Partners (Number 2, 2006)

Vol. 16, No. 2, 2006


Can Housing Be Green and Affordable?

Technical Education: A Remedy for Poverty?

Soaring Insurance Costs Make Housing Less Affordable

CRA Revisions: Flexibility and New Choices

Reverse Mortgages Provide Answers for Some (but Not All) Seniors

Recruiting Retirees Calls for Careful Planning

Atlanta Fed Hosts Last in Series of Asset-Building Forums

Spotlight on the District—Georgia and Eastern Tennessee



  Spotlight on the District

Re-adapted Hospitals Boost Neighborhoods

Obsolete but historic hospitals can be an eyesore or an opportunity. Two communities in Georgia have re-adapted abandoned medical facilities to boost neighborhood revitalization projects.

Savannah project wins award
Retooling the historic Charity Hospital was central in Savannah’s plan to bring new life to the Cuyler-Brownsville neighborhood. Beginning in 1997, the City listed the old neighborhood on the National Register of Historic Places; then it contracted with Mercy Housing, a national nonprofit housing developer, to provide affordable multi-family housing.

Heritage Place Apartments, which opened in 2002, now provides 88 affordable housing rental units to low-income families. In December 2005, Mercy Housing opened Heritage Corner and Heritage Row, a collection of 70 more homes located on sites scattered throughout the development.

Recipient of numerous awards, Heritage Place Apartments most recently won an Affordable Housing Finance Readers’ Choice Award for “Best Master Planned Community.” Combining affordable housing, historic preservation, and neighborhood revitalization, the development is an excellent example of what can be accomplished through the collaborative efforts of local government, nonprofits, neighborhood associations, philanthropists and other community groups.

Decatur hospital makeover
anchors community resurgence

Rehabilitation of the historic Scottish Rite Hospital became a critical part of the City of Decatur’s 1997 plan to revitalize the Oakhurst Neighborhood. The city sought a developer to provide new single-family housing for the community, refurbish the Oakhurst Business District, return some property to the tax rolls, and provide a community center for South Decatur.

Progressive Redevelopment Inc. (PRI) and the Housing Resource Center (HRC) responded. Central to their vision was the adaptive reuse of the Scottish Rite Hospital and its two wings. Planners also proposed construction of 14 new accessible apartment units for clients of the Shepherd Center (who have temporary or permanent disabilities) as well as new single-family affordable homes.

The completed renovation of the hospital provides 22,000 square feet of commercial office space for both non-profit and for-profit tenants, including the YWCA of Greater Atlanta, the Community Center of South Decatur, an art gallery and an optometrist. The property is fully leased.

This project, which has pumped life into both the Oakhurst community and the Oakhurst business district, cost about $5,000,000. Funding came from Regions Bank, a Federal Home Loan Bank EDGE loan, Dekalb County CDBG funds, Historic Tax Credits, a Housing and Urban Development 811 grant, and owners’ equity.

This article was written by Sibyl Howell, regional community development manager at the Atlanta Fed.

Anti-predatory Lending Victory

Tennessee recently joined the growing number of states with anti-predatory lending legislation. The Tennessee Home Loan Protection Act of 2006, signed into law by Governor Phil Bredesen in June, came after several years of prompting by consumer advocates concerned about exploitative lending practices.

Proponents of the bill, led by the Memphis Branch of the NAACP in partnership with the Memphis/Shelby County Anti-Predatory Lending Coalition and other Tennessee consumer advocacy groups, mounted a grass roots campaign during 2006 to gain support for the legislation. Aggressive lobbying and intensive negotiations with the Tennessee Bankers and Mortgage Brokers Association and the Tennessee Association of Realtors resulted in a strong anti-predatory lending bill to protect Tennessee’s most vulnerable homeowners. Previous attempts to pass such legislation had failed.

Regulation of high-cost loans
Effective in January 2007, the new law will regulate high-cost loans—those with over 5 percent in points and fees. Borrowers who opt for high-cost loans will receive certain protections, including measures that will restrict loan flipping, pre-payment penalties and balloon payments.

Lenders will be prohibited from financing points and fees that exceed 5 percent of the loan amount in connection with the closing of the loan. They will also have to assess a borrower’s ability to repay the debt. Mortgage payments less than 50 percent of the borrower’s income are considered affordable. High-cost loans that result in negative amortization will also be prohibited.

Purveyors of high-cost loans will be required to document that the borrower’s credit score disqualifies them for a lower cost loan. Lenders will also be directed to provide a written disclosure (in 12-point boldface type). The statement, to be signed by the borrower, will acknowledge they understand they are receiving a high-cost loan and may be eligible for a lower cost mortgage depending on their credit score and other loan variables. The disclosure also advises the borrower to speak to a HUD-certified home counselor prior to signing the loan documents.

Bill protects most vulnerable
Rosalind Robinson, president and founder of Residential Resources Inc., a nonprofit housing agency in Nashville, is one of the leaders of the coalition responsible for this legislative victory. She states:

“I am extremely pleased with the passing of this much-needed legislation which will help protect the most financially vulnerable members in our community—the low-income, elderly and minorities. It will be interesting to see the impact this legislation will have on the escalating number of mortgage foreclosures in Tennessee. . . We know that this legislation will make things better than before.”

She is also housing committee chair for the Nashville branch of the NAACP.

This article was written by Jessica LeVeen Farr, regional community development director at the Atlanta Fed’s Nashville branch.