St. Ambrose Asset Control Area

In 2000, Baltimore was identified as having the highest number of FHA foreclosures per capita of any city in the United States, eclipsing other cities that were experiencing high volumes of foreclosures such as Los Angeles, New York and Miami. According to a study by the National Training and Information Center commissioned by the Abell Foundation, Baltimore had a staggering inventory of 677 FHA-foreclosed houses and 2,200 delinquent FHA loans in 1999. During the entire ten years prior, a total of 2,500 FHA houses had completed the foreclosure process in Baltimore, a number far too high in itself. The growing inventory of FHA foreclosures became harder to sell as the appraised values did not generally reflect the need for some amount of renovation and repair. And while houses remained for sale, they sat vacant, reducing their marketability and affecting surrounding properties by depressing neighborhood appeal.

Beginning in 2001, St. Ambrose took advantage of a U.S. Department of Housing and Urban Development (HUD) dollar house program, renovating and selling 61 FHA-foreclosed houses throughout the City utilizing an Abell-guaranteed line of credit. As HUD discontinued the program, St. Ambrose turned its attention to a newly established HUD program called Asset Control Area (ACA). Administered by HUD in a number of cities, FHA-foreclosed houses within the boundaries of an ACA are offered at 50 percent of the appraised value to a designated nonprofit or city agency.

In 2004, the Abell Foundation provided a $150,000 grant to St. Ambrose to pay the staff costs to buy, renovate and sell vacant FHA-foreclosed houses under a newly established Asset Control Area (ACA) in Northeast Baltimore. St. Ambrose had worked with HUD for two years prior to convince them to include majority homeownership areas in the ACA. St. Ambrose provided demographic, homeownership, and sales documentation to make the case for including those areas that were experiencing a lower volume of foreclosures relative to other parts of the City. St. Ambrose was confident they had a chance of stabilizing neighborhoods that were seeing the first few foreclosures, but that they would not have the resources or capacity to do large-scale redevelopment in areas where there was already an extreme concentration of foreclosures. The boundaries of the ACA ultimately agreed to by HUD include neighborhoods of Ramblewood, Idlewood, Northwood, Woodbourne, Chinquapin Park and parts of Belair-Edison.

Within the ACA, St. Ambrose is required to purchase all of the FHA-foreclosed houses. HUD provides no capital for the purchase or rehabilitation, but provides the 50 percent purchase discount and St. Ambrose borrows acquisition and renovation financing from five regional lenders. The Abell funding was used to pay staff costs of the housing acquisition and development, construction supervision and home sales. The houses were sold to buyers earning less than 115 percent of the area median income or $68,000 for a family of four.

St. Ambrose acquired the first FHA-foreclosed house in October, 2004 for $42,000, completed renovations totaling $66,000 and sold the property to a new homebuyer in March, 2005 at a sales price of $125,000. As a result of the early success of the program, Senator Mikulski facilitated a $300,000 federal grant to St. Ambrose to expand the program. The federal funds are used to purchase and renovate private foreclosures in the same area and to expand the boundaries of the Asset Control Area to include parts of the Belair-Edison neighborhood.

Over the last three and one-half years, 107 homebuyers have purchased homes that St. Ambrose renovated through the program; an additional five houses are under contract and eight are under construction. Over the last year, the number of new FHA-foreclosed houses has declined in each of the neighborhoods addressed by the Asset Control Area. St. Ambrose will continue to purchase houses in Northeast Baltimore when they are made available through the Asset Control Area program but they have also worked with HUD to expand the program to include the neighborhoods of Brooklyn and Curtis Bay in South Baltimore. As its reputation for quality housing development has grown, St. Ambrose has gained the confidence of area bankers and they have more than tripled their lines of credit from $2.5 million among five banks three years ago to $8.25 million among ten banks that can be tapped for acquisition and construction.