Initiative aims to fix up and sell foreclosed homes
WILLMAR -- Wells Fargo Bank and the Greater Minnesota Housing Fund are teaming up with a program to put foreclosed homes in need of rehabilitation back on the market. Wells Fargo announced it is providing a $750,000 investment to the Greater Minnesota Housing Fund to support its foreclosure recovery initiative.
David Wiese of Minneapolis, Wells Fargo's Minnesota community development officer, said the investment continues Wells Fargo's collaboration with the Greater Minnesota Housing Fund. Since 2002, Wells Fargo has invested about $4.5 million into Greater Minnesota Housing.
The private, nonprofit fund was established in 1996 by the McKnight and Blandin foundations to address the need for safe, decent and affordably-priced housing for low- and moderate-income families in rural Minnesota.
"Nonprofits come to me for these types of investments and we work through which organizations would be the best to work with to get the money into the community the most efficient way possible,'' said Wiese. "We like working with (Greater Minnesota Housing Fund) and that's why we've made four different investments with (the) organization.''
Wiese said the initiative will not help homeowners who are currently in foreclosure, but is intended for new homebuyers.
"First, you're getting a foreclosed home off the market. You're getting it fixed up, and then you're helping a low- and moderate-income family get into that home,'' said Wiese.
Warren Hanson, president of Greater Minnesota Housing Fund, said developers will use the Wells Fargo money to bring foreclosed houses up to specifications for resale to low- and moderate-income households.
"A lot of homes that have been foreclosed on have sat vacant and homes that have been for sale through the private market because of the slow market have been sitting vacant and sometimes there's been damage,'' said Hanson. "This is to correct the damage and provide some needed improvements like furnace or roof repair or replacement.''
Both Wells Fargo and Greater Minnesota Housing Fund say the initiative will address the foreclosure problem in rural Minnesota. A recent study by the Federal Reserve Bank said Minnesota's "micropolitan'' areas have higher subprime loan delinquency rates than the Twin Cities metropolitan area. The study projects the rate will increase in 2010 and 2011.
Foreclosure data compiled by HousingLink of Minneapolis, a distributor of affordable-housing information, showed foreclosures in Minnesota increased from 6,466 in 2005 to 26,265 in 2008. Foreclosures in the Twin Cities area rose from 3,759 in 2005 to 17,268, while foreclosures throughout the remainder of the state increased from 2,707 in 2005 to 8,997 in 2008.
"It has just really been something that became a priority in the last year because there are so many foreclosures,'' said Hanson. "With that many homes going to sheriffs' sales, it has flooded the market with homes that are hung up with various title problems and not in the greatest condition.''
He said home prices in the last five years have risen almost out of reach of working families. But with the economic meltdown, ironically, there's an opportunity for families to afford homeownership again, Hanson said.
"This is a window of opportunity for low-income households to become homeowners if they can get a good affordable home and if they can get a good quality mortgage as opposed to a subprime mortgage,'' he said.
Hanson was asked how many foreclosed structures will quality for this program. Probably most of them, he said.
"Our programs tend to work with homes that are under $150,000 to $160,000. We're seeing homes on the market even in the metro and in your area I'm guessing (that) are in that price range or below. That's a great opportunity,'' Hanson said.
The financing will go to developers who will buy and rehab the homes and make them available, Hanson explained. He said developers in the southwest region with which Greater Minnesota Housing Fund would work are Southwest Minnesota Housing Partnership of Slayton or a municipal housing and redevelopment authority.
Hanson acknowledges the current economic uncertainty is giving people a reason to be a little nervous.
"But I also think that if you're careful and you don't buy more house than you can afford ... if you live within your means and you get the right kind of homeownership counseling and assistance, maybe even a down payment loan or grant, then you're going to be able to continue to afford that home barring a job loss,'' said Hanson.
"If your future is reasonably certain in terms of your job, I think this is probably a good time to buy because the bargains are out there.''
People interested in this program house should call Southwest Minnesota Housing Partnership, 1-507-8673, or their local housing and redevelopment authority.