Program aims to help Schenectady residents fix up their homes

PHOTOGRAPHER: Kathleen Moore

Schenectady is joining KeyBank in an initiative designed to encourage middle-class residents to buy and fix up houses in the city.

KeyBank has long offered a program in which new owners can buy a house and borrow additional money to renovate it all at once. Most such programs are offered only to low-income applicants. But this program is open to anyone, as long as the house is in a low-to-moderate-income part of the city.

That describes roughly 80 percent of Schenectady, Acting Mayor Gary McCarthy said.

The goal is to help homeowners who can’t afford to make repairs by offering a way to refinance with an affordable renovations loan. The program also encourages new owners to fix up abandoned or foreclosed homes by packaging the loan and mortgage together.

“While it’s true Schenectady has fared better than many communities during the recession, in terms of employment and vitality, we still have substantial numbers of foreclosed and abandoned homes,” McCarthy said. “Also, some homeowners are struggling to pay for both their mortgage loans and upkeep, so their properties deteriorate. ‘Key to the City’ will attack both problems and help revitalize our neighborhoods.”

KeyBank Capital Region President Jeff Stone said he has set no limits on the program, which brings revenue to the bank. NBT announced a similar program this spring, but it was aimed at low-income residents and did not include loans for renovations. It was also limited to about a dozen owners. This time, there’s no limit.

“We would love to long-term attract new residents to Schenectady,” Stone said, adding that he thinks local residents are a safe investment and that he doesn’t plan to sell the loans. “It’s staying in-house. It’s good for the portfolio.”

McCarthy added, “They believe this region and this city is poised for growth. We’ve done a review of our enforcement; we’re trying to drive out the bad landlords. Key is being more innovative here to bring in middle class [owners]. That’s what I believe the future of this city is based on, the middle class.”

Some residents could also get grants from the city to help them make a 10 percent down payment; KeyBank requires the prospective owners to put down only $500 of their own money.

The program includes no application fees, a discount on closing fees for KeyBank account holders and no mortgage insurance, which provides a savings of about $70 a month. Buyers must have a credit score of at least 620.

Both new purchases and refinances are eligible, but the buyers must live in the home. Two-family units are acceptable if the buyer lives in one of the units.

Buyers can also borrow up to $50,000 for renovations, for a total loan of up to 150 percent of their home’s assessed value.

“It makes it a great catalyst. The problem is it’s not well known,” Stone said. “Face it. There’s always something that needs to be done when you buy a home. This means there’s enough money to replace a porch, put on a new roof, maybe replace those leaky pipes. All of this makes it easier to buy a home in Schenectady.”

The program is also available in the city’s high-income areas, but in those areas, the buyers must make no more than $60,000 a year.

First-time homebuyers will be required to take financial education classes before getting a loan. KeyBank will also offer voluntary seminars every three months to loan-holders, on topics ranging from emergency savings plans to college financing.

“At Key, we really believe in financial education. This is not about easy money,” said Schenectady branch Manager Sid Ramotar. “This is to help them not only buy a home but make smart decisions to remain there.”

Roger Hull, who is running against McCarthy in the mayoral election, supports the program and has recommended it to several people, he said.

“But the bottom line for me is, as good as any one program is, it cannot succeed unless we change the people who are responsible for putting us in the financial position we are in,” he said.

He said McCarthy and the members of the City Council, all Democrats, must be replaced to ensure that better financial decisions are made to revitalize the city.

Hull, the founder of the new Alliance Party, is also endorsed by the Republicans.