Arlene and Roland Morin had no idea when they moved into New Colony Village in Elkridge nearly three years ago how hard it would be to move out.
The Morins have had their house on the market for 382 days - in Howard County, where the average home is snatched up in a month. A neighbor is stuck with two mortgages because the contract on her house fell through after she bought a new one in Catonsville. Another neighbor who was transferred out of the state months ago finally rented her house, despairing of selling it.
Plenty of people want to buy into the development of 228 single-family homes. Home-mortgage lenders won't give them financing for New Colony because it's unlike anything they've seen.
The community, tucked between Interstate 95 and U.S. 1, is technically a mobile home park because residents don't and can't own the land. But the upscale prefab houses they live in look like the traditional American dream - two stories, basements, porches.
The neighborhood was crafted in the mid-1990s as an innovation to help middle-income people find a place to live in the increasingly expensive region. Now the original buyers are finding that it's nearly impossible to sell, casting a dark cloud over the futures of the residents, the neighborhood and the affordable-housing technique that created it.
"I can't keep paying a second mortgage," said Regina Kleve, 44, an auditor who moved to Catonsville in November but is stuck with her New Colony house because the buyer's financing fell through. "I just want to sell my house and move on with my life."
Few companies ever offered financing in New Colony, where the homes are considered personal property instead of real estate (and are, oddly, registered with the state Motor Vehicle Administration). Enough lenders were involved originally to allow people to move in as the homes were erected during the past five years.
One foreclosure
New Colony has seen only one foreclosure, says developer Wayne Newsome, who owns the land with a partner. But now that the last two single-family homes are under construction and under contract with financing in place, all the lenders but one have pulled out.
American Home Mortgage, which handled most of the loans in the community, stopped financing there last year. Only BUCS Federal Bank is still involved, and the local company has limited funds to invest in New Colony.
The bank's lending officer for that area could not be reached for comment, but several Realtors say they were told last week by BUCS that there's nothing left to help their clients.
Mike Haeffner, the American Home Mortgage loan officer who handled New Colony, said he believes that a key problem with finding banks willing to finance purchases of homes in the development is that the loans can't be bundled and sold on secondary markets like most conventional mortgage loans. Without the prospect of that flexibility, banks don't want to touch New Colony loans.
"I know of no financing available - of any source - for New Colony Village," said Al Cooke, a Realtor with two homes that can't be sold, both belonging to clients transferred out of the area.
Realtors' warning
Real estate agents warn that the quaint neighborhood is on the brink of a downward spiral if something isn't done soon. Several houses sit empty, including one damaged a year ago by a blaze that county fire officials are investigating.
"In a situation like this, you cannot buy your way out," said Columbia Realtor Lucille M. Souder, who adds that she feels she is teasing the many people who have called, eager but ultimately unable to purchase Kleve's four-bedroom, two-fireplace house for the bargain price of $170,000. "There will be more and more people just giving [their homes] back to the bank."
The six homes for sale in New Colony have been on the market for an average of about 190 days, according to the MRIS multiple-listings database. Another 10 were taken off the listings after they failed to sell.
Fritzi Hallock, president of MarketSmart, a Towson consultant to builders and developers, says she fears that New Colony's "great strategy" for affordable housing will never be tried anywhere else unless lenders buy into the idea. "No one has a problem with the architectural design, the construction, the features, the location - from a community standpoint, there's no problem, and that's what's so crazy," she said.
Newsome, who says he fought hard for financing but has given up, predicts that the lending predicament would disappear if residents had the option to purchase the land under their homes. But it's not a simple proposition. The land would have to be subdivided, and there are lots that would be too small - some are less than 1/20th of an acre - to meet Howard County's subdivision standards.
Last week, the county hearing examiner denied Newsome's request for variances that would make subdivision possible. Thomas P. Carbo wrote in his decision that he legally had no choice, but it dashed the hopes of residents - and county officials - who thought they saw a light at the end of the tunnel.
'Very tough situation'
"This is a very tough situation for everybody right now," said Leonard S. Vaughan, the county's housing director. "It has provided some of the most affordable housing in Howard County in the last few years, and it's definitely a housing resource we need to maintain. But if you have persons trapped by their mortgages, it's not a good circumstance."
Howard County Executive James N. Robey promised last week to speak to lenders who have offered creative financing for businesses along the U.S. 1 corridor; he said he hopes they will be open to helping New Colony residents. County Council Chairman Guy Guzzone vowed to see what could be done about the regulations.
"We need to have subdivision regs that help encourage that type of affordable housing," agreed C. Vernon Gray, who retired from the council last month after 20 years representing, among other communities, the area where New Colony sits.
Newsome, who said he will appeal the variance decision, is convinced everything will turn out all right. "It's a shame you have to fight so hard to provide something that is in such demand," he said.
New Colony, located next to a conventional mobile home park, is modeled after the neo-traditional communities gaining ground nationwide, with small lots and small roads typical of 19th-century towns. The smallest of the homes originally sold in 1997 for as little as $89,990 in a county where anything under $100,000 is a rare find.
Residents pay a monthly fee of up to $483 to cover the community amenities, lawn care and use of the ground under their houses. They hold long-term leases on the land, guaranteed renewable in perpetuity. It's an important distinction from the "ground rent" communities once common in Baltimore, whose residents had the right to "redeem" their lots and own them outright.
Take away the unexpected inability to sell - not to mention the inability to refinance - and New Colony is a wonderful place, residents say. Neighbors have cookouts and block parties. On hazy summer evenings, men hoist a big-screen TV outdoors and everyone watches movies together.
"I know I could not have bought a home when I got transferred here if it was not for this community," said Kristina M. Sakash, 44, a contract negotiations manager who moved in last June from Orlando, one of the last people to get financing in New Colony.
She calls the neighborhood an "absolute blessing."
"But our government is sorely lacking in understanding," she said. "I think they've got a diamond, and if they don't jump on board and help us, they're going to let it turn to coal. ... "
The Morins, who already packed up to move once, only to see their buyer walk away for lack of financing, are getting increasingly frustrated. They want a single-level house, and they want to stop living in limbo. Potential buyers visit all the time, for all the good it does the couple. "Seven or eight people show up on a weekend, and you never hear from them again," said Roland Morin, 44, a correctional officer for Howard County.
Twilight zone
Some of the residents stuck in this financing twilight zone say the developers - and politicians who approved regulations allowing New Colony to be built as neither fish nor fowl - should have foreseen this problem. Their Realtors agree with them.
"They had to know, once everyone was in, it was going to be a problem," said Souder, a RE/MAX agent. "The builder and the county both had to know."
Newsome's attorney, Howard L. Alderman Jr., said no one involved in New Colony's birth anticipated this predicament because financing was easier at the start. They figured things would improve - not worsen. Lenders have proven increasingly unwilling to invest in the unusual, he said.
Haeffner, the American Home Mortgage loan officer, thinks residents' best hope is to have the option of honest-to-goodness real estate to call their own. Then anyone would give them financing - and the freedom to get on with life.
"The entire community is hinging on this right of redemption," Haeffner said.