Rehabilitation Financing

by Chicago Agent

By Maia Benson

We are all familiar with the fact that the foreclosure ratios that plague our city are significant. What results from these dramatic foreclosure numbers is that rehabilitation of this foreclosure housing product provides for the only vehicle of salvation for some of the hardest hit ethnic and socioeconomic groups in the South and West sides of Chicago, and at the same time also provides tremendous social benefit to the revitalization of those diverse neighborhoods. 

This also happens to offer tremendous profit opportunity and affordable housing for those with the vision and fortitude to pursue those opportunities. However, the challenge to the foreclosure wave that we are all too familiar with is that most of these foreclosure properties are now burdened with safety and health issues that preclude secondary market financing qualification. The solution — or opportunity to capitalize on the buy-side — is to purchase, rehab and then refinance these properties. Unfortunately, at this time of unprecedented buy-side opportunity there are few lenders with either the ability and/or willingness to enable those acquisition and improvement strategies through rehab loans.

The Chicago real estate foreclosure trend seems to be following the same path it has been for the last three years or more. As reported by Associated Content, foreclosures within the Chicago metropolitan area are at twice the national average and currently rank second in the nation for metropolitan areas. In September alone there were over 8,000 homes that went into foreclosure in the Chicago metro area. Current statistics show that one out of every 471 Chicago metro homes is somewhere in the foreclosure process. The only metropolitan area hit harder than the Chicago metro area is Dallas, Texas. 

At the same time that many of the most diverse neighborhoods within our area suffer the worst of these statistics, there is also a most interesting dichotomy in the Section 8 Housing Choice Voucher program, as deficient housing continues to increase, leaving many of the best voucher recipients craving quality housing options. This combination has resulted in what may be some of the most significant cash-flow return options ever to be seen by Chicago. 

Our opportunity together is to be aware of, and counsel our clients on, the incredible buy-side opportunities that exist, whether for owner occupancy, investment property or the conversion of one to another, through rehabilitation financing. Many of our clients will not truly understand what is possible in terms of their ability to take advantage of these opportunities without our guidance, while also serving an overwhelming social need and purpose through the revitalization of Chicago’s neighborhoods. 

Blueleaf Lending is one of the few Chicago-area lenders who offers this niche product of rehabilitation financing, and I welcome you to call us to present these options to your brokers or to take a look at our company at BlueleafLending.com to further explore the enabler to solving these social and economic opportunities that rehabilitation financing represents. 

Maia Benson is the Vice President/Residential Lending of Blueleaf Lending, a subsidiary of Midwest Community Bank.

She can be reached at 312.379.8866, or by e-mail at mbenson@blueleaflending.com.

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