Here in Southern Oregon, in the traditional peak buying season we're seeing quite a bit of activity in the lower price ranges of the real estate market. Even Ashland, where prices are at the higher end of the scale for the Rogue Valley, sales are picking up. In Medford, White City, Central Point, Eagle Point the under $200,000 price ranges are seeing a flurry of activity, especially heavy in the lower price ranges where both first time home buyers looking to take advantage of the $8000 tax credit before it sunsets December 1, 2009 AND investors who are seeing price ranges that will cash flow and meet their investment goals are competing against each other. The inventory of available homes is shrinking consistently now, with the Mar-May 2009 number of homes on the market 27% less than the same period in 2008. Foreclosure sales are still representing a large percentage of these sales, and this market segment is likely to pick up a bit more when the State once again releases the funding for the Neighborhood Stabilization Program, probably sometime toward mid to end of July.

So, how does the "average buyer" buy a foreclosure home? Typically, you won't find the average buyer on the courthouse steps trying to pick up a bargain through the Trustee's Sale. This is where you will find the sophisticated, experienced investors who know the risks associated with purchasing foreclosed homes in this manner. The average buyer is working with their savvy, experienced Realtor, who has explained the many risks associated with these "as is" purchases where the bank who owns the property has no idea of how the property was treated by previous occupants. Their Realtor is advising their buyers how to limit risk and protect themselves through home inspections and other more specific types of inspections specific to a property, such as septic system and well/ water flow/quality inspections and certifications. And, their Realtor is watching for these properties to come on the market - knowing even before they are on the Multiple Listing Service that they are coming down the pipe, letting their buyers position themselves to pounce as they come on the market.

Sound intimidating? With the right professionals on your team, it doesn't need to be. Southern Oregon Buyers are finding amazing deals this way. They are choosing their own Realtor to look out for their best interests vs. the bank's representatives who are looking out for the banks'. Here are some financing tools that may help you if you choose to buy a foreclosure/bank-owned home:

Home Path - Fannie Mae's specific program for buyers purchasing a home that Fannie Mae owns. A "standard program", or a "renovation program" for homes in need of some work. Fannie Mae works with local Realtors and Lenders on the sale of their homes so you may work with your chosen professionals. Here are the general highlights:

• Low down payment and flexible mortgage terms (fixed-rate, adjustable-rate, or interest-only)
  
• You may qualify even if your credit is less than perfect
  
• Available to both owner occupiers and investors
  
• Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer. This is a great fit for the Neighborhood Stabilization Program (see below)
  
• No mortgage insurance
  
• No appraisal fees
  
• HomePath Renovation Mortgage Financing to fund both your purchase and light renovation

HUD Homes - These homes went back to HUD after an FHA loan was foreclosed upon. This foreclosure process is a slow one, so we haven't seen many Hud Homes on the market in our area, but we do see a handful of them in our area. With only $100 down payment required, plus other buyer incentives, buyers may find they are paying as much as they are paying for rent, but own their own home.

Neighborhood Stabilization Program - This federal program that was devised as part of the stimulus packages approved in late 2008 has had a slow start getting to market so buyers may use it. Eligible Buyers purchasing foreclosed homes in the eligible areas that have seen a high concentration of foreclosures may get up to $50,000 to be used for matching down payment, closing costs, prepaid expenses, eligible repairs and mortgage reduction. A recent change in June has led to further investigations by the State of Oregon who administers the program. This process will hopefully be complete and the Neighborhood Stabilization program re-released for eligible buyers purchasing foreclosure homes

USDA Guaranteed Rural Housing - This program is not specific to foreclosure properties as are those programs listed above, but it does have a unique feature that allows for a "holdback" of up to $10,000 for repairs to be made after close of escrow that may be financed. Buyers meeting the income/property eligibility requirements of this program end up with a great government loan with no down payment and no mortgage insurance required.

Some of these programs have income limits; some have population/area limits, so feel free to check with me to see what is available to you based on your individual circumstances.

See you at the closing table!

Karen Cooper - OR/CA Mortgage Consultant - www.Quality4Loans.com