Tight mortgage credit standards will hamper nonprofits' ability to sell newly rehabbed properties acquired post-foreclosure, some Neighborhood Stabilization Program (NSP) grantees say.
According to a ‘snapshot survey’ conducted at a recent meeting during the NeighborWorks Training Institute in Philadelphia, homes that could be put back into productive, long-term ownership status may sit vacant if underwriting standards do not loosen. The groups in attendance at the NeighborWorks event account for as much as $740 million in NSP funds.
"The concern is real, and it is across the board," says Thomas P. Deyo, deputy director of National Initiatives and Applied Research at NeighborWorks America. "A handful of nonprofits have forged effective relationships with local and regional first mortgage lenders, but the majority of nonprofit real estate businesses that are in these communities never anticipated that the credit market would be so tough for their home buyers.
"Lenders are right to be prudent with credit to avoid the kind of crisis from which the housing market now is emerging," Deyo adds. "But the pendulum has swung a bit too far, and to make revitalized neighborhoods a reality, it has to swing a little bit back the other way."
SOURCE: NeighborWorks America