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Extreme Homeowner Makeover 

An innovative partnership of developers and nonprofit groups helps turn lifelong renters into first-time homeowners on the Westbank.

TRAVIS SANDERS WAS LISTENING to Q-93 when he heard about a deal that sounded intriguing: a program that matched first-time homebuyers with affordable housing. But what really caught his ear was the promise on the mortgage: less than $100,000 for starter condominiums on the West Bank. Sanders, who was living in eastern New Orleans with extended family post-Katrina, was interested: "I got on the Internet and looked it up." His assessment? "This was a sweet deal." That was in spring 2007. This April, Sanders and his wife LaShandra moved into The Gates on Manhattan, a large lease-to-own complex on Manhattan Boulevard in Harvey. Their monthly $868 lease payment covers a three-bedroom condo in turnkey condition, with new roof, central air, ceiling fans, washer-dryer hookup, new carpet, water heater and appliances, and grounds fees. There's also a clubhouse and a pool, and it's all on a quiet private street half a mile from the West Bank Expressway. Currently, the Sanderses are still leasing, but by October they should be paying the same monthly payment on a 30-year fixed mortgage that's permanently priced at one percent below the daily current market rate.

A three-bedroom condo in the New Orleans market for less than $100,000 and only 10 minutes from downtown? It may sound like a dream in the post-Katrina economy, but the Sanderses are taking advantage of an innovative idea in affordable homeownership. It's not exactly free-market, not exactly subsidized housing but a patchwork effort of developers and nonprofit groups that have joined forces to get first-time homebuyers out of rental properties — and, in some cases, get displaced Katrina survivors a brighter future.

NEW ORLEANS NEEDS WORKERS, and it needs affordable housing. A study released this month by the Brookings Institution and the Greater New Orleans Community Data Center found that rents in the city are 46 percent higher than they were before the storm. The average rent on a two-bedroom apartment that was $676 in 2005 is now $990. In contrast, the mortgage on a comparable two-bedroom unit at the Gates of Manhattan is $777, which includes condominium fees. The 320-unit apartment complex consists of detached two-story buildings connected with planted walkways and courtyards. Each building has four units; each unit has one, two, or three bedrooms.

"The city's not going to come back until we have housing for the people who can work in the recovery — police officers, nurses, those sorts of essential professionals," says Stewart Juneau, the founder and CEO of le Triomphe Property Group, which spearheaded the complex's transformation from apartments to condominiums.

Juneau is best known for the properties he develops in Louisiana and along the Gulf Coast — large apartment complexes around Baton Rouge, luxe condo developments like The Harbour Village at St. Andrews in Destin, Fla., and, most notably, the transformation of the old Maison Blanche Building on Canal Street into the Ritz-Carlton. A collection of once-ragtag apartments in Harvey wouldn't seem to fit that portfolio, but it fit in with Juneau's social and charitable interests, which include a year spent in South Africa working with the International AIDS Foundation.

For this project, though, Juneau and le Triomphe partnered with two Los Angeles-based developers: CityView (founded by Henry Cisneros, former U.S. Secretary of Housing and Urban Development) and Our Castle Homes, both specialists in working-class homeowner developments. Also on board are two nonprofit agencies, the Neighborhood Assistance Corporation of America (NACA) and American Sunrise Communities.

The Manhattan Boulevard complex had been built in 1973, back when portions of the street were still paved with limestone, according to Juneau, and it had barely been improved since. By the time Juneau acquired the apartment buildings in the late 1980s, he says, the area was so dangerous ('a murder a night") that the ABC newsmagazine 20/20 had produced a segment there about inner-city crime.

Juneau and his then-partners purchased the troubled complex using affordable-housing tax credits, which meant that the units had to be maintained as rental units and couldn't be turned into condominiums for years. When that period was over, in the mid-2000s, he had several options — continue renting out the apartments, turn them into condos, or sell the whole parcel outright. Harvey had changed over the past decade; Manhattan Boulevard was still no St. Charles Avenue, but much of the decay had been replaced with destination big-box stores and strip malls, and the complex's location — half a mile from the West Bank Expressway — was now desirable real estate. "We were offered some lucrative prices," Juneau says, "but we resisted that."

For low- to middle-income people, the location offers many advantages. Two Jefferson Parish transit buses run nearby — the W3 Lapalco line stops directly in front of the complex, while the W2 West Bank Expressway is a short walk up Manhattan Boulevard. Across the street is a Subway sandwich shop and a movieplex, and a Zea rotisserie/brewhouse is moving in. Within walking distance are a library and several big-box stores, including a Walmart Supercenter (which includes a supermarket) — and LaShandra's two favorite shopping destinations, "a Target and a Barnes & Noble."

