I'm not sure if this made the local news and I just missed it, or if it's been flying under the radar, but there's a program in Winston-Salem and Forsyth County to help folks buy foreclosed properties. Back in January I got an email from Sen. Burr's office about North Carolina receiving over $52 million for the Neighborhood Stabilization Program, but didn't really hear much after that. Then today the following item from FindForeclosureProperties.com (nice URL huh?) showed up in my Google Reader:
Housing officials in Forsyth County and Winston-Salem, North Carolina have partnered with the Center for Homeownership and financial institutions to help eligible buyers purchase bank foreclosures for sale for less than the properties’ appraised value.
Under the Neighborhood Stabilization Program (NSP), eligible homebuyers will be able to receive a maximum of $20,000 as deferred forgivable loan. The funds will be used by the eligible buyer as down payment for buying foreclosure houses, provided that the mortgage holders are willing to sell the properties for less than their assessed value…
Furthermore, the home buying assistance initiative is open to first time property buyers and families or individuals who have not purchased or owned a house for three years.
Eligible borrowers will not be required to pay back the loan under the NSP program if they opt to stay and live in the property for not less than 20 years. Additionally, homebuyers should have the properties under sales contract on or before July 18, 2010 in order to become eligible for the program.
Prospective buyers should have household earnings of equal to or not more than Forsyth County’s 120 percent median income which for a four-member family is $71,640. The median income restriction varies with the family size.
I'm not sold on this being a good idea. Will this prompt people who may not be financially ready to buy a house and then, a year or two down the road, be in over their heads and threatened with foreclosure themselves? Normally you might say that the banks wouldn't lend to risky buyers, but given what we've learned over the last two years do we really want to trust the banks with their own due diligence?
I appreciate what the program is aiming to do, but like I said I'm not sold on it's merits.
Here's the link to the county's page dedicated to the NSP.