Milwaukee Public Radio (IDAs)
By: LaToya Dennis
July 11, 2011
Since the start of the economic downturn, cities have been grappling over what to do with foreclosed houses. While the problem in Wisconsin never reached the levels seen in states such as Michigan, foreclosures are a major concern here. The vacated homes bring down property values because often times they are not maintained and attract squatters and criminals. To address the problem, the U.S. Department of Housing and Urban Development is doling out a third round of funding in its Neighborhood Stabilization Program. WUWM's LaToya Dennis visited Racine - one city utilizing the NSP program and others to get new owners into foreclosed homes. --------------------------------------------------------------------------------
Jennifer Dieter and her three children have lived in their home on Racine's west side for about three months. At the age of 37, she's a first time home owner.
"I just love it. It's mine. I go outside at night, like at midnight and I just sit outside in the backyard and I'm like wow, this is all mine. I just love it," Dieter says.
Dieter bought her four bedroom two bathroom house from the city of Racine for the list price of just under $90,000. But the process took about three years, because she had work to do before she could qualify for a bank loan.
"My credit was horrible because I never paid attention to that stuff. I just didn't. The electric company, that's the people you have to pay on time every month. That was one of the things that I just let slide if I didn't have the money for that. I would not pay the electric bill, 'cause it wasn't like they could turn you off, you know," Dieter says.
During the time Dieter worked to clean up her credit, she also enrolled in Racine's Individual Development Account Program. It matches the amount of money prospective first-time home buyers put into a savings account. So Dieter was required to make monthly deposits.
"My target goal was $90 a month, so I put in $90 a month to bank of your choice. And it was just between you and the city of Racine, it was a duel account," Dieter says.
In the end, Dieter saved $1,300 toward her down payment and the Racine program gave her a five-to-one match. That money, along with a grant, gave her a down payment of nearly $20,000. Her resulting mortgage payments are $740 a month. Jean Wolfgang of Racine's Department of City Development says the goal is to get people who will be responsible home owners into their own places.
"It's nice to see people at least have $1,000 of their own cash into the deal, so they have some skin in the game," Wolfgang says.
Dennis: "That sounds like not a lot at all."
"It doesn't, but during the boom banks were doing $0 down," Wolfgang says.
Wolfgang says in the case of Dieter, it was a win-win situation, because the city had owned the property she purchased. Back in 2008, Racine received more than $3 million from the federal government's Neighborhood Stabilization Program to purchase and rehab foreclosed properties. According to Wolfgang, the city is buying 17 houses and fixing them. So far, five are finished and three have been sold.
"It helps the city in many ways. It's an opportunity for the city to gain ownership of the properties, turn them around and sell them and get a home owner in there whose gonna pay property taxes, maintain the home, improve the neighborhood," Wolfgang says.
In 2010, there were more than 400 foreclosures in Racine - nearly double the rate of three years ago. Wolfgang says while 400 may not sound like a lot, it is problematic for a city of 80,000 people. In order to get the most out of the NSP funding, she says city leaders honed in on certain areas.
"Foreclosure in the near downtown neighborhoods, our lowest income census tracks, areas that were struggling even during the boom, we really made an effort to target hose areas, and bring the most improvement to the areas that are in most need of the improvement," Wolfgang says.
Racine like a number of other cities across the country recently won a third round of NSP funding. So another $1.3 million will soon be headed its way to help bring life back to a few foreclosed houses.