With more and more blue signs going up around St. Paul marking homes as registered vacant buildings, it's been hard to ignore the repercussions of a home being condemned.
One negative side effect is that mail delivery is ceased within 10 days of the St. Paul home being "tagged". If the former occupant/owner of the home is not aware that his/her mail delivery will cease, s/he may have moved to a friend's or relative's and be stopping by to retrieve mail. Important items like paychecks, tax refunds, utility bills, fix up loan applications, utility assistance documents, city correspondence, etc., could be returned to sender once the mail delivery ceases. My local St. Paul post office confirmed that mail delivery stops. There is a short period of time the mail is held and then everything bounces back to the sender. The condemned homeowner has to get a PO box or file a forwarding order to continue mail service.
A second negative side effect is that traditional home loans usually cannot be made on a condemned home. Plus, the homeowner often has poor credit because of the unpaid bills that may have gotten him/her into the dilemma to begin with. Unless a homeowner already has an equity credit line in place with funds still available, getting a traditional mortgage is a bit difficult. Mortgage companies don't lend money using collateral that is not "resell-able" and a condemned house is considered high risk collateral.
A special "fix-up" loan like a 203K program from FHA would have to be obtained. Fix-up loans function much like a construction loan in that an estimate is made of the total cost of the entire project and funds are drawn from an escrow account as the work is completed. The funds are not disbursed without proof of the completed work. Most of the time, the work must be completed by a licensed contractor, and the closing costs and percentage rate on the loan are usually higher.
The homeowner can be in a bit of a pickle if they can't get a loan and they don't have the money to make the city's required repairs. What are the options for the owner?
- Quit. Find an experienced rehabber to buy the house and move into an apartment or other living arrangements. Usually the sale price on a condemned house will be very low as it takes a considerable amount of money to fix the home up for resale.
- If the owner wants to make the repairs and return to their St. Paul home, the city has extensive resources for those who qualify including a 40 yard roll off box for debris removal and deferred loans and grants for fixing the home through their City Living Home Programs. Applications and income guidelines are requirements of the funding programs.
- Energy assistance programs like Community Action Partnership exist for those with qualifying income. Some of these programs will replace furnaces, hot water heaters, and other energy saving features of the home.
- St. Paul neighborhoods like the one for Frogtown listed here have grant and deferred loan programs for fixing homes through the neighborhood CDC's (community development corporation). Some St. Paul neighborhoods even have programs that can be used by landlords.
The important thing to remember is that IF the owner of a condemned house in St. Paul wants to restore the property to safe and functional use, resources are available. One can start with the sites linked from this blog and branch out from there.
A little off topic, but this site may be helpful.
It has some practical information on how to avoid foreclosure.
http://www.howtoavoidforeclosure.org
Good Luck
Posted by: Foreclosure Information | April 10, 2008 at 06:29 PM