Staff writer
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| SHAWN GUST/Press Daryl Wilder, owner of Wildwood Building Co., stands in a condominium on April 25 that his company built in the Prairie View Terrace development in Post Falls. A buyer can expect to purchase a 1,500-square-foot home, similar to the one shown, for around $145,000. |
Most loans going toward 'affordable' housing category
COEUR d'ALENE -- The Idaho Housing and Finance Association is cranking out mortgage loans at a furious rate in Idaho, with about 10 percent being made in Kootenai County as homebuyers rush to take advantage of dropping prices and interest rates that remain low.
In the first four months of 2008, loans are within a couple dozen of what were created in all of 2006 in the county, with most going to the category known as "workforce" or "affordable" housing, priced at $200,000 and less. In 2007, IHFA made 385 loans totaling $63.6 million in Kootenai County. This year 140 loans totaling $23.7 million were made through April, compared to 162 loans totaling $25 million in all of 2006.
"The market is in this lower level, and is being served," said Jack Beebe, chairman of the board of the association.
Beebe specializes in commercial real estate, but for a decade has been active with IHFA and is vocal in the supporting the need for affordable housing. During the real estate boom that peaked a couple of years ago, the American Dream of owning a home appeared to be fading fast for many North Idaho wage earners.
"As a Realtor I can see a stabilizing of price increases in Kootenai County," Beebe said. "There are some decreased home values that have created an opportunity to buy. For some, it is a first-time opportunity."
Several factors have influenced the increase in total loans, said Gerald Hunter, president and executive director of IHFA.
"We have revamped our loans, and made it easier for lenders to work with us," he said. "Two, and this is important for North Idaho, we have added mortgage brokers to our program."
Brokers now account for about 30 percent of loans, he said, because they previously were not reaching the clients of brokers.
IHFA mortgage rates are as low as 5.39 percent, and as much as 6 percent depending on borrower qualifications. A credit score of at least 620 and as much as 700 is required to qualify. IHFA has maintained an excellent portfolio of loans, with a delinquency rate of less than 5 percent and foreclosure rate of less than 1 percent, Hunter said.
That exceeds banking standards, and though it has been challenging that success means IHFA has been able to sell the bonds it uses to finance mortgage loans, Hunter said. IHFA is a self-supporting nonprofit organization that is not a state agency, though it does function as an agent for the U.S. Department of Housing and Urban Development.
Loans can be made for new or existing housing, to previous homeowners, and even to refinance, which can be a blessing for buyers with adjustable rate mortgages who are seeing increased payments.
"There is still a lot of money to lend," said Katie Marcus, real estate sales manager for Mountain West Bank. "We've just tightened lending standards. There won't be any more loans made to a 400 credit score any more."
In years past, IHFA has accounted for about 10 percent of the mortgage loans made there, but now it is closer to 50 percent or more, she said.
"IHFA is a big thing in Kootenai County," Marcus said.
There is still a lot of creativity in the face of tightened standards, she said. With mortgage insurers frowning on 100 percent loans, there are options including a second mortgage for a 5 percent down payment.
"It helps people save money," on mortgage insurance, Marcus said. "Believe it or not people don't have any money around here."
IHFA offers a variety of buyer assistance and education programs, and with help from a recent federal grant is offering counseling services for those facing foreclosure or other difficulties keeping their mortgages current. Information is available by calling toll-free (877) 888-3135.
Conditions have improved significantly in just the last year, with land prices softening and sellers realizing their inflated expectations were not reasonable, Beebe said.
While IHFA will loan as much as $325,000, the average price of a home financed in Kootenai County in 2007 through IHFA was $183,000.
The under-$200,000 category represents 43 percent of home sales in recent months, according to a report from the Coeur d'Alene Multiple Listing Service, and there are now numerous new and existing homes on the market below that number.
