The Marshalltown City Council will consider whether to allow the city to become the lender on four homes it acquired and rehabilitated through the Neighborhood Stabilization program.
At the council's Monday night Committee of the Whole meeting, Michelle Spohnheimer, Housing and Community Development director, said issues of finance approval have arisen for potential buyers.
"We are dealing with households that are very low income, often have issues related to credit," she said.
T-R PHOTO BY DAVID ALEXANDER
Michelle Spohnheimer, housing and community development director, speaks the Marshalltown City Council at its Committee of the Whole meeting Monday night. Because of issues with buyers qualifying for loans to purchase homes the city rehabbed as part of the Neighborhood Stabilization program, Sponheimer suggested the council consider allowing the city to become the lender for the four homes.
The city purchased and rehabbed the homes, which were foreclosed on because they were in disrepair, earlier this year. In 2010, Iowa Department of Economic Development provided $400,000 to the city to purchase the homes with the stipulation that the homes must be sold to first-time, low-income buyers.
Grant guidelines are rife with regulations, Spohnheimer said, but mandates as to whether buyers must occupy the homes by February 2013 or whether the city must have spent the money by then are still unclear. Ultimately, she said, it doesn't matter since the city will face the same dilemma.
Spohnheimer said state officials have given her mixed responses to several inquiries, but that city officials in Davenport told her city lending worked there.
Curt Ward, city attorney, said although the city is involved since it has purchased and rehabbed the properties, becoming the lender is something it views with trepidation.
"It is difficult to market these homes after you rehabilitate them," he said.
The city is still looking for private lenders to help finance the homes, Spohnheimer said.
Since the city already owns the homes, it would be lending the money to buyers to pay back the city; however, being the lender puts the city at risk to incur expenses for legal fees and city workers time should foreclosure be needed.
"It's definitely not our first choice to be moving into this arena," Spohnheimer said. "It's not something I am super excited about, taking on these mortgages."
Two potential buyers have expressed interest, and she said she would like the city to be able to pull something together for them.
The city cannot sell the homes on contract because that sale doesn't qualify under U.S. Department of Housing and Urban Development guidelines.
Even if the city sold the homes to the bank, Spohnheimer said, the city would need to reinvest the money gained into the Neighborhood Stabilization program. She said she does not intend to apply for another such grant.
Charlotte Santana, of Marshalltown, is one of the people interested in buying one of the rehabbed homes. She said the program allows families like hers - families with roots in the community who want to stay in Marshalltown - to become homeowners.
She said the city becoming the lender acts as a sort of good-faith investment in keeping those types of people in town.
"You have citizens of the town who are very active and very participant ... sometimes looking at the finer details makes the difference," she said.