JOPLIN, Mo. —
The Salvation Army has agreed to coordinate a $40 million housing program that Joplin’s master developer described as one that has not been done anywhere else in the nation.
Lt. James Curry of the local agency told Joplin’s Headed for Home committee on Wednesday that 400 or more houses would be sold for $100,000, and qualifying buyers will earn roughly $50,000 to $60,000 in equity in five years at a payment of about $400 a month, including insurance and taxes. He said the Salvation Army will be working with Wallace Bajjali Development Partners of Sugar Land, Texas, to administer the program. The organization also will work with Wallace Bajjali and the Joplin Redevelopment 353 Corp. to buy lots on which to build the houses.
“It’s a unique endeavor,” Curry told the committee. He said it was created for Joplin’s tornado recovery by examining housing programs in other disaster-stricken areas to see what went right and wrong. One of the problems that occurred in areas hit by Hurricane Katrina that complicated recovery from that disaster was that no housing was built that was affordable to people in lower-income brackets, he said.
Curry said the Salvation Army has built hundreds of houses in the Hurricane Katrina area to help those who needed affordable homes and for disaster recovery in Thailand.
The Headed for Home committee was trying to create programs and resources to help homeless people in Joplin before the 2011 tornado, which destroyed about 7,500 houses and apartments. The committee suspended its work after the storm because its members have been involved in recovery efforts. It met Wednesday to assess where its work stands, and agreed that tornado recovery is taking care of many of the issues it had studied.
The housing project that the Salvation Army will administer is called the Principal Reduction Plan. It is expected to be available for three years. It will allow people who earn up to 120 percent of the poverty level — up to $52,000 for a family of three — to obtain a new, energy-efficient home at a low down payment. Curry said the down payments would be $2,500 or $5,000, depending on which bank finances the mortgage, and that assistance would be available for those who need help obtaining the down payment. He said the partners in the project have been working with Southwest Missouri Bank to provide mortgages. The bank has agreed to provide home loans to people with lower credit scores to help increase home ownership.
Under the plan proposed by Wallace Bajjali, the money to fund the principal reduction — which will pay some of the debt so that buyers earn $60,000 in equity if they stay in the houses for at least five years — will come from a Salvation Army program. That program will provide $3.5 million for principal reduction. That amount of equity is expected to be realized because the houses may cost $100,000 but will have a market value of $115,000.
The Missouri Housing Development Commission will provide $4 million in down-payment assistance to buyers.
A portion of the city’s federal Community Development Block Grant money designated for storm recovery, $4.5 million, will go toward the costs as well.
Curry said the program has been under development for about a year, and that it has been a difficult one to devise because of the number of different entities and legal requirements involved.
“We’re almost to the point of let’s go,” Curry told the committee. “We’re just waiting on the lawyers” to wrap up the contracts among the partners, he said.
The Salvation Army will work with people who have obstacles to qualifying for traditional mortgages, such as debt and low credit scores. Classes will be provided to prospective buyers on budgeting and other topics related to managing expenses and maintaining home ownership, Curry said. The program also calls for the agency to have a housing specialist who can help buyers work themselves out of a bind if they miss a payment to try to avoid foreclosure.
Buyers will be provided options such as the size of house, from 1,200 to 1,700 square feet, the floor plan and the builder, Curry said. Buyers who already own a lot will be able to build on it and have the value of the land included in the purchase.
THE PRINCIPAL REDUCTION PLAN is one of $285 million worth of housing projects Wallace Bajjali Development Partners has proposed for Joplin’s tornado recovery.