WARREN - A policy that guides the spending of federal dollars Warren receives to improve homes for low-to-moderate income residents may need to be reviewed, the city's director of Community Development says, after some of the money was used to fix the roof and install new electrical service at a house on Palmyra Road S.W.
Under one of Warren's rules to receive emergency home repair funds, an applicant must be the recorded owner and live in the property for at least one year before asking for help. It was policy put into place, director Michael Keys says, to avoid house ''flipping.''
Repair work at 1371 Palmyra Road S.W. was OK'd because the resident had lived in the home for years in a situation akin to rent-to-own and she was owner of record when she applied for the help. The resident had been the recorded owner for only about a month before the application for the aid was made.
Tribune Chronicle / R. Michael Semple
This home at 1371 Palmyra Road S.W., Warren, was fixed up using federal money.
Keys said the decision ''follows the intent of what our policy is,'' though, admitting the rule could be interpreted to mean the resident should own and at the same time, live in the home for one year before financial help is given, and that the policy may need better defined.
''I want to help people who own the home stay in the home ... I don't want them getting it fixed up and flipping it,'' he said.
Records in the county Recorder's Office show Diana Bowers was in a land installment contract with Warren businessman Robert W. Cregar to purchase the Palmyra Road S.W. home for $20,000. The contract, recorded in May 2009, was taken over by a quit claim deed that transferred Cregar's interest in the property to Bowers filed July 25, 2012.
Filed the same day were mortgage documents between Cregar and Bowers that show Bowers is required to continue making the same monthly payment contained in the land contract.
The next month Bowers began the process of applying for funding for the repair work, and by October, the $5,600 of repairs were complete.
Keys said the city hasn't assumed any more risk under this arrangement, a seller-financed mortgage, then it would with a traditional bank-financed mortgage. There are safeguards in place to protect the investment, Keys said.
The city puts a lien on the house for the value of the repair work for five years, which is the length of time the U.S. Department of Housing and Urban Development requires that the home be affordable for low-to-moderate income residents, Keys said. At the end of five years, the mortgage is forgiven.
If there is a foreclosure on the home during that period, the city can foreclose on the mortgage it holds for the improvements or allow the owner to rent back to another low-to-moderate income resident, Keys said. If the resident moves or does not occupy the home for another reason, Keys said the city has three options: try to recover the money, foreclose or allow another low-to-moderate income resident occupy the home.
Bowers said she went for help to make the roof and electrical repairs after she unsuccessfully tried to have the home insured. Several insurance companies, she said, would not give her a policy until the upgrades were made.
Bowers said she ''bought the house as is'' and knew it was a ''fixer-upper.'' The roof issue happened about two years after she moved in, but she had the hole covered. Bowers said she did now know the electric needed upgrades until she attempted to get insurance.
''To me, if there was a fuse box down there, it was good enough,'' she said.
Bowers said she went to the city for help because she could not afford to make the repairs herself. Illness has caused her to stop working.
''I just thank God for them because I would be in a mess without this house,'' Bowers said. ''There is no way, with my income, I would be able to afford all of that.''
Officials in charge of emergency home repair programs in other communities say they strictly adhere to policies that require the recorded owner live in and own the home for one year at the same time.
Jennie Dennison-Budak, director of Interfaith Home Maintenance Service, which runs Youngstown's emergency home repair program, said the 12-month rule is ''pretty hard and fast'' and they ''try hard not to make'' exceptions.
Dennison-Budak said the Mahoning County Auditor's Office's real estate database is used to confirm ownership and length of ownership.
''If it shows the sale date was one year prior to the date of the person's calling, then we can accept that,'' Dennison-Budak said.
Similarly, in Canton and Alliance, information is pulled from the auditor's website in Stark County to ensure year-long owner/occupancy, say Lisa Miller, Community Development director in Canton and Beth Pearson, chief of Community Development for the Stark County Regional Planning Commission, which runs Alliance's emergency repair program.
In Canton, rules don't recognize land contracts, but in Alliance, Pearson said, buyers purchasing on a recorded land contract may be eligible.