eview Staff Writer
Free money might not be as fun to spend as one would think.
In 2008, the Village of Lake Orion received $425,000 in Neighborhood Stabilization Program (NSP) funds to buy, rebuild and sell foreclosed homes.
The national program, created by the Department of Housing and Urban Development (HUD), allocates different funding amounts to municipalities based on population, income, number of foreclosed houses and other criteria. NSP was established for the purpose of stabilizing communities that have suffered from foreclosures and abandonment, according to its Web site.
‘There are a lot of strings attached to [the money], said Village Manager Paul Zelenak, ‘but there’s a lot of potential good. Our goal is to rehabilitate neighborhoods and get owners to occupy a house.?
The ‘strings,? however, are proving to be a hindrance. Because of HUD and village requirements, four of the five houses under consideration for purchase were bought out from underneath the village.
Time needed for appraisals, price offers and village council approval, along with contingencies like asbestos and lead paint inspections, make house shopping difficult, according to Zelenak.
The village was poised to make a purchase several weeks ago, but another buyer took the house two days prior.
‘I didn’t expect homes to be bought up so quickly,? Zelenak said.
Recently, village administrators began working with a realtor in an attempt to make the buying process speedier and more successful. Using the realtor’s knowledge, the village hopes to find newly foreclosed homes quicker.
If or when the village is able to buy a house, it must follow HUD and NSP guidelines such as the house must be foreclosed and vacant, and must be located east of M-24 and inside village limits, according to Zelenak. The village must also bid out all work done on the house and sell it for no greater than one percent below the appraised value.
In addition to meeting HUD requirements, the village manager is also checking historic registries to see if any homes are on them. Being a historic home creates an entirely new and stricter set of guidelines for renovations and/or construction.
Ideally, the village would like to purchase four to five houses: one to tear down and rebuild, and three or four others to rehabilitate, according to Zelenak. He added that $65,000 is a good price, as more expensive houses mean tougher loan applications. Ideal layouts would include around 1,500 square feet, three bedrooms, one and a half baths and a garage.
Any of the $425,000 not committed by the end of the year will be put back into an NSP pool and redistributed to municipalities, according to Zelenak.