Qualified Buyers For Affordable Homes Becoming Harder To Find

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By: Diana T. Barth
Published: 11/17/11

The nation’s tough economy is creating a unique problem for those working to help low-income residents fulfill their dreams of home ownership.

Those with an income in the range that makes them eligible for an affordable home are having trouble qualifying for a loan.

Many people are “on the edge” in this tough economy, said Bourne Housing Specialist Kerry A. Horman.

People have seen their credit ruined, he said. Those who had been keeping their heads above water in the current economic climate, found that it only took one little thing to bring them down. Others, Mr. Horman said, had kept their credit scores up, but lost their jobs. They were then unable to demonstrate a regular income from which to repay a loan.

The end result is fewer qualified buyers in the region.

Housing specialists like Mr. Horman can sometimes find solutions for those people who cannot raise a down payment, he said, but helping those individuals get a loan is a different story.

While the Bourne Housing Partnership has successfully found eligible purchasers to date, it has taken considerable effort. The dearth of mortgage-eligible buyers has left Mr. Horman advertising on radio and TV and in newspapers across the region for qualified people, as well as personally bringing affordable housing flyers to the Cape’s larger employers and various town departments.

Because most of the young families and young adults who would be both eligible and interested in getting help for a home purchase go online to gather information, he has started posting there, as well.

Mr. Horman said he had recently attended a housing conference in Worcester sponsored by a number of agencies, including the Department of Housing and Community Development. He said the conferees discussed the tight money, credit score issue, a problem that is widespread.

The sponsors of a Citizens’ Housing and Planning Association conference held in May said that the sub-prime mortgage crisis—along with the financial meltdown and the adoption of tighter lending criteria that followed—has caused a steady decline in homeownership rates overall. At the time of that May meeting, major changes to Fannie Mae and Freddie Mac were adding to the uncertainty of mortgage financing.

The conference sponsors concluded that, “Efforts to place blame for these challenges” created an atmosphere in which some financial institutions view lending money for homeownership to low and moderate income households as risky.

Loan issues aside, affordable housing is available in Bourne.

Earlier this year, the Bourne Housing Partnership held a lottery for two, newly built three-bedroom homes, one on Adams Street in Sagamore and the other on Shearwater Drive in Cataumet.

At that time, the partnership also began creating a new waiting list of residents ready to buy affordable homes when they go up for sale. That action was due to the availability of funding, some of which can be used to subsidize the purchase of market-rate homes by low-income residents. Declining home prices have also made purchasing such properties less expensive.

A few years ago, Mr. Horman created the Bourne Housing Opportunity Purchase Program, which works with the US Department of Agriculture to assist households earning less than 80 percent of Barnstable County’s median income to buy homes in Bourne. Funding is available through B-HOPP to subsidize a gap of up to $20,000 between the market price and what an applicant can afford to pay. The program, in essence, turns market-rate, single-family homes and condominiums into affordable homes. While those homes must be sold as “affordable,” the people who buy them build up equity while they own them.

Mr. Horman said he can help low-income families apply for programs that could potentially help them own, for example, a $180,000 home for a monthly payment of $800, including insurance, principal, and interest.

The lucky buyers of the Bourne Housing Partnership’s newly constructed home on Shearwater Drive will be receiving an extra bonus. The home’s HERS rating, a measure of energy conservation, came back a 56.
To understand how good a rating that is, an Energy Star home can qualify at any rating under 85. That rating, which should ensure lower energy bills, was achieved through good construction practices, without any special additions such as solar panels. The Valle Group, builders of the home, are using the same practices in working on the Adams Street home.

In the current economy, with falling home prices, the gap between the price of an affordable home and that of a market-rate home is not, in some cases, as large as it used to be, Mr. Horman said. He explained,
however, that the buyer of the affordable home may end up in a better position. While the purchaser of the market-rate home is watching the property lose value, during the same time period the owner of a home deemed “affordable” may have accrued substantial equity, he said.

Mr. Horman said he is always willing to help crunch the numbers for those who are “on the cusp” in terms of income, and who could purchase either a market-rate or affordable home.

Mr. Horman said people are not tied to one town when looking to buy an affordable home. He said that there are two key websites where potential buyers can see all of the affordable homes available in Massachusetts, www.chapa.org and www.mahahome.org, the latter being the site of the Massachusetts Housing Alliance.

Mr. Horman said that the down economy notwithstanding, the upside is that there are great opportunities for those looking to become homeowners. All of the housing specialists have said that people should not prescreen themselves, opting out of those opportunities by assuming they will not qualify.

To review eligibility requirements, learn more, or to apply to be on the Bourne Housing Partnership’s ready buyer list, call Mr. Horman at 508-457-1005 or e-mail him at affordablehomes@townofbourne.com.

The Bourne Housing Parnership’s “Guide to Housing Programs” is available on the town’s website, townofbourne.com. It outlines a number of home purchase opportunities, sets out income criteria, and provides contact numbers for those needing everything from help with home repairs to foreclosure assistance.

There are even options for those who need help in prequalifying for a loan.

 

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