$1 houses for sale across the nation -- courtesy
federal government's new "Good Neighbor Policy"
one dollar is all it takes to buy a house.
Thanks to a new federal program, thousands of
$1 homes are about to go up for sale in towns big and small in every
corner of the country.
In what it calls "The Good Neighbor Policy,"
the Federal Housing Administration will sell some of the homes it
has foreclosed on to local governments for just one dollar.
Those local authorities will then decide what
to do with the houses.
But Washington insists the dollar domiciles
be used for the betterment of the community, and local government
buyers will have to outline their post-sale plans before they buy.
The FHA expects the houses will be resold or
rented out to needy families, or made specials for first-time home buyers.
Or they could even be torn down to make way for something community-enhancing
such as a child-care center or vital new enterprises, like job training.
After the FHA forecloses on a home it will try
to sell it for market value for six months, and only then slide
it into the $1 bargain-basement bin.
If the houses are in such poor shape that they
have to be torn down, the FHA will do the demolition, then sell
the vacant lot for a buck instead.
to your local government
"The local authorities won't be able to do just anything they
like with these houses," said an FHA representative, "they'll have
to be used to benefit their surrounding community or help people
"The local authority can sell a house at a huge
profit if they can make it, but that profit will have to be plowed
back into community redevelopment projects under our terms. Mostly,
we expect local authorities to sell to people who might otherwise
not get a home or find other ways to use the homes to bring life
and business back to dying areas."
The missing piece of the puzzle is just how
local government or housing authorities will make those decisions.
People who want to buy $1 homes will have to find out from their
local government how they can get in line and how potential homeowners
or home uses will be selected.
When a local authority applies to buy a $1 house
it will have to give the FHA a broad outline of its plan for the
house, describing in general terms how it will use the property
to help community rebuilding. Once approved, the sale goes ahead
and the FHA keeps an eye out to see the plan is followed.
across the U.S.A.
The program will kick in on May 1, but already 3,000 houses
are in line to be dumped for a dollar by the FHA, a part of the
Department of Housing and Urban Development.
The houses are available in all 50 states. HUD
has listed the cities, but will wait until the May 1 launch
to reveal the addresses, because some houses will be added and some
will come off the present list before that date.
By the way, the whole program will cost taxpayers
nothing. That's because the FHA makes more than it spends, returning
about $1.5 billion to the U.S. Treasury last year.
"The Good Neighbor Policy will build better
futures for hundreds of communities and thousands of families across
our nation," said HUD Secretary Andrew Cuomo. "It will help reverse
decades of decline in our cities by revitalizing neighborhoods,
attracting new residents and promoting homeownership."
It's certainly a hit with local officials. Thomas
Cochran, executive director of the U.S. Conference of Mayors, called
the initiative "a great opportunity for cities and counties."
gets there first
The $1 house idea is the brainchild of Rep. John Kasich (R -Ohio),
chairman of the budget committee. And so the first sale under the
dollar deal will be a three-bedroom house at 344 Midland Avenue
in Columbus, Ohio -- part of the congressman's district.
Kasich called the program "a great way to put
power in the hands of local people."
"The longer they stay vacant, the greater the
chances they'll deteriorate and be more difficult to put to good
use," says the congressman. "Placing them in the hands of local
officials will help cut red tape and insure that they'll more quickly
be used in a way that meets local needs."
The 3,000 homes waiting for dollar buyers are
only a handful of the houses the FHA has foreclosed on and put on
the open market. In the past six months the FHA sold about 39,000
homes this way -- leaving only those lonely 3,000 eligible for the
The FHA insures about 6.7 million mortgages.
When homeowners can't pay, the FHA tries to work out payment plans
so the owners can stay in the home. If that fails, the lender forecloses
and the house goes to the FHA in return for the payment of the outstanding
mortgage balance. Then it goes up for sale.
And now, if it stays unsold for six months it
becomes a 100-cent bargain.
The new policy will complement HUD's Direct
Sale Program, which sells houses it has foreclosed on to local government
and community-based nonprofit organizations for a 30 percent discount
as soon as it takes over the house.