After more than a year of negotiations, the U.S. Department of Housing and Urban Development has approved a unique agreement with the City of Rochester to market HUD-foreclosed properties to owner-occupants within eligible areas (Zip codes 14605, 14606, 14608, 14609, 14611,14613, 14619 and 14621). Future owner-occupants will be able to purchase a HUD home at a 23 percent discount, and rehabilitate that home using various financing sources, which include monies from the FHA 203K, the FHA Title I Home Improvement Program, and City of Rochester loans and grants.
The agreement, unique in the country, allows the City to be an agent to market HUD single-family houses to owner-occupants. Each week, HUD will review its new inventory with the City. The City will then inspect eligible houses, determine the rehabilitation cost, and provide a financing package for interested buyers. These properties will then be advertised by the City, and local realtors will be involved in selling each of the homes. At the closing, the City will acquire each house from HUD, place an owner-occupancy clause on the deed, and transfer it to the new owner.
"This agreement is a unique and innovative approach that clearly demonstrates the commitment by HUD and the City of Rochester to making affordable home ownership available to all citizens," stated Kenneth J. Lobene, Area Coordinator for the U.S. Department of Housing and Urban Development.
It is the City's goal to sell approximately 50 homes during the first year of the program. The City will monitor owner-occupancy for a period of three years. Additionally, the Greater Rochester Association of Realtors has endorsed the program, and its realtor members will participate with the City to sell the HUD homes.
"It should be a win-win situation," said Mayor William A. Johnson, Jr. "HUD will sell more houses, owner-occupants will receive a discounted price, and the realtors will work with the City to increase home ownership."
While announcing the property disposition agreement with HUD, Mayor Johnson announced two other unique efforts which the City will launch to stimulate the rehabilitation and sale of existing homes. The first of these will be the Homestead Lottery, a reincarnation of the successful Urban Homesteading Program discontinued by HUD in 1991. From the City's inventory of property acquired through tax foreclosure, a select group of single family dwellings will be sold for $1 through a lottery process. Buyers will be required to correct all code violations and reside in the property for a minimum of five years. The repairs may be financed through any combination of City rehabilitation funds, home improvement loans, private funds, or sweat equity.
The second program enlists the assistance of private investors who will purchase and rehabilitate City-owned single-family residences. Acting as both owner and general contractor, the investors will be required to obtain a Certificate of Occupancy and to sell the renovated home to a qualified owner-occupant. A combination of personal funds, City rehabilitation programs, or home improvement loans may be used to finance improvements to the property.
The City Rehabilitation of Investor Properties Program can provide a loan of up to $15,000 at one percent interest. Upon sale to an owner-occupant, the loan balance will convert to a grant. The investors will also have the option of entering into a lease/purchase agreement whereby a tenant may "rent to own," using a portion of the monthly rent to accumulate a down payment.
Through these innovative owner-occupant housing programs, along with the benefits derived from the participation and skills of local investors and realtors and the cooperation of HUD, the City of Rochester is continuing to expand the range of affordable home ownership choices for urban buyers.
Contact: Thomas R. Argust, Commissioner of Community Development, (716) 428-6550
The United States Conference of Mayors
J. Thomas Cochran, Executive Director
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