$2 Million Loan Helps Purchase Foreclosed Homes
A $2 million loan from Grand Rapids Community Foundation to Great Lakes Capital Fund and its subsidiary, Capital Fund Services, will help local organizations acquire and redevelop 100 foreclosed homes in Grand Rapids. “The impact of foreclosure on neighborhoods and the community goes far beyond those families who have lost homes. Property values have declined each of the past two years, tax revenues are diminishing and vacant foreclosed properties that aren’t maintained have a visible negative impact on neighborhoods. Some neighborhoods have nearly one quarter of all homes in foreclosure,” said Laurie Craft, program director at Grand Rapids Community Foundation.
This is a significant investment and an innovative approach for the Community Foundation. It is a loan rather than a grant and it will be repaid within three years at a below-market interest rate. “It is a forward-looking strategy to assist our community in restoring the lives of people suffering the effects of the downturn in the economy,” Diana Sieger, Grand Rapids Community Foundation president said, of the Foundation’s largest program-related investment. The program leverages funding that the City of Grand Rapids and Kent County will receive from the federal Department of Housing and Urban Development through the Neighborhood Stabilization Program.
Homes selected for rehab were prioritized by the City of Grand Rapids and Kent County based on a history of federal or private investment in revitalization. “We’re looking at neighborhoods where home acquisition will have great impact on a neighborhood,” Craft said. “Foreclosure has a huge impact on many of the neighborhoods where the Community Foundation has already invested considerable resources in housing rehabilitation, neighborhood business districts and community building. We need to protect that investment,” Craft said.
Local community development corporation, Lighthouse Communities recently closed on the first loan made through the program for purchase of a home on Giddings Street SE. They will rehabilitate the foreclosed home, one of several they have purchased in the area, for re-sale to a low to moderate income family. “Vacancies caused by foreclosures have devastating consequences in neighborhoods; these funds allow us to directly address the problem by purchasing houses and restoring them to owner occupied neighborhood assets. Doing this in strategic locations the program will have a big impact improving neighborhoods and reversing the downward spiral of community stability that foreclosures cause,” said Jeremy DeRoo, executive director of Lighthouse Communities.
Capital Fund Services is a designated Community Development Financial Institution with a history of financing community redevelopment. Capital Fund Services will contribute at least $200,000 of its own funds to the program and will administer the loan on behalf of the Community Foundation. It will work with local municipalities to help address the devastating effect that foreclosed properties have on a neighborhood. The loan from the Community Foundation will make it possible for local nonprofits like Lighthouse Communities to purchase abandoned houses and redevelop them for sale.
According to research conducted by Community Research Institute at Grand Valley State University in early 2009, in the City of Grand Rapids there are 55,332 houses and 6,000 have been foreclosed; 12,000 of the 180,737 homes located in Kent County have gone through foreclosure.