Ohio Funding to Cope with Effects of Bank REO Properties
June 4th, 2009 by 
Joseph Smith
The city of Springfield in Ohio has received $2.27 million in federal funds to boost its programs to counter the effects of bank REO properties. The funding, made possible under the Neighborhood Stabilization Program, will go to communities that qualify under federal guidelines.
Community Development Director Shannon Meadows said that the funding is a big help in addressing the needs of neighborhoods severely affected by the unabated increase in the number of bank REO properties.
One housing recovery program in the city involves a budget of $850,000 to purchase, rehabilitate and re-sell abandon and vacant foreclosed properties in Southgate and Highlands areas. These bank REO properties were repurchased by banks at sheriff’s auctions. Under the program, foreclosed properties will be purchased only from banks.
The program requires that eligible buyers should have good credit standing, must bring with them $1,500, secure a loan from the bank and have earnings of $72,250 for a household of four and $50,550 for individual.
Typically, buying bank REO properties requires at least 2.5 percent down payment. However, potential homebuyers should prepare to shell out more. Springfield can help potential homebuyers procure as much as $20,000 for closing costs and down payment.
Bank REO properties will be sold based on their purchase and rehabilitation costs. Proceeds from the sale will be used to buy and rehabilitate other bank REO properties.
Another program aimed at reducing the number of foreclosed houses in the city offers eligible homebuyers an opportunity to borrow money directly from the city of Springfield. Additionally, foreclosed houses will be rehabilitated to make them energy-efficient. In line with this, workshops will be conducted to educate homeowners on energy efficiency.
Springfield housing program coordinator Jackie Sudhodd said that landscapes will be improved to make repossessed homes attractive to potential homebuyers. She said that the goal is not just to make distressed properties pass code but to make them marketable.
Meanwhile, Meadows pointed out that making foreclosed homes livable will greatly improve conditions in neighborhoods severely affected by the foreclosure crisis. She added that the longer these repo homes remain unsold on the market, the more expensive it is to rehabilitate them.
One out of 160 houses in Ohio is at risk of becoming bank REO properties in the first quarter of 2009, making the state the 11th highest nationwide in terms of foreclosure rate.
