October 21, 2009 3:45 PM CST Jim Erchul has only contempt for the architects of policies that created the avalanche of foreclosures smothering communities across the United States, like St. Paul’s Dayton’s Bluff.Erchul fighting foreclosures in Dayton’s Bluff by Frank Jossi Special to Finance and Commerce
“It was criminal,” declares Erchul, 53, executive director since 1990 of the affordable housing nonprofit, Dayton’s Bluff Neighborhood Housing Services (DBNHS). “It wasn’t a case where they should have known better and didn’t. It was criminal. When you see houses with mortgages on them for $220,000 that are condemnable – come on, that’s fraud!” Dayton’s Bluff sits on a high perch overlooking downtown St. Paul and the Mississippi River. The hardscrabble East Side neighborhood had been making some progress since the late 1990s as Victorians were being renovated, schools built and blocks once known for drug dealing were being stabilized. But then the foreclosure mess hit, and now the neighborhood has hundreds of empty homes waiting for buyers, or for city crews to knock them down. The Minnesota ZIP code with the highest number of foreclosed homes in the state is in North Minneapolis; the second-highest includes much of Dayton’s Bluff. October 21, 2009 3:45 PM CST Erchul fighting foreclosures in Dayton’s Bluff by Frank Jossi Special to Finance and Commerce  The nonprofit provides a wide variety of services to homeowners and buyers in the neighborhood, from low-interest loans for repairs to rehabilitation loans. It builds new homes and rehabs others for sale to households with gross incomes of 80 percent or less than the median income. DBNHS was founded in 1980 and since then has helped build or renovate 2,000 housing units and injected investments totaling $120 million into the area. Since last October, Erchul’s agency has looked at more than 600 foreclosed homes and purchased 18 to renovate and sell to low-income buyers through a pilot program called “First Look.” Sitting in his crowded office, Erchul pulls up an e-mail message from Bank of America that shows two houses in his coverage area that are available for him to look at – he gets one day to say whether he is interested, and does that after consulting with the city and other interested parties. The First Look program is a national project put together by the Washington, D.C.-based National Community Stabilization Trust, a nonprofit formed in 2008. Some 100 communities around the country are piloting the program, including Minneapolis and St. Paul. Lenders such as Bank of America, Wells Fargo and others work with Erchul by sending him daily e-mails listing homes available by ZIP code, along with a discounted price – thus the title “First Look.” If Erchul likes what he sees he’ll have his appraiser take a look, and if it looks like a good deal he’ll buy it. Unfortunately, many homes on the East Side in foreclosure are probably not worth saving, he says. In those cases, the buyer of last resort – the city – purchases with demolition in mind rather than renovation. Many such houses were badly built, stand on poor soil and are “condemnable.” To Erchul “there’s no economic reality in saving them.” He keeps an eye out for houses that can be saved and renovated for families and are not the kind of structures “the marketplace will take care of.” First Look isn’t the only program helping Dayton’s Bluff. DBNHS received $1 million from the Pohlad Family Giving Foundation to assist homebuyers in purchasing homes. Under the guidelines, DBNHS can provide home buyers as much as $8,000 for down payments or closing or other costs, and in return they have to stay in the place for seven years. The program has great appeal, especially when combined with the federal government’s $8,000 tax credit for homeowners (which, at least for now, ends Nov. 30). More than $400,000 has been distributed to East Side families. “It has gotten the market moving – it works pretty good,” he says. Erchul works in an office stuffed with filing cabinets and mountains of paper on every available surface, a reminder of the complexity of building and renovating homes for low-income buyers. The government’s many programs have too many regulations, Erchul says, and the new administration seems to be adding even more; if he can cut a deal through a bank without any government intervention, Erchul will. He seems to have been born to the job. The son of a schoolteacher and a restaurant manager, Erchul grew up on the Iron Range in Gilbert. He graduated from the University of Minnesota at Duluth in “social development” and then worked for community action agencies in Virginia and Duluth. “This is what I wanted to do,” he explains. “What motivated me was my uncle, a shop teacher, was always getting involved in construction projects and I would work with him and my other uncles on those projects. Every year we had a project. And they were so cheap they made us save the nails and straighten them out.” He made his way to the Twin Cities in 1990 to work at DBNHS. The challenges of today are a strange echo of that time, when the savings and loan crisis had begun to ebb. Back then all the mortgages in trouble were owned by FHA, making it much easier to get homes fixed up and back on to the market. Today, about half the mortgages are owned by banks, the rest by Freddie Mac, which Erchul says is not fixing up any homes prior to their sales. “Who is going to pay for that eventually?” he asks. “The taxpayer.” Although fixing up foreclosed houses is a priority, it’s not the only mission of DBNHS. The organization built brownstones on Swede Hollow and apartments on Bates and Surrey avenues. It fostered “Homes To Learning,” a novel project offering low-income families that often move during the school year a chance to rent an affordable place next a local elementary school. DBNHS also works in Washington and Dakota counties. Sheryl Pemberton-Hoiby, project manager with the city’s department of Planning and Economic Development, says DBNHS works with a tight group of nonprofits on the East Side. The nonprofits often bring to the table foundation partners and relationships with national housing organizations. Pemberton-Hoiby has seen Erchul doing his thing for years and appreciates his expertise, access to resources and work with the city on programs like Homes for Learning. “It’s taken him a long time to build up that kind of expertise, and it is rare,” she says. Although the East Side and other parts of the city will continue to struggle with foreclosures for at least another year, according to experts, the city sees this as an “opportunity” to upgrade the neighborhood and create more sustainable developments and redevelopments “to bring the East Side into the 21st century,” Pemberton-Hoiby says. When Erchul goes home at night he travels to the West Bank, where he lives with his wife, Jennifer Blevins, who directs the Brian Coyne Center in the same neighborhood. Considering the problems of the West Bank’s minority communities, he says his job is cushy. “My job is easy compared to hers,” Erchul says.
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