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Home Ownership and Section 8 Mortgage?

By
Real Estate Agent with Coldwell Banker Traditions

Home Ownership and Section 8 Mortgage?

By: Elaine VonCannon, ABR, SRES, REALTOR, NOTARY, PROPERTY MANAGER, TEAM LEADER

 

You know I was speaking with my Broker/Owner the other day.  He made a comment which caused me to pause and think.

I do property management and we were talking about landlords and tenants.  The topic switched to home sales in our area, can you picture that. This is the place where you smile.

Now to the serious topic of this blog, I will proceed.  My Broker said, "Elaine, I do not understand why instead of section 8 vouchers, that someone could not come up with a way for this money to count as part of a mortgage payment for people."  This was how our discussion started, and it started me thinking.

With all the foreclosures that our country is facing, leaving vacant properties which can become an eyesore or worst in a community, surely there is a way that this could work.

Here is how I think it could work:

1.  The applicant for the Section8 mortgage would have to have at least 8 years of steady employment, whether it is a single parent or a couple.

2.  The applicant would have to have at least a 600 credit score.

3.  The applicant would have a 10 year mortgage payment at 4% interest, which would adjust to 5% for the remainder of the loan (no more than 30 years).

4.  The applicant would have to be able to pay on their own at least 1/3 of the mortgage payment with the Section 8 mortgage paying the remainder for the 10 years.  The remainder of the mortgage would adjust to 1/2 the next 10 years and then to 2/3 that the applicant would pay for the remainder of the mortgage.

5.  The applicant would also have to have a good rental history with no evictions or judgments.

6.  At any time the applicant looses the section 8 mortgage waiver then the applicant would be responsible to pay the whole mortgage payment.

               A.  A single parent would remarry.

               B.  Income levels rise, they would have to turn in a wage form every year for review to see if they still meet the criteria.

               C. Death of the mortgage holder the estate would have to procure their own mortgage or place the property for sale with review of the listing agreement by the Section 8 mortgage holder.

7.   The applicant would receive all the tax deductions that are allowed by the tax law under home ownership, with the Section 8 mortgage holder providing the documentation at the end of each tax year.

8.  If the property is sold then all equity that has been occurred would be earned by the applicant.

9.  An applicant would only be eligible for this mortgage 2 times in their lifetime.  The limit to the amount of the mortgage would be determined by the area that the applicant purchases in and the amount that they could be approved for taking into account the portion that the applicant would be responsible for paying.

10.  If the applicant buys a short sale or foreclosure then the repairs would be consider part if the loan and money would be escrowed at the time of closing for the repairs.

I firmly believe that a system like this one could work.  Put the Section 8 money to work for the good of the people not just for rent.

 

Visit my web sites to view other listings at www.voncannonrealestate.com    www.estatesinvirginia.com You will also find articles and more information on homes, the Virginia real estate market and my team.

Comments (3)

DeAndrea "Dee Dee" Jones
Samson Properties - Manassas, VA
DMVRealEstateChick

Chesapeake and Norfolk City in VA has a program that converts to a home ownership program.  Redevelopment and Housing Authority development department offers an assistance grant to those who can qualify.

Jan 28, 2009 02:35 AM
Troy Erickson AZ Realtor (602) 295-6807
HomeSmart - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Elaine, I agree with most of your points, and would like to see a program like this.  I feel that someone should only be eligible for this once, and that there would be strict income requirements as well as guidelines on home prices and loan amounts.

There are a few questions, however.  What happens in a market like we have now, If the Sec 8 owner loses their job or something and cannot afford their payment?  Also, if they need to sell and their home has decreased in value by 30%.  These people would be in the same situation as many regular homeowners are currently in.

Jan 30, 2009 06:23 PM
Elaine VonCannon
Coldwell Banker Traditions - Williamsburg, VA

Hi Troy,

Thank You for your comments.  I have been pondering on them.

1.  If they lose their jobs to no fault of their own, like downsizing or company folding, etc.....Then they would have a one time option they could exercise of 12 to 18 months of payments, with a small monthly increase on the loan to pay it off once they are working again.  Sort of like you borrow on your full life insurance or  like an equity line.

2.  If they need to sell their home and it has decrease in value, they have no equity in it then they could sign the title over to be resold.  Also they would not have a black market on their credit report due to the market condition.  They would also have to voluntarily leave the home in good condition and not more that 2 payments behind.

 

Anyway this is just an outline of what could be done it help our current market.  We all no real estate drives the market. And we as REALTORS should be thinking outside the box to help get it back on its feet!

Once again Thank You,

Elaine

Feb 12, 2009 02:32 AM