Sounds to good to be true right? You’re probably wondering how this is possible. The program works like a short sale. The homeowner’s property is purchased by a company operating the program on behalf of the State of Oregon, and it’s then sold back to the homeowner, at current market value, with the purchase price financed by the State of Oregon through a 30 year, fixed rate loan.

TOTAL PROPERTY RESOURCES, a full service real estate sales brokerage company headquartered in Bend, is pleased to be one of the FIRST real estate brokerage companies in Oregon to position itself to assist homeowners in taking advantage of OHHFP, focused on the needs of homeowners in Deschutes and Jackson Counties, through the use of designated TARP funds. This program is one of the first of its kind in the nation.

Year 2011     Median sales price $200,000  (down 1% from 2010)
Year 2010     Median sales price $202,000  (down 9% from 2009)
Year 2009     Median sales price $222,000  (down 26% from 2008)
Year 2008     Median sales price $299,000  (down 16% from 2007)
Year 2007     Median sales price $355,000

You can clearly see that the decline in values has slowed drastically and home values are only 1% lower than they were last year. Depending on which types of homes I include and which neighborhoods, I can even show that values didn’t decline at all. If this trend continues, we certainly could see some appreciation over the next 5 years.

What makes this program so exciting? It’s very similar to HAFA but without all hurdles and red tape and prevent HAFA short sales from being successful. (I hate HAFA) In a Cooperative Short Sale, the property is listed for sale at fair market value. You have 4 months to sell the property. If the property is sold, the proceeds from the sale are used to pay off the mortgage debt, even if the proceeds are less than the amount owed on the mortgage (short sale). The borrower may be eligible to receive relocation assistance of $2,500 to help with moving, relocation and rental expenses. And best of all, Bank of America will not pursue the deficiency balance on the loan. I just faxed in the required paperwork (only 2 forms) so we’ll have to wait and see how it goes but I am optimistic.

To be eligible for the incentives, you must submit an offer (and have it accepted) between November 15, 2011 and January 31, 2012, with escrow closed on or before March 15, 2012. You also must plan to move into the home. The incentives are only good for owner occupied properties.

There are currently 11 properties for sale in Bend that are offering these incentives. 32 homes owned by Freddie Mac have sold in Bend this year with sales prices ranging from $65,000 – $275,000. Contact me for a list of available properties.

Last year I was contacted by a homeowner who had received approval to do a HAFA short sale. It took him one year to get approval. First they told him he made too much money to qualify. (Really? He was seriously struggling to make his mortgage payments and stay on top of other obligations but he made too much money?) He tried again a couple of months later and was told he didn’t make enough money. (He had just been laid off and wasn’t bringing in any income. Again, really? He knows he doesn’t make enough money, that’s why he contacted you!) Finally, third times a charm, he was approved because he made just the right amount. Reminds me of the three little bears.

The approved sales price was $168,000. I’m convinced they only did a drive-by BPO when they determined the value. Had anyone stepped one foot in the door they would immediately have known that we would never find a buyer willing to pay $168,000. We put the house on the market at $168,000 and had 4 months to sell it. I heard the same feedback over and over. It’s overpriced, it needs too much work, my clients don’t want a fixer, etc. I sent new comps to the lender only to be ignored. With a foreclosure date quickly approaching, we made the decision to reduce the price to $149,000. Within one week we had an offer of $129,000. I submitted the offer along with new comps that justified the purchase price and the offer was immediately rejected with no explanation. I eventually learned that for the first 120 days of a HAFA short sale, the lender will only accept offers at the “approved” price. It didn’t matter how many times or how many different ways I explained to them that we would never find a buyer willing to pay $168,000 they weren’t willing to budge or agree to a price reduction. By the time the offer was rejected, we were nearing the end of that 120 day period and dangerously close to the foreclosure date. The only options were to roll the dice and resubmit the offer as a traditional short sale and hope that we could get the sale postponed in time, or the borrower could try for a HAFA deed-in-lieu (DIL). In fact, a HAFA short sale automatically rolls over into a HAFA DIL if it’s not successful. The borrower chose the HAFA DIL because it seemed like the most likely way to get the sale date postponed. There’s no guarantee the DIL will get approved, but at least the sale was postponed while the bank considered it. The borrower still does not have resolution.

I will likely never list another HAFA approved short sale and I can’t even suggest it to seller clients. It was the most frustrating short sale experience I’ve had. I have yet to talk to a real estate agent that has had a positive experience. Had my client just listed his home for sale at market value, I believe it would have been much more likely that we would have gotten the short sale approved and the transaction would have closed. I’ve been very successful at getting deficiency rights waived so the only HAFA perk he would have missed out on would be the $3000 incentive.

The other HAFA option is to list your home for sale, receive an offer, and then submit the offer to your lender and request a HAFA short sale. This is know as the Alternative Request for Approval of Short Sale (ARASS). This seems to be the route that more frequently leads to success. I planned to try this option with a recently ratified short sale agreement but I just learned that if Freddie Mac is the investor on the loan, you are ineligible for HAFA if you have already accepted an offer. Your only option is a traditional short sale. If your loan is backed by Freddie Mac, you have to either get approved for HAFA before listing your home or do a traditional short sale. I could do an entire post on the intricacies of Fannie and Freddie HAFA short sales. In fact, I probably will.

