by Jim Zarroli for NPR, heard on Morning Edition
October 20, 2009
Yvonne Ziegler had an apartment in a central Brooklyn housing project and a decent job in an office. But like a lot of New Yorkers, she figured she'd be renting forever. Owning a place seemed beyond the realm of possibility.
Thanks to the Nehemiah project, a church-run affordable housing program, Ziegler now owns a trim, neatly maintained three-bedroom house, where she lives with her elderly mother in the Brooklyn neighborhood known as East New York. The program has built more than 4,000 houses in Brooklyn and the Bronx since the 1980s.
"When it came to light that these churches were building affordable houses and how low the mortgages were, I thought, 'Well, maybe this is something I can aspire to,' " Ziegler says.
The Nehemiah project, named for the biblical prophet who rebuilt the walls of Jerusalem, has provided a bulwark of stability in neighborhoods once devastated by arson and neglect. That's been especially true during the mortgage crisis. In a part of the city where foreclosures topped 10 percent last year, few of the program's homeowners have defaulted on their loans.
Tough Love Breeds Success
While exact numbers are difficult to access, Mike Gecan of the Metro Industrial Areas Foundation, which helped organize the Nehemiah project, says no more than 10 of the properties built by the program have suffered foreclosure.
Program officials say they owe their success to their rejection of the worst excesses of the subprime mortgage era. Applicants get mortgages through private lenders and from the city, but Nehemiah adds its own layer of tough income guidelines and credit checks. For instance, mortgages can't exceed about 20 percent of an applicant's income, Gecan says.
"At the time [the program began], the conventional wisdom said that people should be asked to spend a third of their income on housing," he says. "That is extraordinarily high, and if someone has a family emergency, has a job loss, or if the economy gets weakened, and if they go from 40 hours a week to 27 hours a week, then if you're spending 35 percent of your income or 50 percent of your income on housing, you're in trouble."
Homeowners also have to provide detailed financial information, including bank account statements. Sudden infusions of cash have to be explained to program officials, to ensure that applicants aren't involved in illegal activity.
'The Organization Wanted Clean Money'
"In our community, there were ways to make money illegally, you know," says Sarah Plowden, a Nehemiah official and homeowner. "The organization wanted to make sure they had clean money coming in there."
In fact, Nehemiah succeeded because, despite all the crime and poverty in East New York, the neighborhood also boasted a core of working people with solid credit, Plowden says. They jumped at the chance to buy their own properties. While some applicants were chafed by Nehemiah's restrictions and probing questions, most people were willing to tolerate them as the price of maintaining a stable neighborhood.
"We more than just bought homes. We bought into one another as a people," Plowden says.
Applicants also put up with the restrictions for another reason: When all was said and done, Nehemiah was a great deal.
Because houses were constructed on land abandoned to the city, and building costs were kept to a minimum, Nehemiah could sell a house for as little as $39,000 in the early days. That price has risen over the years (houses in the newest development, Spring Creek, top $120,000) but is still well below comparable Brooklyn properties.
That was why applicants like Zandra Brockman were willing to jump through hoops to join the program. "Where else could we live at the prices we had?" she says. "It was truly a blessing for us."
In fact, applicants who were turned down because of poor credit or a lack of a down payment would often go home, work on their finances and reapply later. As often as not, they were accepted the second time around.
With its thorough vetting of applicants' finances, Nehemiah "in theory, leaves a lot of people out," says Alyssa Katz, author of Our Lot: How Real Estate Came to Own Us.
"But look at what it actually did," Katz says. "It brought the entry point into home ownership to a point that working people could afford, in a very, very expensive city, where people who make modest incomes invariably rent. So on the contrary, rather than decreasing opportunities for home ownership, it was opening them up to an entire group of people who had never had access to it before, and it did it on sustainable terms."