Less than a month after visiting a blighted section of the city’s Arbor Hill neighborhood and criticizing federal procedures that favor real estate speculators, Sen. Charles Schumer Wednesday received assurances that the Department of Housing and Urban Development will give community employees and prospective owner-occupants more time to buy homes the agency sells online.
At a Senate hearing in Washington, HUD Secretary Alphonso Jackson said the agency will extend the 15-day window select individuals have to exclusively bid on properties the agency sells online. Schumer, a New York Democrat, decried HUD’s deadlines as being too short and promoting urban blight.
HUD puts many of its properties up for auction on the National Home Management Solution’s Web site, which is managed by an outside contractor. Under HUD’s Good Neighbor Initiative, community workers, such as police officers and teachers, can buy those homes during a five-day period at half their appraised value. For the following 10 days, prospective owner-occupants can bid on the property.
However, 15 days after hitting the market, the property goes to the highest bidder, which often is a speculator who is more financially positioned to quickly arrange a purchase. Schumer warned those speculators tend to make poor stewards of the homes they buy.
Area real estate investors say they rarely pick up HUD properties immediately after they are put to auction, because they tend to be overpriced. HUD says there is a cost associated will homes sitting on the market for longer periods. It costs HUD an average of $26 to hold a property each day. Last year it sold 24,000 properties.