Out from Under
Christine Hince bought her dream farm near Talent in 2006. But the housing crash two years later wiped out almost half of its value, leaving the property — two homes on 3 acres — financially underwater and Hince facing the prospect of foreclosure.
Today, however, thanks to a new pilot program for Jackson and Deschutes counties, Hince still has her property and a mortgage that's been reduced from $364,000 to $230,000.
Called the Loan Refinance Assistance Pilot Project, it buys troubled homes from lenders at 90 percent of current market value in a short sale, then sells the properties back to homeowners at current market value.
"I feel like I've died and gone to heaven," Hince said. "I love this little paradise. I have three horses, three cats, a golden retriever and 11 chickens.
"And now I've got payments I can handle and can stay here," she added, showing off her garden full of roses and gladioli.
About $10 million has been allocated for the pilot project, which aims to help 330 homeowners across the counties before 2017.
It is part of the Oregon Homeownership Stabilization Initiative, which uses $220 million in federal bailout money to prevent foreclosures in Oregon.
The umbrella program started in 2010 and has already delivered more than $65 million in assistance to more than 4,500 homeowners statewide, according to a news release.
The process for homeowners, which Hince described as "fairly simple and easy," is handled by Further Development in Portland and Bend.
It's a private real estate company that describes itself on its website as "socially conscious" and dedicated to keeping families in their homes.
The pilot program, which is just starting up in Jackson County, requires owners of private homes to earn less than $95,000 a year for a family of four, be able to afford mortgage payments at the new value and not own any other properties, said Eric Sten, president of Further Development.
In addition, the lender has to be willing to unload the property at current market value. Most banks have been willing, he said, except for Bank of America, Washington Federal, U.S. Bank and Rogue Federal Credit Union.
"We buy your home at its true value and sell it back to you 15 minutes later," said Sten.
"Foreclosure costs (banks) a lot of money. This is quicker and we pay the bank 90 percent of the home's current value, when they would get about 70 percent in foreclosure."
The program is aimed at "people having a hard time making payments but they have equity, they're working and they could afford a mortgage on the current value," Sten said.
Caroline Robinson of Shady Cove said she went through the process while undergoing surgery for a life-threatening condition.
"It worked great for me — quick and easy," she said.
Robinson reduced her underwater $358,000 construction loan to $125,000 through the program.
"I've told everyone about it. My daughter is trying it but her lender won't go along with it."
Further Development chose the two counties in Oregon hardest hit by the foreclosure crisis, Sten said.
He said the state becomes the new mortgage-holder, receiving payments in a revolving fund so it can lend them out again to upside-down homeowners.
Homeowners using Fannie Mae and Freddie Mac are not eligible, said Benjamin Pray of Oregon Housing.
"What makes the program truly innovative is that there is no ongoing subsidy for homeowners in the program — they own their homes outright, and earnings from their mortgage program will support administrative costs," Pray said in a release.
"When a homeowner refinances, or Oregon Housing sells the loans, profits are put towards purchasing another home in Deschutes or Jackson County."
John Darling is a freelance writer living in Ashland. E-mail him at firstname.lastname@example.org.