In early 2007, le Triomphe offered right of first refusal to current tenants before opening the project to public sale. The excitement surrounding the project, now christened The Gates on Manhattan, brought in 610 applications. About 200 applicants qualified for the program, based mostly on their FICO scores (the algorithm by which banks and lenders determine eligibility for mortgages). To get a loan, applicants had to have a respectable FICO score of 620 (60 percent of FICO scores are in the 650-799 range).

"And then a month later, the bottom fell out," says Sheila Sims, vice-president of property management for le Triomphe, referring to the mortgage crisis of summer 2007.

During the initial days of the meltdown, skittish lending institutions quickly tightened up their loan requirements. Prospective homebuyers found that an average FICO number was no longer good enough, as banks weren't willing to take a risk on a first-time homebuyer with a credit score under 700. The initial round of pre-qualified applicants, says Sims, dwindled down to single digits. "That's where NACA came in," Sims says.

NACA is a nonprofit organization specializing in helping people with damaged or "risky" credit scores obtain a home loan, using what the group calls "character-based lending criteria." The benefits of NACA are many, including no down payment, no closing costs, no fees, and a below-market fixed-interest rate on a 30-year mortgage. For would-be homebuyers with suboptimal credit scores, it's a lifeline, and Sims shows applicants the ins and outs of the program, simultaneously steering them away from shady credit-repair businesses that overpromise and underdeliver.

"There's no such thing as a quick fix," says Sims. "If someone tells you they can repair your credit and all you have to do is hand them $400 — that's just a big [lie]. What we can do is work on your credit score, and I show them how to do that."

THE SANDERSES, both New Orleans natives, are just the sort of tenant-cum-owners that Sims can help — and that Juneau hoped to attract. LaShandra, 30, works as a nurse on the post-surgical floor at Ochsner Baptist Medical Center; Travis, 29, manages the Coyote Ugly nightclub in the French Quarter. He had gone to Nashville after Hurricane Katrina, while LaShandra landed in Atlanta, but both had wanted to come back to the city — if they could afford it.

Neither LaShandra nor Travis had owned a home before, but both had excellent work histories and references. As for credit, LaShandra describes hers as "pretty good," while Travis' was "less than optimal," he says with a laugh. "I was fresh outta being stupid, working on it after growing up a bit. But I never had a new car," he adds. "I always drove a raggedy car until I could afford my own house."

Sims, who vets all applications, stresses that the complex has specific requirements for prospective homebuyers. Current employment and a stable employment history are musts, along with a household salary at least 2 1/2 times the monthly lease payment. She performs criminal background checks and follows up with references. But a so-so credit history — the kind that might not fly these days with a conventional lender — is not a disqualifier. In the year or so between the time that tenants sign the lease and assume the mortgage, Sims works with them on credit remediation, helping them to pull up their credit scores with the assistance of NACA.

WITH SUCH ATTRACTIVE TERMS, one might think that The Gates on Manhattan would have a waiting list for tenants. It doesn't; after the 2007 mortgage meltdown, word has been slow to spread again, says Robert Dabney, spokesman for le Triomphe. The development is being completed in four phases, and people began moving in last September. As of last month, however, only 58 of the units were occupied — mostly by former and current West Bank residents, according to Sims. She stresses that there are no residency requirements; anyone who meets the complex's criteria is welcome to apply: single people, couples, families with children. Their next plan: community outreach through area churches, spreading the word through the media, and by word of mouth.

LaShandra and Travis Sanders say they've both told family and friends about the deal they've found and have already begun upgrading their unit; they took the money they'd saved on the down payment and invested in a new washer-dryer combo. Come October, their lease will switch to a mortgage, and they'll be homeowners for the first time in their lives. "We love it here," says LaShandra.

But do they plan on moving on in a few years — perhaps to a detached house?

Both of them nod vigorously.

"Right now we're just building some equity," Travis says confidently, sounding like he's done this all his life.

click to enlarge First-time homebuyers Travis and LaShandra Sanders outside their lease-to-own condominium at the Gates on Manhattan in Harvey. - TRACIE MORRIS-SCHAEFER
  • Tracie Morris-Schaefer
  • First-time homebuyers Travis and LaShandra Sanders outside their lease-to-own condominium at the Gates on Manhattan in Harvey.
click to enlarge Sheila Sims, vice-president of property management for le Triomphe, the company that developed the complex, counsels first-time homebuyers on everything from the intricacies of the mortgage process to improving their credit scores. - TRACIE MORRIS-SCHAEFER
  • Tracie Morris-Schaefer
  • Sheila Sims, vice-president of property management for le Triomphe, the company that developed the complex, counsels first-time homebuyers on everything from the intricacies of the mortgage process to improving their credit scores.
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