Three properties in the city’s first-time homeownership loan program have been abandoned, Oneonta officials said, and two other property owners haven’t responded to requests for payments.
The five property owners owe the city more than $90,000, plus interest, stemming from loans made through First-Time Homeownership, a federally funded program, according to a report recently discussed at a Common Council committee meeting.
The city received a total of $1,185,170 in federal Housing and Urban Development funding in three installments since 1996, and turned it into loans for more than 60 low- to moderate-income homeowners. Loan payments are deposited in the city’s “program income account,” which recirculates funds for various projects, and isn’t part of the city’s general operating fund, according to Jeff House, city housing specialist and acting director of community development.
Meg Hungerford, the city director of finance, said the loan repayments fund the city’s community development budget, which has been set by the Common Council at $107,500 for next year. Of that amount, $67,000 is projected to come from loan repayments, including first-time homeownership payments, she said, and about another $40,000 is from previously collected payments.
The largest item in the community development budget is $70,000 for an annual agreement with Otsego County for downtown Oneonta business retention and expansion services, Hungerford said. The budget also would cover expenses stemming from requesting or providing other loans or grants, she said.
House said the first-time homeownership loans carried an automatic three-year deferral of repayments to the city. But all of those HUD deferrals have expired, he said, and the city has approved many deferrals in recent years.
In recent years, the city has been studying its housing stock, which includes student rentals, and identifying needs and and ways to encourage improvements, development, affordability and ownership.
“We’re trying to fill homes with families,” Chip Holmes, Eighth Ward member of the Common Council, said Tuesday.
About 18 months ago, House said, city officials decided that the municipal books needed review to determine who among nonpayers in the HUD-initiated program was eligible for continued deferrals and who needed to start making payments.
Bob Brzozowski, Seventh Ward council member and chairman of the Community Improvement Committee, said the city has an obligation to monitor the program to prevent abuse. The committee has been reviewing the program and discussed its status with House during a meeting earlier this month.
According to the most recent list compiled by House, the three abandoned properties, the owners, amount due, the original loan amount and date are:
• 50 Elm St., Anne Avery, $22,242, and $18,750, May 15, 1998.
• 2-6 Miller St., Judy Marshall, $14,585, and $12,000, May 29, 1997.
• 3 Lewis Ave., Mark Wheeler, $12,397, and $14,000, May 6, 2002. This property is in foreclosure.
House said the accounts for the abandoned properties have been turned over to City Manager Michael Long and City Attorney David Merzig for further attention.
The properties, owners, amount owed, loan amount and origin date for which the city has mailed requests for compliance but received no reply are:
• 519 Main St., Diane Perry-Pleban, $28,799, and $25,000, July 7, 1999.
• 5 Tilton Ave., Muganyzi Katoke, $20,910, and $20,500, July 10, 2001.
Community Improvement Committee members asked House about possible next steps, such as credit inquiries to determine deferral eligibility for parties that haven’t responded to requests for compliance. House said the city would prefer not having to take legal action.
The city has assisted 63 households in three allotments of the HUD initiative, which was approved though the state’s Community Development Block Grant program, House said, and HUD’s guideline was that housing costs shouldn’t exceed a third of a household’s annual adjusted gross income.
Under the program, the applicant was required to find another lender to carry a first mortgage, House said, and the city has a subordinate position behind that lender.
Previously, city officials said the program has been important for new homeowners, for improving and stabilizing neighborhoods and for protecting other residents’ investments in their properties.
First-Time Homeownership I dates from 1996-99 and was $453,170 to assist 29 households, according to House. First-Time Homeownership II in 2000-02 with $340,000 assisted 20 households, he said, and the third program in 2004-06 loaned $392,00 to 14 households.
Of the 63 households assisted, 24 loans have been paid off through repayments or sale of the property, House said, of and 39 current accounts, 23 borrowers are making payments and 16 property owners aren’t making payments on their loans.
His review determined that seven property owners met HUD income criteria for continued deferrals. Four other owners didn’t meet deferment criteria and began making payments, he said, and four others have responded to the city’s request for information and are in various phases of negotiation or compliance.
For borrowers unable to start payment under HUD guidelines, the city grants deferment on a yearly basis, he said.The programs’ goal was and continues to be to help individuals and families of low- and moderate incomes to own homes in the city, House said.
“That goal has surely been met,” House said. The majority of the participants are families and almost all of the borrowers have met their obligations, he said.
“In all cases, these participants would not otherwise have been able to purchase a home in the city at the time they applied,” House said in an emailed response to questions about the program. “With rapidly increasing housing costs, and stagnant or decreasing wages, most probably still could not, without assistance such as that provided through programs like these.”