Washington Homeownership Center

What do Lummi Island, Whatcom County, Leavenworth and Seattle all have in common? In all these places, skyrocketing land values have pushed home prices far out of reach for average workers. Residents of these communities have also all recently started Community Land Trusts (CLTs) as a community-based response to runaway housing prices.

Through membership in a CLT, the community owns land and stewards the ongoing affordability of homes on its land as a community asset. While the CLT model dates back four decades, widespread implementation is a more recent phenomenon, especially in the Western U.S. In 2000 there were only a few CLTs stewarding property in Washington. Today there are nine working CLTs and five more are forming. Over 400 Washington residents now live in permanently affordable CLT homes. That number is growing rapidly, making Washington one of the hotbeds of CLT growth in the country.

CLTs keep homes in our communities affordable forever and give communities control of some of their land resources. How? By assembling grants from public and private sources, CLTs can offer homes to modest income buyers for 25% to 50% below market prices. In return, buyers sign an affordability contract with the CLT, promising to sell to another modest income buyer for an affordable price if they decide to sell in the future. This contract is in the form of a ground lease for single-family homes, or a covenant for condos. Either way, CLTs offer modest income buyers the security and wealth building opportunity of homeownership at an affordable price. Members of a CLT are everyday community people and CLT homeowners, and makes up a majority of the CLT’s Board of Directors. The membership stewards the affordability of CLT homes and makes sure that the CLT is addressing the most urgent community needs.

Through new construction or existing homes, in rural towns or urban neighborhoods, communities are turning to CLTs to create local community-controlled housing markets that serve those left behind by the traditional market. To learn more about CLTs in Washington and across the U.S., surf to www.burlingtonassociates.com.

by Sheldon Cooper, Homestead Community Land Trust (www.homesteadclt.org)

That misconception, say those working with home-buying assistance programs in Seattle and across the state, often prevents renters from making the leap to home ownership. "So many people that I talk to (think), 'Well, I just don't qualify. I'm not low or moderate income,' " said Emily Nolan, a program manager at the non-profit Washington Homeownership Center in Seattle.

"When they think of assistance, they think of welfare or ... food stamps. They think, 'I don't qualify for that, so why would I qualify for other assistance?' "

Some programs available here max out annually but others remain untapped, leaving thousands of dollars in assistance available to people earning as much as 80 percent of the $72,000 median household income in the Seattle metropolitan area. That currently translates to $40,600 a year for an individual and $58,000 for a family of four. Most programs offer deferred payments with low interest rates, and frequently provide up to $45,000 to help with a down payment.

"We don't run out of money as long as our programs keep going," said Karen Carlson, second mortgage program administrator for the Washington State Housing Finance Commission. "We have capacity for quite a bit (of assistance)."

Washington state ranks near the bottom -- 43rd out of 50 -- in home-ownership rates nationwide, according to the 2004 Census. Sixty-six percent of households in the state are homeowners. Analysts attribute the low numbers not only to soaring home values in the Seattle area, but also to the state's numerous military communities, which tend to have lower numbers of homeowners.

The Washington Homeownership Center wants to improve those rates by reaching out to the estimated 300,000 renter households statewide making at least half the median income. Those include many people under age 35, as well as teachers, police officers, firefighters and skilled laborers -- the people that Jeffrey Caden refers to as "the glue that kind of holds our state together."

"These are hard-working people, sometimes even two-income families that truly could benefit from a lot of the programs that are available," said Caden, the center's executive director. "What is distressing for us as an agency is that we see that there is money left on the table every year."

Since the budgets for many assistance programs roll over at the start of each fiscal year, now is a particularly good time to start looking at what's available, said Adrienne Quinn, director of the city of Seattle's Office of Housing.

"The money is not all out the door," Quinn said. "People should definitely contact some of our partners."

In 2002, the city began including money in its voter-approved housing levy to help home buyers. The city's contribution of $7.8 million over the seven-year levy, which expires in 2009, is combined with federal funding to provide a variety of programs run by partner organizations. Repayment rules vary, and the maximum home price for most of the programs is $335,800.

Seattle home buyers making up to 80 percent of median income can also go directly to Wells Fargo or HomeStreet banks, Quinn said, and apply for city-funded and federal assistance. The banks handle the loan application and send the information to the city, which verifies the applicant's eligibility and provides the assistance. The city, Quinn said, is able to help 65 to 85 buyers a year through all of its programs.

The Washington State Housing Finance Commission runs various programs statewide, including one that provides lower mortgage rates and then allows participants to apply for down- payment assistance, a stumbling block for many potential buyers. A survey conducted by the Washington Homeownership Center last year found that not enough money for a down payment and closing costs was the major perceived obstacle to home ownership. Another issue for many, Caden says, is the shock of realizing that what were once considered modest starter homes are now out of reach for many.

"The problem we run into with many of our clients is that their expectations are beyond what they can afford," he said. "That's always a difficult bridge to cross in terms of their own perception.

"But I think we can show them not only how quickly they can move through this process, but how beneficial it is to own your own home, no matter how small or how modest, initially."

A year ago, Fairchild was living in a one-bedroom rental apartment in Renton. She learned about the Homestead Community Land Trust, which buys properties and allows first-time home buyers to buy a house and sign a 99-year lease to occupy the lot. The property goes into a trust, and buyers agree to a resale formula that maintains the home's affordability for future owners. The concept, which began in the 1960s to help Southern farmers, is used in cities nationwide to create a permanent supply of affordable housing in gentrifying areas.