Some builders are specifically targeting the need for affordable housing, and there is no problem in getting IHFA financing for them, said real estate agent Joel Pearl, who has new homes listed in the $135,000 for a townhouse to $160,000 for a house in the Prairie View Terrace community in Post Falls.
He said builder Daryl Wilder of Wildwood Building Co. has cut his margins considerably to offer the homes with good quality in the Energy Star community.
Wilder said he does it by purchasing the land at a low price and by getting buy-ins from his suppliers and subcontractors. The homes range from 1,230 to 1,550 square feet, and the additional couple of percentage points in cost for the energy efficiency is recovered in less than two years, he said.
"There are a lot of ways to attack affordable housing," he said. "Contractors can see there is a shortage of affordable housing."
Wilder is frustrated that all the fees imposed by the city add up to $14,000 for the small homes, and only $1,000 more for the million-dollar luxury homes he also builds.
"In a sense, they're subsidizing the high end, because there is no sliding scale," he said. "It's outrageous paying 10 percent in fees."
Wilder said he has participated in regional think tanks discussing affordable housing, but became frustrated because talking is all they do.
"I decided to act on things we had control of," he said. "More effort could be made at the policy level."
That is happening in Moscow, where IHFA's Home Partnership Foundation is working with the Home Equity Partnership Fund of Latah County, a local community investment pool, in a partnership with homebuyers to provide workforce housing.
The Green Acres development features homes built with renewable and recyclable materials. The homes are 30 percent more energy efficient than code.
"Green Acres provides affordable, energy-efficient workforce housing," said Rick Beebe, the developer of Green Acres, and brother of Jack Beebe.
He and other community contributors in the industry donated $1.3 million to the fund.
The Home Equity Partnership Fund benefits homebuyers by making it possible to qualify for a home they might not otherwise have been able to afford. If a homebuyer who would like to buy a home realizes the amount of an available mortgage loan and their down payment funds won't provide sufficient funding to purchase the home, the Home Equity Partnership Fund can provide financial support, within certain limitations, through an equity partnership investment, allowing that homebuyer to purchase their home.
For example, if a qualified buyer purchasing a home with a $200,000 market value can only qualify for $150,000 financing through their first mortgage and down payment funds, the additional $50,000 needed to meet the value of the home would be paid from the fund as a workforce housing investment.
Jack Beebe said a similar program is being worked on in Kootenai County. That could include a partnership between the nonprofit North Idaho Housing Coalition, IHFA and the Lake City Development Corp., Hunter said.
"There are some bright spots out there," Beebe said.
Information: www.ihfa.org
Mortgage payments
The mortgage payment on a $200,000 home, not including taxes and insurance, with a 6 percent interest rate for 30 years, is about $1,200, according to a table computed by Financial Publishing Co.
With no car payments or other debts and a debt to income ratio of 40 percent, household earnings would have to be $36,000 per year to qualify for that payment. At a maximum 55 percent ratio, income would need to be about $26,000 per year.
An additional $300 in monthly payments would raise those earnings requirements to about $45,000 and $33,000, respectively.
The U.S. Census Bureau reported the county's median (half making less, half making more) household income was $41,639 in 2004.
IHFA mortgage rates are as low as 5.39 percent, depending on borrower qualifications, and as much as 6 percent.
With help from a federal grant, the IHFA is offering free counseling to homeowners who are facing foreclosure or other difficulties keeping their mortgages current. Information is available by calling toll-free (877) 888-3135.
Idaho Housing and Finance Association Single family loan production
Loans 2006 Value 2007
Statewide total production 1811 $220 million 4350 $599 million
Kootenai County production 162 $25 million 385 $63.6 million
January -- April 2008
Statewide 1414 $202.6 million
Kootenai County 140 $23.7 million
Delinquency rates 4.83 percent
Foreclosures 0.89 percent
Portfolio Totals 16,000 Loans $1.6 billion
Betty Wont wrote on May 5, 2008 7:15 AM: