering down payments, rent, savings assistance and home ownership education to thousands of employees. Program leaders say the feds aren't doing enough.

Federal agencies in September finally began doling out $3.92 billion in new Neighborhood Stabilization Grants (See what your community will get), once rejected by President Bush, but signed into law under Title III of the Housing And Economic Recovery Act of 2008 (HERA). The grants are designed to help local governments acquire and redevelop foreclosed properties that might otherwise become sources of abandonment and blight within their communities.

"These Neighborhood Stabilization Grants provide limited resources enough to recover just a fraction of the more than 30,000 properties that have been foreclosed upon in metropolitan Chicago since 2007," said Robin Snyderman, vice president of the Chicago area council's Housing & Community Development.

Check with your employer, local redevelopment and planning agencies, metro government, business groups, community efforts and social programs for employer assisted housing.

• In what's not a truly local effort, but evidence of federal knee-jerking, the National Association of Homebuilders have been lobbying Congress, though the din of recent bailout action, for a larger tax credit for first-time home buyers.

The builders say the current credit, actually a $7,500 interest free loan and another provision in the recovery act, has done little to spark housing sales in a credit-starved world. They'd like the feds to pump up the volume and double the credit/loan to $15,000.

Jerry Howard, the chief executive officer of the National Association of Home Builders, says association members -- small and large builders alike -- have felt "no impact" from the $7,500 provision.

Home buyers more often need up front cash incentives in the form of grants, down payment assistance and even solid lessons in home ownership. Again, check the local market for faster help.

New home builders, however, certainly aren't waiting for solutions from Capital Hill. All offer both cash and amenity incentives in most developments and some are taking matters into their own hands.

• Downtown San Jose, CA's redevelopment vision of a more vibrant city core included a building frenzy of first-time-for-the area, high-rise condos with ground floor shopping, retail services and other amenities in the mix. But failing sales -- zero sales for some properties -- led builders to convert many of the empty units to rentals. With an average rent of nearly $1,700 in the Silicon Valley area, according to, rents can be far from affordable, but the conversions do add more rental units to an economically thriving region that's often short on housing.

As the housing bust ensued, rental housing in many hard hit areas has become cheaper or at least more negotiable due to a glut of unsold speculative condos and other properties converted to rentals.

Consider your position when the market springs back to life and you are already nesting in a full-featured home, rather than an apartment. It's not out of the question to negotiate a lease-option deal with the builder.

• Down the road, in Gilroy, CA, long before home ownership counseling was de rigueur for certain loans, mortgage assistance programs, bankruptcy law and bailout legislation, South County Housing was doling out a heavy curriculum of home ownership studies along with sweat-equity programs and loans that look a lot like subprime mortgages.

However, thanks to smarts that largely Latino buyers receive, foreclosure rates hover around zero, belying rates in the rest of the foreclosure-hammered Golden State.

Seek accredited home ownership counseling now and prepare in advance for your own home. There's a lot of counseling going around these days. In October, the U.S. Department of Housing and Urban Development (HUD) doled out, to more than 2,300 local housing counseling agencies, $50 million in housing counseling training and housing counseling grants for first-time home buyers.

The feds, for all their stumbling and bumbling through the housing crisis, do seem to understand the local angle.

• Portland's elected regional Metro government has the authority to coordinate land use across several local jurisdictions and is currently focused on integrating housing choices and affordability into policymaking and funding allocations, better evaluating land use impacts of transportation investments, and safeguarding regionally significant natural areas. Similar agencies exist elsewhere.

• In "Facilitating Shared Appreciation Mortgages to Prevent Housing Crashes and Affordability Crises" the Brookings Institution recently foretold of today's affordability and credit crises and made the case for equity sharing or "shared appreciation mortgages" (SAMs) as a creative financing tool whose time as come.

Too little light has been shed on now-available federally insured SAMs available from the Federal Housing Administration (FHA) yet another element of the HERA legislation.

The program should give SAMs a higher profile, but with the growing group of SAM facilitators, private SAMs can be available locally without federal originating restrictions.

For more help, see:

"American Dream Deferred"

"Foreclosure Prevention Efforts Grow"

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews Group -- DeadlineNews.Com, a real estate news and consulting service and Web site and the new Deadline Newsroom, DeadlineNews.Com's news back shop. In both cases, it's news that really hits home!

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