Mortgage program key to selling Schenectady, distressed homes

PHOTOGRAPHER: Kathleen Moore

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The Key To The City program is already persuading new homeowners to buy Schenectady’s somewhat-distressed properties.

In the first four months of the program, which offers better mortgage rates to city homebuyers through KeyBank, seven houses have been sold and eight more are progressing through the sale process. In what city officials say is a hopeful trend, some of those houses were in less than pristine condition.

Many of the city’s vacant houses have gone unsold because they have a sagging porch or a leaky roof. With the Key program, owners can use part of their down payment to make repairs or borrow more than the house is currently worth so that they have the money to fix it up and bring it back to its full value.

Mayor Gary McCarthy, who announced the program last year, said he hoped it would encourage middle-class buyers who would help revitalize the city’s neighborhoods. It may be working. New resident Jeff Ohliger, who moved to Schenectady from Niskayuna, bought a house that badly needed insulation and modern bathrooms. With the Key program, he used most of his down payment to, as he put it, invest in the house, rather than paying down the mortgage.

“It’s better as an investment than a down payment,” he said. “It provided me the opportunity to buy a house that was not in tip-top condition and put that money into the house.”

In other hopeful news, some of the sales are short sales, which is generally used by banks as a last resort to sell before foreclosing.

Many sellers facing foreclosure have stopped paying taxes. That’s a dire problem in Schenectady: each year, about 12 percent of the city’s taxes go unpaid. McCarthy hopes the program will put those delinquent properties into the hands of more responsible owners.

“The 12 percent uncollectability in taxes now is something that drives up the tax bill for everyone else,” he said.

Now he wants to “close the deal” for many more buyers. The city is partnering with local Realtors to offer a series of open houses every weekend, beginning Feb. 18. Command staff from the police and fire departments, along with general services staff and school officials, will meet prospective homebuyers at each open house and talk up the city.

The fire department will explain its state-of-the-art paramedic program, which Chief Michael Della Rocco said is one of the best in the county. Every firefighter is a trained paramedic, and since they are based throughout the city, they get to emergencies quickly.

Police Chief Mark Chaires said he would give presentations similar to the ones he gives at neighborhood association meetings, discussing the new, faster crime analysis program and the department’s plans to put basic crime reporting online so residents can more easily report a minor theft or property damage.

Schools Superintendent John Yagielski said his staff will describe the many programs offered in Schenectady that aren’t found in many other schools — including the international baccalaureate degree.

“We have a much better school district than some people believe,” Yagielski said. “I think it’s helpful if we directly communicate that.”

Officials would also be able to answer residents’ questions about Schenectady’s problems — such as the low graduation rate and ongoing concerns about violent crime.

McCarthy said his staff will explain why Schenectady is a good choice — and he said he’d fight to improve the city’s reputation even if he had to put the police chief at each prospective buyer’s kitchen table.

“If that’s what it takes to close the deal, we will,” he said. “We are a city that wants people here. This is a great city. We are going to go out and help close those deals.”

He urged buyers to consider the economics of living in the city, adding that “$150,000 will get you a lot more house in Schenectady than in surrounding communities.”

That’s part of what convinced Ohliger to buy in the Union neighborhood.

“After taxes, I will be paying less to own than I paid to rent a 700-square-foot apartment in Niskayuna,” he said. “We actually enjoy the area. The only house that fit all our wants and needs was in Schenectady.”

Although the program has driven only 15 sales so far, that’s a lot for such a short period of time, Capital Region KeyBank President Jeff Stone said.

And there could be more — another 19 homebuyers signed up and have been pre-approved but have not yet found a house they want to buy, he said.