A recent house foreclosure on Zellars Court has brought new life to the City’s affordable housing program. This project is a joint venture between the City of Auburn and the North Auburn Housing Development Corporation.
“In this case, the homeowner defaulted on their first mortgage, which was being held by Auburn Bank,” said Al Davis, Auburn Community Services director. “At that point, the City is going to purchase the house from Auburn Bank. We’ll be able to resell the house to another low-to moderate-income family.”
The City Council has approved a budget of $85,000 to buy the house back from the bank, Davis said. He is planning to have the house back on the market within the next month.
“Anything can lead a person to a foreclosure,” Davis said. “We’ve had to buy back a few [homes] from the bank, but we’re probably no different from what the general market is.”
The affordable housing program allows for low-to-moderate-income families to purchase a house through three mortgages.
The first mortgage covers at least 80% of the price of the house and will be through a traditional bank.
The second covers the remaining 20% of the price and has an interest rate around 3%, but is funded through the NAHDC.
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The final mortgage covers the closing fees and other new home expenses up to $3,000.
This loan does not have to be paid back to the City if the homeowner lives in the home for 30 years.
“This is not a moneymaking program for the City,” Davis said. “It is a program that allows us to continue to put more families in a homeownership opportunity.”
This program has provided the Northwest Village subdivision 29 homes, along with various homes throughout the community. The program aims to provide two to three new houses each year.
“We’re getting ready to build seven new houses on the corner of Byrd [Street] and Tucker [Avenue,]” Davis said. “This [foreclosure] is a small part of our affordable housing program. This is not something that occurs on a regular basis.”
The affordable housing program is funded through the Community Development Block Grant program within the U.S. Department of Housing and Urban Development.
“We try to keep our houses anywhere between $115,000 and $120,000,” Davis said. “Our houses are typically about 1,100 square feet. They’re not humongous houses, but they’re a good starter home.”
Potential homeowners will have to meet with a counselor to talk about the upkeep and hidden costs associated with owning a home, Davis said.
To qualify for this program residents must be able to obtain a loan, have no outstanding federal delinquent debt and an evaluation of the HUD Income Limits.
The first step for a potential homeowner in this program is to schedule an appointment with the Community Services Department to determine eligibility.
Applicants will also have to fill out an application through the Auburn Community Development Division. A full list of requirements can be found in the Community Development section on the City of Auburn’s website.
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