Their dream houses turn into nightmares

Elkridge: New Colony is a great place to live, residents say - except for the predicament that virtually denies them the ability to sell their homes.

January 23, 2003|By Jamie Smith Hopkins | Jamie Smith Hopkins,SUN STAFF

Arlene and Roland Morin had no idea when they moved into New Colony Village in Elkridge nearly three years ago how hard it would be to move out.

The Morins have had their house on the market for 382 days - in Howard County, where the average home is snatched up in a month. A neighbor is stuck with two mortgages because the contract on her house fell through after she bought a new one in Catonsville. Another neighbor who was transferred out of the state months ago finally rented her house, despairing of selling it.

Plenty of people want to buy into the development of 228 single-family homes. Home-mortgage lenders won't give them financing for New Colony because it's unlike anything they've seen.

The community, tucked between Interstate 95 and U.S. 1, is technically a mobile home park because residents don't and can't own the land. But the upscale prefab houses they live in look like the traditional American dream - two stories, basements, porches.

The neighborhood was crafted in the mid-1990s as an innovation to help middle-income people find a place to live in the increasingly expensive region. Now the original buyers are finding that it's nearly impossible to sell, casting a dark cloud over the futures of the residents, the neighborhood and the affordable-housing technique that created it.

"I can't keep paying a second mortgage," said Regina Kleve, 44, an auditor who moved to Catonsville in November but is stuck with her New Colony house because the buyer's financing fell through. "I just want to sell my house and move on with my life."

Few companies ever offered financing in New Colony, where the homes are considered personal property instead of real estate (and are, oddly, registered with the state Motor Vehicle Administration). Enough lenders were involved originally to allow people to move in as the homes were erected during the past five years.

One foreclosure

New Colony has seen only one foreclosure, says developer Wayne Newsome, who owns the land with a partner. But now that the last two single-family homes are under construction and under contract with financing in place, all the lenders but one have pulled out.

American Home Mortgage, which handled most of the loans in the community, stopped financing there last year. Only BUCS Federal Bank is still involved, and the local company has limited funds to invest in New Colony.

The bank's lending officer for that area could not be reached for comment, but several Realtors say they were told last week by BUCS that there's nothing left to help their clients.

Mike Haeffner, the American Home Mortgage loan officer who handled New Colony, said he believes that a key problem with finding banks willing to finance purchases of homes in the development is that the loans can't be bundled and sold on secondary markets like most conventional mortgage loans. Without the prospect of that flexibility, banks don't want to touch New Colony loans.

"I know of no financing available - of any source - for New Colony Village," said Al Cooke, a Realtor with two homes that can't be sold, both belonging to clients transferred out of the area.

Realtors' warning

Real estate agents warn that the quaint neighborhood is on the brink of a downward spiral if something isn't done soon. Several houses sit empty, including one damaged a year ago by a blaze that county fire officials are investigating.

"In a situation like this, you cannot buy your way out," said Columbia Realtor Lucille M. Souder, who adds that she feels she is teasing the many people who have called, eager but ultimately unable to purchase Kleve's four-bedroom, two-fireplace house for the bargain price of $170,000. "There will be more and more people just giving [their homes] back to the bank."

The six homes for sale in New Colony have been on the market for an average of about 190 days, according to the MRIS multiple-listings database. Another 10 were taken off the listings after they failed to sell.

Fritzi Hallock, president of MarketSmart, a Towson consultant to builders and developers, says she fears that New Colony's "great strategy" for affordable housing will never be tried anywhere else unless lenders buy into the idea. "No one has a problem with the architectural design, the construction, the features, the location - from a community standpoint, there's no problem, and that's what's so crazy," she said.

Newsome, who says he fought hard for financing but has given up, predicts that the lending predicament would disappear if residents had the option to purchase the land under their homes. But it's not a simple proposition. The land would have to be subdivided, and there are lots that would be too small - some are less than 1/20th of an acre - to meet Howard County's subdivision standards.

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