by Sean McManus
Staff Writer
Last month, the Housing and Urban Development announced that $1,000 checks will be issued to anyone who signs a sales contract on a single-family HUD home by Sept. 30.
Calling it a move-in allowance, the HUD checks would be delivered at closing and would be effective immediately. The idea is that low income people who can afford to buy a home need money for repairs and moving costs. To take advantage of the new policy, residents must agree to live in their new HUD home for one year.
According to sources at the Jacksonville HUD office, the homes that are used for this initiative have been repossessed or foreclosed. They are then sold to the highest bidder on the Internet at dramatically decreased prices. Most of the buyers use Federal Housing Authority subsidized loans to make the purchase. There are about 200 of these homes all over Jacksonville.
“It’s a nice gesture but nothing more,” said Nathan Krestul, the executive director of the Duval County Housing Finance Authority, which, similar to HUD, finds low income housing for people in Jacksonville and administers funds for emergency housing repairs, rental rehabilitation, credit counseling and special needs housing. “The problem is these people need to be approved for a loan by someone and often they don’t have very good credit.”
Krestul recommends the emphasis be placed on mortgage education through organizations such as the Urban League or Consumer Credit Counseling, not on cash back incentives to purchase homes.
“We already have programs in place that are joint ventures with the City to provide more money than that,” said Krestul, “but HUD’s heart is in the right place.”
The Duval County Housing Finance Authority was created in 1980 and issues mortgage revenue bonds to people who make anywhere from 30 percent of the median income to 120 percent.
“Credit is always the big issue,” said Krestul.
But according to HUD, the real value of the $1,000 lies in the ability of families to leverage the amount into greater equity in the home.
“What better way to increase the value of your home than to utilize this incentive to put some sweat equity into fixing it up,” said the one high level HUD official who asked not to be identified. “It’s a great way to get people feeling like they are a part of something.”