Grant program helps those in foreclosure avoid homelessness

The aftermath of a mortgage foreclosure can be as big a trial as the event itself.

It’s likely both that late or missing payments have wrecked the homeowner’s credit and that the homeowner has drained all of his or her savings fighting to remain in the house. And so it can be next to impossible for that homeowner to secure a new place to live - even a rental unit.

At least without help: That’s where the Minnesota Home Ownership Center enters the picture, with a new $125,000 pilot-program funded by the Saint Paul Foundation Community Economic Relief Fund.

The Re-Housing Grant program aims to help foreclosed homeowners secure appropriate rental properties, so they can begin anew.

“The goal of the program is to prevent homelessness,” says Ed Nelson, marketing and communications manager for the St. Paul-based Home Ownership Center.

The Re-Housing Grant program figures to help some 50 foreclosed homeowners from the city of St. Paul, as well as Dakota, Ramsey and Washington counties-the areas the pilot program covers, Nelson says.

Successful applicants would receive $2,500 that may be used for security deposits, first and last month’s rent, utilities, application fees, and other expenses directly associated with securing an apartment in “a stable rental environment,” Nelson says.

The Home Ownership Center normally provides pre-purchase financial counseling for people thinking of buying a house, Nelson says. His organization applied to The Saint Paul Foundation to launch the pilot program grant to assist people who bought homes during the mortgage frenzy of the last half-decade, only to lose them when the markets collapsed.

“Our entire mission is driven by successful home ownership,” Nelson says. “It’s built into our name. But we will be the first people to admit that home ownership is not right for everyone.”

The program takes a tough-love approach to the grants, Nelson says: Applicants will face rigorous income-verification scrutiny of precisely the sort they did not undergo while buying the homes that pushed them underwater.

And while the money may also be used to pay as much as half of an apartment’s rent for the first three months of occupancy, that would only be allowed if counselors determine that the new unit is affordable to the family going forward.

“If, for example, somebody needs this $2,500 because their rent is just unaffordable to them,” Nelson says, “the money probably wouldn’t be disbursed. Three months down the road they wouldn’t be able to make the payments anyway.”

Applicants also have to provide documentation verifying that they notified their mortgage company they were vacating their home.

Ultimately, the goal is to help people who got in over their heads to re-establish themselves in rental properties, get back on their feet financially and perhaps one day take another shot at home ownership-this time on far more solid financial footing, Nelson says.

The Home Ownership Center is administering the grants, but the following four counseling agencies will disperse the money directly.

• Dakota County Community Development Agency (651-675-4555).
• Neighborhood Development Alliance (651-292-0131), for Spanish-speaking homeowners in Dakota, Ramsey and Washington counties.
• St. Paul Planning and Economic Development (651-266-6626).
• Washington County Housing and Redevelopment Authority (651-458-0936, ext. 542).

If the pilot program is successful, Nelson says, the Minnesota Home Ownership Center will apply for further funding from The Saint Paul Foundation and other sources to expand it, perhaps statewide.

For more information, download a PDF from the Ramsey County website.