One of the biggest changes is the elimination of the loan to value ceiling for fixed rate mortgages backed by Fannie Mae or Freddie Mac. In the past, if your loan balance was more than 125% of your home’s value, you were not eligible to refinance. As an example, if your loan balance was $125,000 but your home was only worth $90,000 you were not eligible to refinance at today’s low interest rates. In addition to removing the LTV ceiling of 125%, other changes include:

• Elimination of certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
• Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model);
• Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the Enterprises on or before May 31, 2009.

The way I see it, this program can benefit borrowers in two different ways. For those struggling to make their mortgage payments, refinancing at today’s lower interest rates will obviously lower the monthly payment and relieve some of the financial strain. Another option is to refinance into a shorter term mortgage, which will allow the borrower to pay down their principal faster and in some cases eliminate the problem of negative equity. The lower interest rate may provide borrowers the opportunity to shorten the term of their mortgages without much change in their monthly payments, and perhaps even a reduction in that payment since interest rates on short term mortgages are typically lower than on 30-year mortgages.

You might be eligible if:

• Your loan was sold to Fannie Mae or Freddie Mac on or before May 31, 2009. Homeowners can determine if they have a Fannie Mae or Freddie Mac loan by going to:
  http://www.FannieMae.com/loanlookup/ or calling 800-7FANNIE (8 am to 8 pm ET)
  https://ww3.FreddieMac.com/corporate/or 800-FREDDIE (8 am to 8 pm ET)
• Borrowers must be current on their mortgage payments with no late payment in the past six months and no more than one late payment in the past 12 months.
• The current loan-to-value (LTV) ratio must be greater than 80%.

The Enterprises will send out instructions to lenders by November 15, 2011 and some lenders may be accepting refinance applications as soon as December 1, 2011.

Information compiled from Federal Finance Housing Agency News Release October 24, 2011.

This Earth Advantage certified home is pre-wired for roof mounted, grid-tied photovoltaic solar panels. The metal roof reflects UV radiation and keeps the home cool in the summer. The xeriscaped front yard was planted with drought tolerant and local plants.

The entire home has no VOC and low VOC paint. The heat source is hydronic radiant floor heating powered by a 96% energy-efficient boiler. This home is estimated to save about 54% in energy consumption over standard code-built homes.Formaldehyde-free blown-in insulation improves indoor air quality & provides better acoustic dampening & thermal retention.

The kitchen features Southern Oregon grown Madrone wood countertops. The cabinets throughout the home were locally made by Moon Cabinetry and consist of reclaimed black walnut cubes from Northern California and wheatboard with non-toxic adhesives and binders.

The master suite was designed so that the bed could be placed against any of the 3 walls. The thoughtfully placed windows ensure ample natural light and plenty of privacy. The master bath doesn’t leave much to be desired with cork flooring, Paperstone countertop, dual sinks, large walk-in shower, soaking tub, Caroma Caravelle dual-flush toilet, radiant floor heat, and a heated towel rack.

Looking towards the master suite from the 2nd and 3rd bedrooms. As you walk up the stairs from the main level, the master is on the south side of the home and the other bedrooms are on the north side. Note the abundance of natural light. The only additional light is from the chandelier, which is mostly decorative.

The owners recently hired a local artisan to design and install this fire pit and privacy fence. What a gorgeous addition. The low maintenance side yard means you’ll spend more time enjoying the space and less time on upkeep. The address is 1229 NW Newport Ave. This home features 3 bedrooms, 2.5 baths, and is 2145 sq. ft.

Some experts argue that all the programs aimed at avoiding foreclosure are just delaying the inevitable and that the lenders should be accelerating foreclosures to clear the glut. Delaying foreclosure simply increases the number of delinquent homeowners who will never catch up. That’s certainly true, as many homeowners have no desire to keep a home that is underwater so they have no interest in pursuing a short sale or loan modification. Delaying the foreclosure simply allows them to remain in their home longer without making payments. I don’t know what the answer is but in my experience, the government programs like HAFA and HAMP have been dismal failures and they have not helped anyone I know avoid foreclosure.

CLICK TO ENLARGE

You might be wondering how to get started. Generally, couples planning to get married (and other individuals) will contact a participating lender and request that a registry account be established in their names. This account will take the guesswork out of gift selection. These gifts can be given with the assurance that the donors are providing the couples or individuals with an opportunity to purchase their first home. Bridal couples or individuals are not obligated to use the money in the Bridal Registry Account for a down payment on a home. The couples or individuals control how the funds will be used, and if their plans change, they can simply withdraw the money and use it for something else. Also, there is no requirement that the bridal couple be married prior to closing the mortgage loan. Even better, on the HUD website, it states that this registry is not just for couples about to get married. It is applicable to “other legitimate occasions where substantial gifts are typically received by an individual or individuals that may in turn be applied toward the purchase of a home.” Think civil unions, college graduation, or even baby showers.

If you could benefit from this down payment assistance, contact me and I’ll put you in touch with a participating lender.