NCUD's Housing Initiative

As I mentioned in my post about about my 'blogcation' we've been working diligently on a shared equity or 'third sector' housing solution for our community. This has occupied much of my mental bandwidth, along with the important curriculum development project for our youth program, Future Profits.

We're beginning to see some light. On April 24th the city of Menlo Park will vote on a proposal for funding for our housing project. If approved, we will have the funding to save around ten homes and families from foreclosure. This will happen through an investment of public funds as an equity partner and a write down of the current (underwater) mortgage by the lender to a level where, with the public funds, will place the homeowner in a fair mortgage with a payment they can afford. However, the homeowner will give up some of their future appreciation by which the city will be paid back it's funds. We're also looking at a similar project with private funding. Certainly ten homes isn't going to change the US housing market. It will however dramatically impact ten families and demonstrate our approach is valid and important and perhaps help us to bring it to scale and impact a larger group of folks.

A number of newspapers have picked up the story. When the proposal goes to the city council it will be coupled with a proposal from Habitat for Humanity to pick up REO or foreclosed properties and a city led Below Market Rate (BMR) project.

Bravo to the city of Menlo Park and to Councilmember Andy Cohen for being creative and open to solutions and for bringing three concurrent solutions to the Council at the same time. This project will be focused on the Belle Haven neighborhood of Menlo Park. This is the area on the east side of the freeway and is socio-economically similar to East Palo Alto.

For this project we've been working with the EARN Group. They've developed the model and is looking to offer it across the country if they are successful in our backyard. For this, they've been offering their services and expertise pro-bono. Here is an excerpt from the article. You can read it in it's entirely here.

In an effort to keep low-income residents in their homes, the city of Menlo Park is considering a plan to buy an equity stake in some of those properties.

The plan, one of three foreclosure-related measures under consideration by the Housing Commission at its meeting Wednesday, April 1, is essentially untested, according to Housing Manager Doug Frederick. The city would first try to convince banks to reduce the principal to near market value, and would then purchase equity in the home.

The number of Menlo Park homes in some stage of the foreclosure process has hovered near 100 for months, the vast majority of them in the Belle Haven neighborhood on the east side of the city, according to the Web site realtytrac.com. So far this year, about 40 Menlo Park homeowners have defaulted on their mortgages.

As home prices have dropped, many Belle Haven residents have found that they owe more in mortgage payments than their home is worth.

The city would invest about $90,000 in each home, Mr. Frederick said — 30 percent of a representative $300,000 home.

The EARN Group, a Los Gatos-based company that has been developing a plan independent of Menlo Park to buy equity in homes, would advise the city, and help homeowners to renegotiate terms with banks. The group is offering its assistance pro bono (save a possible small service charge to homeowners) because it is looking to test its model in the hopes of taking it to a wider market, Mr. Frederick said.

San Mateo County has not received any federal funding to deal with foreclosures, but the city may be able to find other sources of funding to amplify its efforts, Mr. Cohen said.

NCUD wasn't specifically mentioned in the article, but we'll be coordinating the community side of the effort. While certainly not a done deal, the signs so far are encouraging.

How can you help? If you have a connections with the city government of Menlo Park you can contact them and let them know you are in support of NCUD and EARN's efforts - as well as the efforts of Habitat for Humanity. If we get this project approved at a minimum we will see the lives of ten families dramatically saved and perhaps we can use this model change the lives of many more.

Additionally, please pray for ours and Habitat's efforts. We need an extra portion of God's wisdom and blessing. If you want more information on our efforts feel free to contact me.