Ramsey County program helping restore and fill foreclosed homes

The tidy blue rambler on Larpenteur Avenue in Maplewood may not look unusual, but it's the first home rehabbed under a new foreclosure program aimed at Ramsey County suburbs.

Six months ago, the house stood empty and in need of repair, one of more than 3,000 foreclosed properties in the county last year.

But if all goes as planned, it will be the first of 25 foreclosed houses in Maplewood and Little Canada to get a face lift and a fresh chance of new ownership, county officials said.

It's part of a growing interest in suburban foreclosures, which until recently have not been the focus of government spending.

"These ZIP codes [in Maplewood and Little Canada] had the highest number of foreclosed properties, so that's where we're starting," said Denise Beigbeder, project coordinator at the Ramsey County Housing Redevelopment Authority. "But we will be looking at other neighborhoods to assist over the next 36 to 48 months."

Maplewood, White Bear Lake and North St. Paul had the highest number of foreclosed homes in Ramsey County suburbs last year, with 143, 84 and 59 foreclosures respectively. Shoreview, Vadnais Heights, New Brighton and Roseville each had about 40 to 50 foreclosures, according to county reports.

Beigbeder said her office had begun hearing horror stories from suburban communities about some rundown properties and decided to take action.

"It wasn't wide scale, but usually a single home on a block," she explained. "For instance in the winter, the water was not turned off so it came running out the door."

The Ramsey County HRA has been working for more than a year to find a model to make the suburban homes more marketable, said Beigbeder. Thanks to a $350,000 federal grant, as well as another $1.3 million in federal stimulus dollars, that's about to happen.

Here's how it will work: The county will work with a developer or other intermediary to help them locate and purchase a home. The developer will hold the title to the property, but the county will hold the mortgage.

The county will pay for the repairs to make the home more marketable to first-time home buyers. In the case of the Larpenteur Avenue rambler, that meant upgrades to the plumbing, electrical and heating and cooling systems, as well as new carpets, freshly painted walls and a newly sided garage.

"It was just rundown," said Beigbeder. "A first-time home buyer would not want to deal with the extent of the problems, given there are so many other homes out there."

When a buyer steps forward, the developer gets 5 percent of the sales price for the work. Any leftover profit gets sent back to the foreclosure fund to be used for the next home.

Brooklyn Park is using a similar approach to fix up its most troublesome properties. Jason Aarsvold, the city's economic and redevelopment director, said it has worked well.

"People are getting completely fixed up homes, the neighborhood is being stabilized by having the house occupied, and it's providing neighborhood beautification -- curb appeal.

"In fact, we specifically tell developers that we want some curb appeal, landscaping."

The goal is to fill the gap between the cost of rehabbing the often rundown homes and the price that a first-time home buyer would be willing to pay for it, he said.

"We look at the cost and the sales price and fund the gap," Aarsvold said. "Then we move onto the next home."

Brooklyn Park expects 30 to 50 foreclosed homes to be repaired in this way over the next year and a half, he said. So far, 11 houses have been renovated.

And the two houses that already have gone back on the market have sold within days, he said.

Ramsey County is too new to the process to make predictions about the speed of sales. But project organizers said they will closely monitor their pilot project to learn what works best in Ramsey County.

For more information on the Ramsey County's Foreclosure Remediation Project, go to www.co.ramsey.mn.us/ced. The county will post information on it this week.

Jean Hopfensperger • 612-673-4511