Rehab fund created to lure people back to city In some cases, loans up to $15,000 would be forgiven

November 19, 1996|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

A remodeling program to lure homebuyers to aging housing stock in the city is being launched today by a Northwest Baltimore group. The program's most startling feature is a free loan, if borrowers stay in their rehabilitated homes for nine years.

The nonprofit Comprehensive Housing Assistance Inc. (CHAI) will offer deferred loans of up to $15,000 to at least 30 buyers of two-story, semidetached houses in Upper Park Heights, in an area loosely bounded by Reisterstown Road, Park Heights Avenue, Fords Lane and Seven Mile Lane.

The $450,000 pool of interest-free second mortgages comes from commitments of $150,000 each from the Abell Foundation, The Associated: Jewish Community Federation of Baltimore and city government.

Fannie Mae, the Federal National Mortgage Association, which works to boost homeownership among low- to moderate-income households through its Baltimore Partnership Office, will finance the home purchase mortgages that borrowers will get through private lenders.

CHAI, which offers affordable housing counseling and programs, is to announce the loans this morning at a ceremony at a Bancroft Road home recently purchased by one of the first three families to get one of the loans.

CHAI hopes to induce buyers to take second looks at well-built homes they might otherwise bypass because of features such as outdated kitchens and baths, said Ken Gelula, executive director.

Gelula said this area of Northwest Baltimore has hundreds of 40- to 50-year-old semidetached houses, many of them occupied by original owners who are now elderly. He said the owners often have done little to modernize their homes.

"We were interested in figuring out some model that would show people they can take one of those semidetached houses and make it a house for the '90s," he said.

To qualify, a homebuyer must come from outside the city and use at least two-thirds of the money for home improvements, such as installing central air conditioning or updating the electrical system. The balance can go toward a down payment or closing costs.

If the program is successful, Fannie Mae expects to work with other nonprofit groups to offer similar loans in other "outer city" neighborhoods such as Belair-Edison, Forest Park or Harbel, said David K. Elam, director of Fannie Mae's Baltimore office.

Such neighborhoods, while generally stable, often find home sales suffering from competition with new suburban townhouses, he said.

"We want to look at how we can deal with some of the neighborhoods that have good housing stock that needs improvement to be competitive and attractive to homebuyers -- and affordable to a large component of the market trying to purchase a first home," Elam said. "Hopefully, this will be a model of how to do moderate rehabs."

In the area served by CHAI, a three-bedroom, brick semidetached house with a finished basement sells for an average of $70,000, Gelula said.

Buyers who qualify for a first mortgage on a home can apply to CHAI for a deferred loan of any amount up to $15,000.

Buyers will pay no interest. The principal on the second mortgage decreases by 10 percent after two years, then by 10 percent each of the next seven years.

A borrower must repay the loan only when the house is sold or refinanced. A borrower who lives in the home at least nine years will owe nothing.

CHAI hopes the home improvements will prompt owners to think of their purchase as more than a starter home, Gelula said.

"We tried to create an incentive for people to buy a house, make it something that works and stay for a longer period of time," he said.

Pub Date: 11/19/96

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