Low-income housing group to expand reach with $4 million in federal money

The Community Development Corporation of Brownsville has $4 million burning a hole in its pocket.

The money is being made available through the Neighborhood Stabilization Program, created by the Housing and Economic Recovery Act of 2008, the federal government’s first stimulus package. The program is designed to help communities buy foreclosed housing units, rehabilitate them if necessary, and put low-income families in them.

The $4 million covers Cameron County and will be gone in four to five months after the program gets moving, says CDCB executive director Nick Mitchell-Bennett. The government requires a countywide environmental study before the CDCB can even start looking for properties.

"Once we do get the clearance in four to six weeks we’ll be up and running immediately," Mitchell-Bennett says. "This has a very short fuse on it, and we’re going to want to find (properties) and then go out and find the families who are ready to purchase one of these homes."

The program, which includes financing assistance, may allow the CDCB to buy entire foreclosed subdivisions, he says.

"Lots of developers out there have gone belly up and they’ve left the property behind," Mitchell-Bennett says.

CDCB, the largest nonprofit producer of single-family housing in Texas, is in charge of managing the Neighborhood Stabilization Program for the county. While the CDCB rehabilitates some housing, most of the housing it provides is new.

"We work with for-profit builders that have figured out this is a good market to be in," Mitchell-Bennett says. "We typically do the grant making and financing."

Families earning under 80 percent of the Area Median Income are eligible for financing assistance from the CDCB. The AMI is calculated by the U.S. Department of Housing and Urban Development. In the Brownsville area, it’s around $28,000 for a family of four.

"It changes on an annual basis," Mitchell-Bennett says. "Our average client makes around $15,000 to $18,000 a year for a family of four."

The CDCB began in 1974 with the goal of eliminating the 1,800 or so outhouses that still existed inside the Brownsville city limits. That goal was met, though 35 years later they’re still finding outdoor privies in rural areas. Still, the group’s focus has widened considerably.

While it operates a school for high school dropouts and offers fair-housing counseling for renters, most of the CDCB’s various programs are aimed at helping low-income, first-time homebuyers. Among them is the "Self Help" program, which tutors aspiring homeowners on building their own homes. Several owner-built homes are going up in Brownsville right now with the CDCB’s help.

"People walk in the door here and we’re able to help them," Mitchell-Bennett says. "We’re always looking for the best way to get people into homes."

Keeping them there is important, too, which is why the CDCB mandates eight hours of home-buyer education — even for clients who are just having their homes repaired or who don’t have to pay back loans. This keeps foreclosures to a minimum, Mitchell-Bennett says.

"You look at the national average now, it’s like 9 percent," he says. "Ours is like 2 percent. "We don’t lose our homeowners, and we’re very proud of that."

The CDCB does offer foreclosure counseling for would-be homebuyers who went a different route and wound up losing their homes — the same thing that spawned the housing crisis nationwide. Despite the relative health of the area economy, the foreclosure problem in South Texas is especially acute, says Mark Moseley, CDCB director of housing programs. In fact, the group’s foreclosure counselors have seen approximately 400 clients since January — none of them CDCB clients.

Moseley blames predatory lending — characterized by repayment terms and interest rates so onerous that the borrower is often hard put to satisfy them. Predatory lenders are common among low-income populations.

"People just can’t swing these rates," he says. "I saw a lady come in the other day who makes $700 a month. She’s on a fixed income. Her house payment was $650."

The quick and easy availability of predatory loans — even if the borrower regrets it later — and the exceptional cultural importance attached to home ownership in South Texas are a dangerous combination. While the borrower obviously bears some responsibility, predatory lenders shouldn’t be allowed to operate, Mitchell-Bennett argues.

The good news, he says, is that the predatory lenders have largely vacated Brownsville. The bad news is that it only took a completely meltdown of the housing market for it to happen.

"Those guys down the road, they don’t exist anymore," Mitchell-Bennett says. "When the market imploded 18 months ago, their business model could not sustain what we’ve sustained since 1974. The guys who are still here are the good guys, whether they be the nonprofits or the for-profits."