HDF Completes Neighborhood Stabilization Program
STAMFORD, CT — The Housing Development Fund (HDF) recently completed the sale of its final property as part of the federally funded Neighborhood Stabilization Program (NSP) – the last of eight NSP homes purchased and rehabilitated for sale to low- to moderate-income households who are mortgage-ready. The Neighborhood Stabilization Program, created in 2008 as the foreclosure crisis gained national attention, helps cities combat the crisis by providing grants to buy and renovate abandoned homes and sell them to new mortgage-ready homebuyers. The idea is to prevent foreclosed homes from dragging down home prices in neighborhoods while also creating affordable housing from these properties.
Of the 10 municipalities chosen in CT to participate in the $25 million program, Bridgeport, CT, received the largest allotment at $5.7 million. Based on the Housing Development Fund’s vast experience and ability to deliver results, the City of Bridgeport selected HDF Community Works, LLC. – a subsidiary of HDF – as its prime partner in 2009, aiming to bring about sustainable stabilization of Bridgeport neighborhoods. Together, they focused their purchase and rehabilitation activity on the neighborhoods determined to be at most risk in the city’s northwest end, with household incomes averaging around $42,000. After completing site visits to more than 50 foreclosed properties, HDF acquired and made necessary improvements to eight Bank owned/REO properties in this region. Once work was completed, the houses were put back on the market at a price that reflected the improvements.
To qualify to buy an NSP home, prospective homebuyers were required to earn no more than 120 percent of the local median income (which would be about $104,000 for a family of four). To ensure his or her readiness, each buyer was also required to attend a homebuyer education class led by one of HDF’s HUD Certified housing counselors or by HDF’s partner, Bridgeport Neighborhood Trust (BNT). For the eight total NSP properties in Bridgeport, HDF identified/counseled over 30 households interested in purchasing these properties. Buyers also received access to HDF’s lending products like its SmartMove loan fund which provides down payment assistance through second mortgages at 3 percent interest over 20 years, an invaluable resource for low-income households in one of America’s most expensive housing markets.
Additionally, the program provided financing to further close the affordability gap, if needed. In return, the homebuyers agreed to a deed restriction that limits resale of the property to income-eligible buyers for 15 years. The Neighborhood Stabilization Program tries to “create a solution to the foreclosure problem that is also an antidote for why that particular house fell into foreclosure in the first place,” said Joan Carty, the president of the Housing Development Fund. Though principally conceived as a way to stabilize areas with high foreclosure rates, NSP has also created affordable housing and construction jobs in a time when unemployment was on the rise. Carty said that HDF put about 300 people to work in renovating the eight acquired properties.
The Housing Development Fund is proud to have participated in this important initiative in Bridgeport, which has been labeled as the epicenter of Connecticut’s foreclosure crisis. “Through a combination of public and private financing resources, HDF had a positive impact on the home values on and around each of the streets where we purchased and rehabbed property,” said Joanne Taylor, the COO of HDF, “Further, our counseling programs have well prepared the new buyers for successful homeownership.” NSP enabled HDF to reduce the threat of abandoned foreclosed properties in Bridgeport’s north end.
The Neighborhood Stabilization Program in Bridgeport and HDF’s involvement were featured in the New York Times, Reuters, Connecticut Post, and Connecticut News 12. About the Housing Development Fund– HDF is a certified Community Development Financial Institution (CDFI) and HUD-Approved Counseling and Lending Agency established 1989 as a nonprofit organization to finance the development of affordable housing. Since its inception, HDF has been creating affordable housing solutions for low- to moderate-income households in the high cost markets of southwestern Connecticut. In that time, it has grown to a loan fund with $44.7 million in assets that encompasses lending programs for pre-development, acquisition, rehabilitation, new construction, and permanent financing. Other projects have included affordable family housing, senior housing, special needs housing and supportive housing. In addition to its financing resources and functions, HDF provides homebuyers’ education and one-on-one counseling to help families qualify for special mortgage financing programs. HDF also provides foreclosure prevention services through monthly clinics and individual counseling.