RICH program, selling city-owned foreclosed homes for $1, receives unanimous Council support
ews release from Alderman Russell W. Stamper, II
Certain city-owned foreclosed homes in distressed neighborhoods will sell for $1, and the buyers will qualify for low-interest revolving loans from the city to aid in renovating the properties under new legislation sponsored by Alderman Russell W. Stamper, II and approved on a unanimous vote by the Common Council on Tuesday.
“There are neighborhoods in the city where the effects of the foreclosure crisis are still being felt,” Alderman Stamper said. “The Re-Invest in City Homes program (RICH) provides a much-needed stabilizing influence in those neighborhoods, gets these properties back on the tax rolls and provides first-time homebuyers with a major incentive to invest in Milwaukee.”
The new legislation directs the Neighborhood Improvement Development Corp. to oversee the selection of program participants, who must meet a battery of requirements—not having owned property in Milwaukee within the last two years, uninterrupted employment for at least a year and a favorable rent, utility and debt repayment history. Buyers must also agree to live in the property for at least five years.
Qualifying buyers will work with the Department of City Development to develop a rehabilitation plan for a city-owned foreclosed property in a distressed neighborhood. The rehab plan will address issues identified in the city’s scope-of-work estimates, including remedies of all code violations, and reasonable property improvements desired by the buyer. Upon closing on the property, the buyer will enter into a 10-year, 1% interest loan agreement with the city to cover the cost of the improvements.
The pilot loan program is funded by $600,000 in unspent funds that were previously allocated to other neighborhood improvement programs. Borrowers in the RICH program will not be allowed to exceed a mortgage-debt ratio of 30 percent, nor a total debt ratio of 40 percent.
“Everyone benefits from this program,” Alderman Stamper said. “The surrounding neighborhood gains a source of stability, new homeowners build a foundation for their families and Milwaukeeans gain another taxpaying property on the city’s rolls to defray their individual tax costs.
“Perhaps the most encouraging thing is that the city’s investment on the property is returned within 10 years, allowing the process to repeat itself and become self-sustaining. The process of transforming foreclosed properties, which was once a drain on the city’s budget, will now provide a positive addition to the tax base.”
Alderman Stamper thanked his co-sponsors on the legislation—Alds. Willie C. Wade, Robert Bauman, Milele A. Coggs, Ashanti Hamilton, Michael J. Murphy, Joe Davis, Sr., Jim Bohl, Nik Kovac and José G. Pérez—for their support in realizing the ambitious pilot program.
“The commendable cooperation on this legislation has put the American Dream of homeownership within the reach of hardworking Milwaukeeans who might not otherwise have had it,” Alderman Stamper said. “I have high hopes that this is the beginning of an upward trend of revitalization in our inner-city neighborhoods.”
Interested applicants should contact the Neighborhood Improvement Development Corp. to learn more about how to qualify for the RICH program. Specific program terms are attached to this news release.
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News release from Alderman Russell W. Stamper, II