Last month, the Urban Institute highlighted an innovative program in Detroit to address the "appraisal gap"--basically, a barrier to rehabbing the city's derelict housing stock caused by the cost of rehab exceeding the new appraised value of the home.
Vermont has one of the oldest housing stocks in the country and bears some parallels to the situation in Detroit, in that much of the affordable properties on the market are also in need of excessive updating, especially in the realm of energy efficiency. Additionally, one of the underlying factors responsible for the appraisal gap is the lack of comparable sales--similarly, VT has a lower sales volume that can make it difficult to appraise properties with a high degree of confidence.
Detroit's program creates a pool of lenders willing to offer high LTV first mortgages without charging fees, and a second lien fund to subsidize soft second mortgages to finance the rehab even when the total amount borrowed may exceed appraised value. To my knowledge, nothing like this exists in Vermont...how 'bout it, VHFA?
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