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Summit County authority will decide by next month on issuing tax-exempt bonds
By Rick Armon
Beacon Journal staff writer
Published on Friday, Jan 09, 2009
The Summit County Port Authority will decide by next month whether to issue tax-exempt bonds to support a new, unusual foreclosure prevention program.
''We have to make sure everything checks out and it smells right,'' port Chairman Steven Kasarnich said Thursday at a public hearing at the Akron-Summit County Public Library downtown.
About 50 people — a mix of government and business leaders, and homeowners who have already agreed to participate — showed up to listen, ask questions and comment on the proposal.
American Homeowner Preservation Inc., a new nonprofit company in Cincinnati, has asked the port authority to issue $12.5 million in bonds to fund the program, which involves AHP buying homes and then leasing them back to the homeowners at lower monthly rents so they can avoid foreclosure.
The homeowners then would have the option to rebuy their homes after three years, paying AHP the cost of the home plus a 15 percent fee.
The program would be the first of its kind in the nation, AHP Executive Director Rob Fredericks said.
Many housing and legal experts are skeptical, though, noting that the business model has been used as a foreclosure scam.
But Fredericks said his company has
been mischaracterized by critics. The company has safeguards in place to prevent abuse, including putting the purchase option on the title for the homeowner, he said. Victims of foreclosure will end up as renters anyway, so why not give them a chance to stay in their home and buy it back, he said.
Several people at the hearing said they want the port authority to investigate the company thoroughly. Since AHP is new, it has no track record of success, and details about its California owners are limited.
Many of those in attendance said they support the effort.
David Blumberg, president and chief executive officer of Blumberg Investments Inc. in Akron, called the idea simple and brilliant, adding that the port authority should approve the request.
''This is a great way to stabilize neighborhoods,'' he said.
The port authority, an economic-development agency, would issue the bonds, but not guarantee them. County taxpayers would not be responsible in case of default.
Despite there being no financial liability for the port, agency President Chris Burnham said there is some risk.
''We have a good name to protect,'' he said.
Don Stuver, 65, of Akron, who has signed up for the program, said he wants to see the port approve the bond deal.
''I certainly think that it does sound too good to be true, but it just might work,'' he said. ''What harm is it to try?''
More than 200 homeowners have signed purchase contracts with AHP, and the company is negotiating sales prices with the lenders, Fredericks said. If AHP doesn't receive the funding from the bond sale, there is no alternative plan to obtain financing, he said.
The next regular board meeting for the port is Jan. 20. The board then meets again Feb. 17.
For more details about AHP, call 800-555-1055 or go online to http://www.ahpoh.org.
For more details about the port authority, call 330-762-4776 or go online to http://www.summitportauthority.org.
Rick Armon can be reached at 330-996-3569 or rarmon@thebeaconjournal.com.
The Summit County Port Authority will decide by next month whether to issue tax-exempt bonds to support a new, unusual foreclosure prevention program.
Get the full article here.
Comments
Click here to post your comments
Akron, Oh
Posted 05:02 AM, 01/09/2009
How is this plan different from the ones that got some of the home owners in trouble in the first place? I'm not bashing the homeowner here, but if you can't pay your mortgage now, how are you going come up with money to buy back the house PLUS 15% in this economy?
The city of Akron got $8.5 million from the Neighborhood Stabilization Program to help people in foreclosure. While the government allowed the situation to happen in the first place, at least there is some level of checks and balances. People in trouble need to call the city before throwing good money after bad.
Tallmadge, OH
Posted 07:03 AM, 01/09/2009
What a bad deal for the home foreclosure folks. Built in 5% a year home price increase for 3 years while homes in Akron are falling by 10% a year. This is a BAD deal for anyone in foreclosure. This is worse then what got them into foreclosure in the first place.
