Low-income loans help fill luxury high-rises in Miami’s Midtown neighborhood

A federal law intended to boost lending in an impoverished Miami neighborhood is helping upper-middle class buyers compete for luxury digs.

With 30-year, fixed-rate mortgages available at historic lows, realtor, artist and architect Troy Simmons and his wife, a local TV news anchor, decided to ditch their Aventura rental for a home of their own.

But their good credit scores and steady income were no match for cash.

“Eighty percent of my clients are all-cash buyers,” Simmons said. “Average people like myself, we can’t really compete with that.”

Instead, the couple won a bid for one of 20 units in 4 Midtown, a sleek condominium tower in Miami’s next “it” neighborhood eligible for 97 percent bank financing, a legacy of a master plan to increase homeownership in the once-blighted section of town, criss-crossed by out-of-use train tracks.

The financing is available because of the Community Reinvestment Act, a federal law passed in 1977 to encourage commercial banks to lend in low-income urban neighborhoods.

With its immaculate streets, high-end retail and restaurants and condo lobbies awash in marble, Midtown has more the feel of an upper-income suburban enclave.

“This is supposed to be a transitional area but it’s already transitioned,” Ron Krongold, one of Midtown’s biggest investors and the owner of Miami amusement park Jungle Island, told The Real Deal. “We’re brilliant because we’re lucky.”

South Florida’s frenzied recovery from the real estate crash six years ago has pushed up prices to near pre-crash levels amid shrinking inventories.

Midtown’s boom was fueled with cash as overseas buyers, principally from Argentina and Venezuela, seek out a safe haven for their U.S. dollars.

“This type of financing was supposed to target minorities but everyone’s a minority now compared to cash buyers,” said George Fraguio, a finance specialist at Fortune International Group who formerly worked at Countrywide.