Gresham takes steps to preserve neighborhoods

City offering $10,000 loans for down payments, closing costs

By Mara Stine

The Gresham Outlook, Nov 17, 2009 (2 Reader comments)

Jim Clark / Gresham Outlook

The city of Gresham has started a program to help home buyers purchase houses that have fallen into foreclosure, such as this one on Northeast Ninth Street.

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In an effort to help improve neighborhoods with foreclosed houses, Gresham has launched a new program designed to get families into those homes.

The “Come Home to Gresham” home loan program, implemented by Community Vision Inc., helps qualified buyers purchase foreclosed homes in certain parts of the city, said Michael Parkhurst, an associate planner with the city of Gresham.

It provides zero-percent interest, deferred payment loans of up to $10,000 for down payments and/or closing costs. Payments are not due on the loan until the house is sold or re-financed. Also, if the home is sold within five years, the loan program gets a share of the property’s appreciated value.

The program, adopted by Congress last year, is not designed to keep people on the brink of foreclosure in their homes. Instead, it’s intended to help local communities mitigate negative effects that foreclosed homes can have on neighborhoods.

Oregon received $19.6 million for the program, funded through the Neighborhood Stabilization Program as part of the federal Housing and Economic Recovery Act of 2008.

The money was then distributed based on rates of foreclosure, high-risk loans and unemployment

Multnomah County, Portland and Gresham received $3.2 million for such a program.

But Gresham city councilors voted to create their own program independent of other jurisdictions, said Mayor Shane Bemis.

“I think the council wanted to tighten controls to make sure the money that was deemed for Gresham really was spent in Gresham,” he said.

Multnomah County and Portland are working on their program called Own Your Own. Implemented by the Portland Development Commission, it provides loans of up to $50,000 to buy foreclosed properties in parts of Fairview, Wood Village, Troutdale, Portland and Maywood Park.

Because of high demand for the program, PDC will randomly select homebuyers from all the applications it receives. Applications are being accepted through Monday, Nov. 30.

Gresham’s program, however, gives out $10,000 loans instead of $50,000 loans to get more families into more foreclosed houses, Bemis said. With roughly $400,000 available for the Gresham program, the city could award 40 loans, versus about eight if the cap was $50,000.

“We thought we could help more houses and more neighborhoods and more home buyers with a smaller amount of money,” Bemis said. “The goal for this money is to take eyesores out of neighborhoods. … We want to make sure we’re fixing the neighborhoods that are affected.”

Some foreclosed houses can become dilapidated. Lawns and weeds grow unchecked. Transients can take up residency. And some criminals see opportunity, stealing appliances and fixtures.

Eventually, such conditions can lower property values of surrounding homes.

But not all foreclosed houses in Gresham are the byproduct of lost jobs, questionable loans or household budgets being stretched to the breaking point.

“Many are new townhouses that were built right before the bubble burst,” Parkhurst said.

This spring, Gresham’s per capita rate of foreclosed houses had surpassed Portland’s. This summer Oregon ranked 11th in the nation for home foreclosures and saw a 48.5 percent jump between September 2008 and September 2009, according to RealtyTrac.

The number of home foreclosures is constantly in flux, but Parkhurst said a real estate agent recently gave him a list of foreclosed homes in Gresham that totaled 37. However, not all of those homes would qualify for the Come Home to Gresham program because they’re not all in the target area, which was created with old data “from before the foreclosure wave hit,” Parkhurst said. “The reality doesn’t match the numbers.”

For example, the target area doesn’t extend south of Powell Boulevard.

“And as this economic downturn has drawn out, there’s more and more foreclosures everywhere in Gresham,” Bemis said.

The Oregon Housing Department is working with U.S. Department of Housing and Urban Development on the possibility of redrawing the target area to more accurately reflect foreclosure rates, Parkhurst said.

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