- change ups
Kent County looking at land bank formation
Unfortunately for David Jacobs, one aspect of his business has grown. Jacobs recently told county commissioners that counseling homeowners on the brink of foreclosure has taken center stage at Home Repair Services.
Instead of teaching homeowners how to patch a leaky roof or fix a dripping faucet, HRS financial counselors are spending time instructing low-income families how to hang on to their house. Jacobs, HRS executive director, said the agency’s five counselors held 5,467 of those sessions in 2008.
HRS began a small financial counseling service in 2001, but now it has become the state’s largest nonprofit program focused on foreclosure prevention. Jacobs told commissioners that foreclosures soared by 74 percent in the county last year. He thanked board members for the money they awarded to HRS, which will get $163,000 next year. He added that it costs about $1,000 to stop a foreclosure, which is a tiny expense compared to the $50,000 a lender spends, on average, to enact a foreclosure.
The county, though, is interested in doing more than funding foreclosure prevention.
County Treasurer Kenneth Parrish told commissioners that he was working on putting together a countywide Land Bank Association, which can provide an alternative to auction sales. An LBA can sell, lease, manage property, convey property for other than monetary consideration, and use financing tools. Parrish also said a land bank would give the county a better method to handle tax-foreclosed properties.
Parrish said he has seen how Genesee County has used its land bank, and he left it up to Genesee County Treasurer Dan Kildee to provide some insight into what that county has done with the association it started in 2002.
“We list our properties with Realtors and what we’ve discovered is, we can get near market prices for the land,” instead of auctioning properties, he said. “The money does not flow back to the property owner. In this case, the money flows to the county.”
Kildee said his LBA was involved with 1,300 parcels last year, and the county has had many fewer defaults from sales through the LBA than it previously had from auction sales.
“A land bank gives you the chance to treat property as real estate, instead of a commodity like a baseball card you might sell,” he said.
Genesee County offers 10 programs for residential, industrial and commercial properties through its land bank, including foreclosure prevention, demolition, lot transfers, housing renovation, property sales and property maintenance. Since 2002, the county’s land bank has reinvested in over 4,000 properties that it acquired through the tax-foreclosure process.
Parrish told commissioners that he doesn’t plan to ask them to fund the LBA and that he would keep them current on his progress to create one.
“I don’t have specifics, but I can’t do anything until we get it started,” he said.
Eighteen Michigan counties have a land bank.
County commissioners gave the county’s Community Development Department a green light to award $40,000 of federal funds to Lighthouse Communities to help find affordable housing for eligible households. The money comes from the Department of Housing and Urban Development. Lighthouse Communities can use it to buy computers, hire staff or for any other administrative function not tied to a specific project.
Jacobs said there could be as many as 2,500 foreclosures in the county this year. HRS stopped 300 of 1,100 foreclosures last year at a total cost of $30,000 — roughly a 30 percent success rate of keeping people from losing their homes.
“We don’t rehab abandoned houses,” said Jacobs. “We just want to stop foreclosures.”