Contract safeguard is recommended
Prices should continue to drop for 11 Henderson area homes available through Vance County’s Neighborhood Stabilization Project.
A recommendation to the Vance County Board of Commissioners pending a decision Monday night was to offer homes such as 225 Hawkins Drive at well below market value to qualified low- to moderate-income buyers.
To prevent new owners from then borrowing off of the cost-free equity of the home, members of the Vance County Planning and Environmental Committee also recommended sales include a second deed of trust on the equity difference.
“With assessed values higher, the resident could refinance and receive the equity out of the house,” said Jonathan Care, the county attorney.
For instance, 225 Hawkins Drive is assessed at $72,000 value, but the commissioners could approve lowering the cost to $49,000.
An anticipated deed of trust would secure the $49,000 purchase as in any real estate transaction that is financed. The second deed of trust would convert the $23,000 difference between the purchase and assessed values as a second debt account that would be forgiven over 10 years.
Care said that should prevent any quick borrowing off of the equity amount.
The committee recommended the debt forgiveness plan for all the program sales: the loan amount on the second deed of trust would decrease each year the home is occupied by the buyer to transfer the equity value over a 10-year period.
The idea is not to add to a buyer’s debt burden, but to put an incentive in place for continuous owner-occupation of the home.
Committee member Terry Garrison, also a real estate agent and Vance commissioner, said his chief concern is that the priority of providing home ownership opportunity for less wealthy families not be jeopardized by the new planning details.
“I want to get these priorities in order,” Garrison said. “First and foremost we want these houses to be available for low- to moderate-income families. That’s where I stand.”
Committee members also noted that the county, through the grant funding, had poured $91,000 into improving 225 Hawkins Drive.
Care said the idea of the grant funding was to provide investment in areas where private enterprises are not likely to have an interest, accepting the anticipated losses as an aspect of the social program.
Committee member Tommy Hester, a property developer and chairman of the county commissioners, said a standard plan for selling the homes should hopefully apply to all purchase situations.
“We’re not going to have control over these once they’re sold, so you might as well put in place something that fits every possible situation,” he said.
At least 10 of the homes went on the market nearly a year ago, and they failed to gain a single offer from buyers.
In June 2010, the Kerr-Tar Regional Council of Governments received $1.9 million through the federal Department of Housing and Urban Development and the N.C. Department of Commerce community investment division.
It was used to take over houses that had been abandoned or whose owners fell desperately behind on taxes, paying for rehabilitation or for demolishing and rebuilding them.
The build-out work on about a dozen homes took place over the following two years, most of them in the area of central Henderson and some outside city limits.
By March 10, the homes received approval for repairs and reduced listing prices. All 10 homes still sit vacant, with no offers for purchase.
Another aim of the program was to stabilize against blight in areas inundated with foreclosures and abandonment.
Care at that time said the list prices were too high.
“The amount these people felt they could qualify for was so much under the listing price that they were embarrassed to make an offer,” Care said.
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