Mortgage crisis: is help on the way?
A Minneapolis program would offer homebuyers a $10,000 bonus toward buying houses in 18 foreclosure-heavy neighborhoods. With additional neighborhood assistance, this news could be worth $14,000 to 50 potential purchasers.
It's not exactly free money, but if you stay in the house for five years, that's the ultimate effect.
The money could be used to cover down payments, closing costs and repair costs that exceed the home's appraisal. Although structured as a zero-percent loan, the aid would be fully forgiven after five years.
This is a step toward rebuilding the crushed housing market. When neighborhoods are full of vacant houses, property values continue to spiral downward. Getting people back into those houses, many of which are in North Minneapolis, would lessen the more than 800 boarded up community properties.
If the plan, which has the backing of Mayor R.T. Rybak, is implemented, these are the neighborhoods eligible:
All but four neighborhoods on the North Side are included, along with the Phillips, Whittier, Central and Powderhorn Park neighborhoods on the South Side and the Beltrami and Holland neighborhoods of northeast Minneapolis.
Nationally, chilling statistics continue to roll in. U.S. home prices fell almost 9 percent in the last quarter of 2007, which is a record downswing. Foreclosures were up 57 percent in January compared to the same month last year. The presidential candidates are talking about it, too, with Barack Obama proposing a $10 million fund to keep people in their homes:
Much work is needed. Nobody thinks the 10K credit is going to get at the root of the mortgage crisis, here or nationwide. It's also not going to solve the foreclosure problem, given that 2,900 homes were foreclosed upon here over the last year. It could stop the bleeding, though, and ameliorate a vicious equity hemorrhage cycle around Minneapolis.