New money available for mortgage help

A fresh infusion of money from the U.S. Treasury has breathed new life into two programs that helped Oregonians avoid foreclosure or get up-to-date on their mortgages in the wake of the Great Recession.

One of the programs began taking applications last week while the other is expected to start in September.

Oregon received two federal grants in February and April totaling $94.5 million to refill its share of the Hardest Hit Fund, created by the federal government in 2010 to help 18 states and the District of Columbia, where the housing market bust created the most distress among mortgage holders. The two grants revived the Home Rescue and Loan Preservation Assistance programs in Oregon.

In 2010, Deschutes County was the hardest-hit county in the state. The county recorded more than 3,700 default notices that year. Five years later, the county’s rate of delinquencies and foreclosures had turned around and was one of the lowest in the state.

The recovering economy is also lifting homeowners out of negative equity, in which they owe more on their original mortgage loans than their homes’ market value. Negative equity is also known as being upside down or underwater.

Rising values mean distressed owners can sell their homes and recoup some of that equity, which alleviates for many Oregon homeowners the need for government mortgage assistance programs.

Even with home values close to prerecession highs in places like Bend, some Oregon homeowners are still struggling, said Mike Boyer, spokesman for Oregon Housing and Community Services. In Crook County, for example, about 19 percent of homeowners were still underwater in December, according to a May analysis by the Oregon Legislative Finance Office. The federal grants are expected to yield an average benefit of $11,373 to 6,700 Oregon households, according to the analysis.

“What we know is in Oregon we have about 14,000 homeowners who are 90 days or more behind in their mortgages. Even with improving home values, there is a need,” Boyer said. “With extremely tight rental markets, it’s a benefit to help people avoid foreclosure and keep them in their homes.”

About 3 percent of Deschutes County homeowners in December were delinquent on their loans or facing foreclosure; about 5 percent in Crook County and better than 6 percent in Jefferson County, according to the May analysis.

CoreLogic, a real estate analysis firm, reported Oregon in May saw an overall 30.4 percent drop in serious delinquencies, year over year. That month, 2.2 percent of mortgages in Oregon were seriously delinquent, defined as 90 days or more past due, the firm reported.

CoreLogic reported the national rate of serious delinquencies, 2.8 percent, at its lowest rate since October 2007.

Oregon delinquencies and foreclosures stood at about 4 percent overall, or 0.3 percent below the national average in May, according to the fiscal office. However, the office reported foreclosure rates in Oregon metro areas are still between 25 and 65 percent higher than prerecession averages.

The new cash infusion came unexpectedly, Boyer said. Housing and Community Services was in the process of shutting down the bureaucracy created to administer several programs created by the Hardest Hit Fund.

“It was a surprise to us,” he said. “We were in the process of shutting down the (Oregon Housing Stabilization Initiative) when the Treasury asked, ‘Are you interested in more money?’”

The grant awards to Oregon, part of a larger, $2 billion package approved by Congress, were part of the original 2010 funding that originally created those programs, but required additional congressional approval to free them, according to the office of U.S. Sen. Jeff Merkley, D-Ore.

The Treasury first funded assistance programs in 2010 through the Troubled Asset Relief Program with $220 million to Oregon, part of $7.6 billion to the District of Columbia and 18 states. Oregon instituted and phased out the Home Rescue, Loan Preservation Assistance and other programs as it used up the funds. Remaining programs are self-funded.

Meanwhile, the number of applicants for mortgage assistance programs in Oregon has declined overall since the recovery spurred higher home values.

Applications in Deschutes County for the Loan Refinancing Pilot Project, a self-financing program that helps distressed homeowners refinance their mortgages, fell to five between Feb. 2 and July 17, according to Housing and Community Services.

“We tend to see more underwater homes in La Pine or Redmond (than in Bend); down in Klamath County, they haven’t recovered much at all,” said Erik Sten, who administers the program under contract through his firm, Further Development LLC. “It’d be great if nobody needed the program, but that’s not the case at this point.”

Two homeowners have applied for the program in Crook County so far this year, and no one has applied in Jefferson County. Originally, only homeowners in five counties, including the three in Central Oregon, were eligible, but the loan refinancing project was expanded this year to include the entire state, according to Merkley’s office. So far the program has fielded 83 applications from across the state. About half of all applications actually went forward, Boyer said.

“This drop-off is typical,” Boyer wrote in an email, “because many applicants visit the Oregon Housing Stabilization Initiative website and apply without fully understanding the eligibility requirements of the program.”

The Loan Refinancing Pilot Project will not receive any of the latest cash from the U.S. Treasury. Neither will the Rebuilding American Homeownership Assistance Pilot Program, which helps homeowners refinance their mortgages but sets stricter limits than the loan refinancing program to qualify. Just six homeowners in Oregon applied for the Rebuilding American Homeownership program so far this year and none from Central Oregon, according to Housing and Community Services. The program is not widely known but could benefit homeowners in Central Oregon, said the program administrator.

“This program is certainly for those folks who purchased or refinanced (their mortgages) between 2006 and 2010, when the market was at its peak or just off its peak,” said Brian DuVal, Portland branch manager for Finance of America, which administers the Rebuilding American Homeownership Assistant Pilot Program for the state. “People who did a no-down or low-down purchase or refi(nancing), those folks would stand to benefit.”

The $94.5 million in federal money will revive two programs. One, the Home Rescue Program, was phased out two years ago and reopened Wednesday in Central Oregon and in Wasco, Sherman, Wheeler and Gilliam counties. It provides up to 12 monthly mortgage payments or $20,000, whichever is used first, to help qualified unemployed and underemployed Oregon homeowners avoid foreclosure. The program also brings delinquent mortgages current if homeowners are no more than $15,000 behind on their payments.

Before the money ran out two years ago, Home Rescue assisted 585 Deschutes County homeowners, 112 in Crook County and 97 in Jefferson County, according to The Bulletin archives. The program paid out $120 million total in Oregon.

Now, applicants have until Tuesday to apply under the first two-week application cycle. The next application window opens Aug. 2. The application cycles will continue until the program money is exhausted, Boyer said. The program first opened July 6 for counties in Eastern and Southern Oregon.

“The program will eventually roll out across the state; it ends up statewide on Aug. 17,” Boyer said. “We wanted to give the smaller Oregon rural counties an opportunity to apply before the metro areas. What we tend to see is a lot more applications from the metro areas.”

As of Wednesday, the program had received at least 28 new applications, according to the Oregon Affordable Housing Assistance Corp., a public nonprofit whose directors manage mortgage assistance programs. To qualify, applicants must show at least a 10 percent loss of projected income this year compared to any tax year between 2009 and 2015, along with other requirements.

The second program, the Loan Preservation Assistance Program, will be resurrected by Housing and Community Services sometime in September, Boyer said. Under that program, qualified homeowners can obtain up to $40,000 to bring current a delinquent mortgage. That’s a $20,000 increase in the previous program limit.

Other benefits of the program include paying back taxes, insurance and fees for qualified applicants, usually seniors, who hold reverse mortgages and owed property taxes, insurance and other fees. Other homeowners may qualify for payment of their owed property taxes. The loan preservation program requires applicants to show they can pay their mortgages going forward and have recovered from a hardship.

— Reporter: 541-617-7815,

Source: BB Real Estate – topStory

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