Families Gain Stability with Federal Money

The federal government's multibillion-dollar plan to prop up communities spoiled by foreclosed and aband­oned homes is beginning to make a difference in real estate-ravaged Palm Beach County.

After sputtering to a start 18 months ago, the Neighborhood Stabilization Program saw its first home buyers move into formerly foreclosed properties this summer.

Nationally, $7 billion has gone into the NSP, including $1 billion dedicated last week.

The general goal is to buy derelict homes, refurbish them and then rent or sell to buyers who will revive neighborhoods hit hardest by the market crash.

Palm Beach County's initial use of the money included $12.8 million to offer 30-year fixed-rate loans to low- and middle-income families buying in blighted areas. Second mortgages, forgivable after 30 years if the owner stays in the home, also were awarded for repair and closing costs.

"My goal has been to become a homeowner for my kids, but I totally lost hope until I saw an ad in the newspaper for NSP," said teacher Kimberly Carioti, 46, who closed on a Loxahatchee home June 28 with the help of neighborhood stabilization money. "With my income and as a single mom, I just didn't think I would get a loan."

With state court records tallying 398,825 Florida foreclosures in 2009 alone, a large chunk of the federal money has landed here.

Over three rounds of disbursements that began in the fall of 2008, Florida's total take is about $1.09 billion. Local governments and nonprofits have shared in Florida's portion based on grant proposals and the level of foreclosure devastation in their areas. Palm Beach County government wields $88.9 million in neighborhood stabilization funding, with the first installment equaling $27.7 million.

Groups had 18 months to use or lose the initial allotment once localized plans were approved. Palm Beach County's deadline was Sept. 4.

It just made it.

"We were having trouble at first," said Assistant Palm Beach County Administrator Shannon LaRocque. "It was definitely a challenge to match buyers with homes."

Part of the problem stems from NSP's restriction that buyers purchase homes only in specific ZIP codes identified as high-foreclosure areas.

Those same properties, however, are attractive to cash buyers and speculators.

In March, with six months left to spend the money, the U.S. Department of Housing and Urban Development released a report saying just 38 percent of NSP money nationally had been encumbered. Florida lagged behind all but three other states in using the money.

In April, NSP rules were eased to spur spending.

The changes expanded the definitions of foreclosed and abandoned properties, allowing homes for sale to be bought if the property is in the process of foreclosure, or at least 60 days delinquent on the mortgage, or 90 or more days delinquent on tax payments.

The previous rule required a foreclosure to be completely through the court system before a property could be bought.

This month, HUD and the nation's major banks announced another tweak to the program that will allow future NSP buyers the first chance to make offers on foreclosed homes.

To make sure all of the NSP 1 money was encumbered by Sept. 4, county officials drove prospective buyers through eligible neighborhoods in Palm Tran buses hoping to match borrowers with homes.

Carioti was outbid on three properties before she landed her 1,900-square-foot home on 2.8 acres.

In 2005, the house sold for $449,000, but by 2008, it was in foreclosure.

Carioti bought it for $163,350. She got $187,500 from NSP funds, which also will be used for repairs.

"It's a dream come true, a solid foundation not only for me but for my kids," said Carioti, who has three children. "This is something for us to be proud of."

Carioti, who earned an elementary education degree from Florida Atlantic University in 2008 and now teaches at Acreage Pines Elementary School, didn't think she could qualify for a traditional loan.

NSP-eligible borrowers can have credit scores as low as 500 and cannot earn more than 120 percent of Palm Beach County's median income of $67,600. NSP also takes into account the number of family members when determining eligibility.

So, for example, a family of four could not earn more than about $88,080 annually.

Contracts have either been signed or closed on 81 homes bought by NSP borrowers.