Help offered for residents who can't sell their homes

Mortgage lenders shied away from New Colony


January 31, 2003|By Jamie Smith Hopkins | Jamie Smith Hopkins,SUN STAFF

People stuck with homes they can't sell - in a Howard County community, of all places - think their nightmare might finally be over.

Money has been made available again to finance sales in the unusual development of New Colony Village, with promises of more help.

Residents of the Elkridge neighborhood are part of an experiment the developer says has not been tried anywhere else in the United States: They live in a mobile home park by definition - they cannot own the land because it isn't subdivided - but their prefabricated homes are traditional, two-story residences, most with basements and porches, some with balconies.

Wayne Newsome, who developed the 228-home community in the mid-1990s, saw this twist as a way to provide affordable housing as prices skyrocketed.

But home mortgage companies have become increasingly leery of lending money to buy a house without also purchasing the real estate on which it stands.

Financing options dried up over during the past year. Some people have had to move, couldn't sell their New Colony homes, and now have two mortgages.

But this week, BUCS Federal Bank, which had used its allotment of loans earmarked for New Colony, won permission from its directors to invest $1 million more.

Fannie Mae, the government-created financing company that Newsome thought had pulled out of the community, has told him that it has $4 million remaining to offer through qualified lenders.

And Howard County officials say they will do whatever they can to ensure people will be able to buy the land under their homes, which will open the doors for any lender to do business in New Colony.

"This situation is unlike anything else in the country," said County Councilman David A. Rakes, who promised to draft legislation ensuring a smooth transfer of the land. "Everyone is really working hard on this. ... We all want to make this happen."

New Colony cannot be subdivided without variances because the lots would be too small to meet county requirements. The county hearing examiner denied Newsome's request for a variance two weeks ago, but elected officials are looking into the possibility of changing the rules.

"We're going to make sure we do this right," said Rakes, who since December has represented the district that includes New Colony.

Rakes said he is confident that the land will be subdivided, and he hopes the county can help residents of modest means buy their land if they choose to do so.

Residents will have the option of leasing the land, Newsome said, but he believes most will choose to buy. He wants to organize a complete refinancing in New Colony - where most residents are paying 7 percent to 8 1/2 percent interest - and he thinks the savings might cover the cost of the land purchase.

"I think it's going to be close to an even exchange of dollars," Newsome said. "We haven't gone through and analyzed what the cost is going to be because every lot is going to have a different value attached to it, but we hope to have achieved that in the next 90 days."

Regina Kleve, for one, is delighted. The sale of her house fell through last fall when the buyer's pre-approved financing proved unusable in New Colony. By the time Kleve found out, she had bought taken a mortgage on a house in Catonsville.

Others are interested in buying her New Colony house, she said, and now it looks as if they will be able to do so.

"I'm telling you, that will just take so much stress out of my life," said Kleve, an auditor. "Not only do I have to pay two mortgages, I have to worry if somebody's going to break into my house because I'm not there, and [if] things will break and I won't be there to notice.

"I hope it all comes together the way that they're saying," she said.

Jack Daniels, vice president of lending for BUCS Federal Bank, which has branches in Howard and Baltimore counties, said his small company cannot offer huge sums but is committed to the community.

He believes other lenders have stayed away for a frustratingly simple reason: New Colony residents can't own their land, and therefore the mortgage-insurance industry doesn't want to insure deals there, he said.

That means New Colony loans can't be bundled and sold on secondary markets like most conventional mortgage loans.

But in the past few weeks, Daniels said, he has found a few insurers willing to at least take a look at New Colony loans.

"No one's ever given me a reason for why they wouldn't insure them - they just wouldn't," he added.

Without insurance in place, BUCS has had to offer loans in New Colony that cover 80 percent of the house price instead of the conventional 90 percent to 95 percent, Daniels said.

The bank is watching closely to see how efforts to subdivide the community pan out.

"What we can't do as a small bank is outcommit ourselves until we know what's going to happen," Daniels said. "We honestly think that the county and the owners of the property ... are going to get something done."

Sharon Wolfe, a New Colony resident who isn't trying to sell her home, hopes the end result won't change the essence of the community. She appreciates that it has a full-time manager to see to upkeep - from lawn mowing to pool maintenance.

But for Arlene Morin, who moved to New Colony with her husband nearly three years ago, this flurry of activity offers a reason to hope instead of despair.

Intending to move to a single-level home, the Morins put their house on the market 390 days ago. They had begun to wonder if they were trapped. "We just want to sell," said Morin, an administrative assistant. "We've been wanting to for a year."

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