This house wasn’t typical of the thousands in foreclosure-battered Arizona that banks have auctioned for cheap — often to investors who make just enough repairs to satisfy a potential renter.
The Cruzes will become first-time homeowners, helped by one of many nonprofit groups that can snag foreclosures at a discount — and sometimes for free — before banks make them available to speculators.
It’s a glimmer of hope for struggling neighborhoods that are watching banks foreclose on a record number of homes this year.
In the Cruzes’ case, Rebuilding Together obtained the home for free from JPMorgan Chase & Co., the bank that foreclosed on its previous owner. Honeywell International Inc. provided the labor to renovate it and $25,000 cash for the materials.
Cruz and his wife watched earlier this month as more than 70 red-shirted Honeywell Aerospace employees swarmed throughout the three-bedroom house, putting the final touches on new kitchen cabinets, painting baseboards and walls, and cleaning up the landscaping.
“All the neighbors, they’re just so grateful, because the house was looking so bad,” Pam Cruz said. “This is a good example of the banks working with the mortgage companies and so forth, helping the community revitalize the neighborhood.”
The disabled Vietnam veteran and his wife bought the house after the renovation was complete and got a completely updated home for below market value. The mortgage payment will be much less than the $900 a month they were paying in rent.
Under an expanded agreement announced in September between the federal government and banks that provide about 75 percent of all U.S. mortgages, as many as 100,000 more repossessed homes will join those already being pumped into the nonprofit and redevelopment agency pipeline.
That deal started in 2008 as a pilot program to provide foreclosed homes to cities and nonprofits that could renovate them for low- and moderate-income families. About $7 billion in federal funds has been allocated to the program.
The home the Cruzes now own is one of 1,200 Chase has donated or sold at steep discounts to nonprofits or community development agencies in the past two years. There are similar programs at other major lenders, including Wells Fargo & Co., which will donate close to 200 homes this year and sell hundreds more at a discount.
The availability of foreclosure homes has helped community-based housing groups like Community HousingWorks in San Diego expand from developing affordable apartment housing to helping buyers get into their first homes.
The 30-year-old group started a nonprofit brokerage in 2008 and soon discovered that buyers were not able to buy homes because of competition from investors.
“The first 15 days on the job back in ’08, I made 50 offers and had none of them accepted” because investors snapped them up, said Jorge Luis Vega, who runs the group’s nonprofit brokerage.
Another group that specialized in rehabilitating homes told Community HousingWorks of banks’ “first-look” programs, and Vega’s group signed on quickly.
“Buyers in this market that we serve aren’t objecting to price, they’re just not being given access to inventory,” Vega said. “And I think that these first-look programs are really allowing a lot of folks that want to be in these more diverse communities.”
This year, Community HousingWorks acquired 18 homes, rehabbed them and handed the keys to buyers. Next year, they hope to do close to 100.