Why Seattle wants people who can’t pay their mortgages to stay in town
Seattle’s real estate market is booming, but contrary to what you might think, foreclosures are still happening. Foreclosures can be disruptive in neighborhoods.
Last year, about 700 people in Seattle lost their homes to banks. The city wants to help them.
Seattle will create a pilot program to offer those beleaguered home owners low interest loans of up to $30,000. Some of those loans will be deferred, meaning people might not need to make payments for up to 20 years.
There used to be more help for people facing foreclosure. A federal program to help people like that stopped accepting applications at the end of last year.
There's a state level program, funded with winnings squeezed out of big banks by state attorneys general. But Washington's share of that money could dry up within a year.
So Seattle is stepping in with a little money from its affordable housing levy to help low-income homeowners.
The pilot program will start small, serving only a handful of homeowners, but it could grow — if the housing levy's goal is to house people, staving off foreclosure is a bit of a bargain, according to city staff.
The levy usually pays to build new low-income apartment buildings, but when city staff find someone facing foreclosure, that’s an opportunity: Spending money to help them catch up on their mortgage payments is cheaper than building a brand new apartment unit. A brand new apartment soaks up $55,000 to $90,000 of levy money.
Jennifer LeBrecque is with Seattle’s office of housing. She says besides the cost savings, there are other reasons to do it, too.
“We know that people do best when they’re in neighborhoods where they’re rooted. They have neighbors, they have access to jobs and services. We know that when people have to leave the neighborhoods that they’ve formed roots, the neighborhood can suffer as well as the person," Lebrecque said. "So we really want to be able to help people stay where they are.”
The city has put out a request for proposals, seeking an organization to run the foreclosure prevention program.