Fairchild was able to obtain $70,000 against the $235,000 cost of the home through the land trust. To that she added $20,000 given to her by a group of generous friends, a tax rebate from her son's adoption, a $10,000 prize from an essay-writing contest on home buying and a small amount in savings. Fairchild ended up borrowing $128,000 to buy the house, leaving her with mortgage and tax payments of $896 a month.

She and her 2-year-old son Luke moved into their first purchased home in December. The Rainier Valley rambler has everything Fairchild wanted: a diverse community, proximity to the library and an elementary school, and a bedroom for Luke. Out the back door is a large, fenced yard with apple, cherry and dogwood trees and now, a sandbox.

"At 47, I finally pulled it off," said Fairchild, who works at Peninsula High School in Gig Harbor. "It's very exciting to buy a house where I wanted to, with the things I wanted, in the city. I couldn't have done it by myself."

There are many reasons beyond economics to promote home ownership, said Glenn Crellin, executive director of the Washington Center for Real Estate Research. "Research that has been done over the years has clearly indicated that those persons who are home buyers are much more engaged in their community," he said.

"Everything from voting rates being higher to volunteerism, taking an interest in the children's schoolwork -- those things are all interconnected in a way that is often surprising and independent of any other socioeconomic factors."

For Fairchild, the benefit is more basic: a permanent place to call her own. "This is the house I'm going to live in forever," she said. "I'm going to keep it until I die."

For help in sorting through the variety of local, state, and federal programs available for working families and individuals that dream of homeownership, please call 1-866-600-6466 or use the WHC website at www.homeownership-wa.org.

I would like to buy a home and think that I can afford it, but I don’t have much in savings and I can’t seem to figure out where all my money goes every month. I have tried keeping track of my spending but end up getting frustrated and give up. Is there anyone out there that can help me set up a household budget and help me track my spending?

Signed, Frustrated

Keeping track of where we spend our money can be time consuming and become frustrating. However, having a budget and sticking to it are going to help you save the money you need to purchase a home. You may find it helpful to write down your household income next to all of your set expenses along with your miscellaneous spending to visually see where your money is going. There are worksheets available on our web site that you can use if you need help generating a list of expenses. Once you have established where your money is going then you can determine where you can cut back. At the same time, set a goal of how much you want to save each month. It may be helpful to pay yourself first and to put the money in a separate account so you don’t spend it.

If you feel like you would like help going through your budget and have some extra help with strategies for a savings plan, there are agencies that provide this service. These agencies can also help you address credit issues.

To find more information or an agency near you log onto www.homeownership-wa.org and search under ‘Resources Near You’ or call the Homeownership Hotline at 1-866-600-6466.

I am interested in buying a condo and my friends keep asking me about the homeowners association. I am not really familiar with what a homeowners association is or what they do, can you tell me more about them?

Signed, Condo Buyer

Homeowners Associations are common in planned housing developments and common interest developments (condos). The association is comprised of all the homeowners in the development or building. The homeowners association will have a set of covenants, conditions and restrictions (CC&Rs) – these are the rules and regulations that you will be expected to follow. These rules may cover things such as: what color you can paint your house, where boats and cars can be parked, how high your fence can be, the type of landscaping you are allowed to do, quite hours, notification to the association of construction, etc. Along with rules, there are also dues and maintenance fees. These fees maybe used for things such as: repairs (new roofs on a condo), or to provide lawn care services, maintenance of common space - play grounds and sport areas. Make sure that you are clear about how much you have to pay and keep in mind that these fees may increase over time. Remember that the association is made up of the owners and you do have a voice in the rules and you can be involved with the association.

Before making an offer ask to see the associations CC&Rs, make sure that you understand and are comfortable with the rules. You can also ask to see meeting minute notes to see what issues have been addressed or if there is scheduled or new maintenance projects coming up. Check to see if the association is financially sound; are other members paying their dues, is there money in the reserve fund, is there money for needed repairs.

Click here to go for more information…..

info on homeowners associations

'Ask Emily' is written by Emily Nolan, Program Manager for Washington Homeownership Center.

(enolan@homeownership-wa.org)

Homeowners need to be aware of a growing scam that can literally cost them their home. It is called a foreclosure “rescue” scam, and it is anything but what the word “rescue” implies.

In this scam a con artist targets those who have fallen behind on their mortgage payments and promises to help consumers save their home. In truth, they are intent on stealing the home or most of its equity.

There are 3 common types of foreclosure “rescue” scams:

Phantom help occurs when the “rescuer” charges outrageous fees either for phone calls and paperwork the homeowner could easily do, or promises additional representation that never occurs.

False bailouts occur when the homeowner surrenders the title to the house believing that he/she is entering a deal where they can remain as a renter, and then repurchase the house over a period of time. The terms of the deal are almost always so bad that the buyback becomes impossible, the homeowner loses possession of the home, and the “rescuers” walk off with all or most of the home’s equity.

Bait-and-switch occurs when the homeowner doesn’t realize he/she is surrendering ownership of the house in exchange for a “rescue”. Many believed they were only signing documents for a new loan to make the mortgage current rather than signing over the house.

How consumers in foreclosure can help themselves:

For more information contact the Washington Homeownership Center at 1-866-600-6466.