Bank Owned Properties in Grand Rapids in Leaseback Program

Bank owned properties in the residential sector in Grand Rapids, Michigan are being purchased under a leaseback program administered by Lighthouse Communities, a community organization which is part of the Kent County coalition called Foreclosure Response.

According to Darel Ross, president of Lighthouse, his organization has been purchasing foreclosed homes from mortgage lenders, repairing them and then leasing them back to the former owners until they get employed again or they can buy back the homes.

Ross said that community organizations or coalitions like the Foreclosure Response need to act quickly after foreclosure to prevent the deterioration of foreclosed properties that pulls down the values of properties in the neighborhoods.

Since January 2004, the pace of foreclosures has been rising in Grand Rapids and in other parts of Kent County, pushing the number of foreclosure homes in the county by more than 12 percent to June this year. Although the rate of foreclosure filings slowed down slightly over the past few months, the level of filings is still high.

In the July-September quarter, the pace of foreclosures in the Grand Rapids metro area rose by almost 9 percent from the second quarter and increased by more than 25 percent from the same quarter in 2008. A total of 2,415 homes were notified of default or foreclosure, many of which were already repossessed and added to listings of bank owned properties.

With one out of every 132 residential units in the area receiving a foreclosure posting, the Grand Rapids area ranked 54th in a chart of 203 of the country’s largest metro areas based on foreclosure rates.

Lighthouse head Ross said that subprime lending, which was the major reason for foreclosures at the start of the housing crisis, was easier to solve. The major reasons for foreclosures over the past few months – record-high unemployment rates and sharp home value declines – are more difficult to solve.

Grand Rapids hit the unemployment rate of 11.4 percent in October. Statewide, the jobless rate dropped slightly to 15.1 percent in October from 15.3 percent in September, but the rate level was still high compared to other states. According to the Bureau of Labor Statistics, October marked the 44th straight month that Michigan occupied the top of state unemployment rate charts.

To help homeowners cope with the effects of unemployment, Lighthouse head Ross said that his organization will use the $12 million it received from the federal stimulus program to help rehabilitate bank owned properties, revitalize neighborhoods and spur job creation.

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