Yuba County considers foreclosure fixes

Yuba County, by the end of this year, may enter the real estate market and do-it-yourself remodeling in Linda and Olivehurst.

Well, not directly.

But $1.7 million in federal stimulus funds will give the county, with an assist from nonprofit group Mercy Housing, an entry into taking foreclosed homes in those communities and making them shine again to sell to new owners.

Next month, county supervisors will vote on an agreement with Mercy, based in West Sacramento, to start the process of buying bank-owned homes in need of improvement.

Kevin Mallen, the county's director of community development and services, said the banks would sell the houses to the county at a discount, but because of their broken-down state, the homes aren't worth much.

"There's quite a few foreclosed homes that if they're selling as-is, don't qualify for a bank loan," Mallen said, explaining the houses were either stripped by their previous occupants or vandals. "It really limits your buyers to folks with cash."

The county will target Olivehurst and Linda because houses there are less likely to attract as many buyers, just based on location. For that reason, the program will skip Plumas Lake, said Greg Sparks, vice president of Mercy Housing. Marysville has a separate, similar program.

"Once the grant is activated, we'll be the development agency on the county's behalf," Sparks said. His agency will work with local contractors to repair the destitute homes.

If the work goes quickly, the county could have the homes ready for sale within a month or two. Qualified buyers would have to make as much as 120 percent of the local median income, which in Yuba County is $55,400, according to the federal Department of Housing and Urban Development.

Sparks said the range of qualified buyers would vary depending on the home being sold, so some buyers could be making a little as 80 percent of the county's median income. Other adjustments could be made depending on the size of the family buying the home relative to income.

Proceeds from the home would be reinvested into the program, Sparks said, though the cost of buying and fixing up the homes is likely to outstrip the sales price and eventually dry up program funds.

County officials hope to buy and resell up to 18 homes before money runs out, said Sean Powers, finance and administrative manager for the community development agency.

"Our goal is for each home to help the program be self-sustaining," he said. "We'll keep going as long as possible and as long as there are funds."

Sparks said his office has applied for federal stimulus money independently to expand and continue the program, with about $3 million slated for Yuba County if the application is approved.

His agency will learn whether it will receive the money in January.

Between buying eyesore houses, putting contractors to work and getting homebuyers connected to new homes, Sparks said, the program constitutes economic stimulus on several fronts.

"It's really redeveloping neighborhoods," he said.

Steve O'Brien, a contractor with O'Brien Remodel in Marysville, said he has worked on housing projects with the county that used community development block grants.

The slowdown in housing, he said, means plenty of interest by local contractors in projects like the one Yuba County and Mercy Housing is discussing.

"It's great for the neighborhoods," he said. "And with the foreclosures, the houses get pretty trashed."

Contact Appeal-Democrat reporter Ben van der Meer at 749-4709 or bvandermeer@appealdemocrat.com. For more Yuba County news, see Ben's blog "Yuba County Insider" at appealdemocrat.com.