Personal Narrative: Solving The Foreclosure Crisis

I was a home owner who lost a home to foreclosure in 2011. I purchased a home for my brother who is learning disabled. Initially when I bought the home for him he had a roommate and knew he needed to keep the roommate to make the payments.

After about a year, his roommate moved out and I had to pick up the remaining $600.00 which was very hard to do. I was able to make the payments for about 3 years but then I could no longer afford it. I was in the middle of a modification with Wells Fargo, they had all of my paperwork, I was npv positive. They denied me on Tuesday and foreclosed on Wednesday!! Which now is illegal per CA HBOR. The realtor who came to evict my brother lied to him. He came to the home at 9:30pm and told my brother that he had to move. This was untrue. He had only purchased the home he had not evicted my brother. My intentions were to fight the foreclosure, but the realtor offered my (learning disabled) brother $3,000.00 to move out now. Which is my brother were not diabled he might have thought, If I have to move out, why are you paying me. Anyway, this home was supposed to make sure my brother was never homeless. Now he has no home and of course has spent the $3,000.00.

I happen to think a Rent to own program would be a very good way for homeowners to get into a house.

i would make sure the homeowner has the ability to make the payment and would probably stick to a much lower

dti.

Once you get this program up and running, I would love to offer it to potential clients. I am a realtor who is going to school to earn my Paralegal AA and possibly go on to law school. My goal of course is Real Estate and Consumer Protection Law!! Below is the essay.

Boomerang Homeowners
Rent to Own Program
JoAnna Jensen

[e-mail]

Foreclosure and how to help Boomerang Home Buyers

The foreclosure crises took many homeowners buy surprise. There are several ways to help previous homeowners who were affected by the foreclosure crisis. Rent to Own may be one of the easiest ways to assist a prospective homeowner.

Typically a person who has a foreclosure on their credit report will need to get their credit cleaned up, and will need to save at least a 5% down payment. For FHA loans, a prospective homeowner needs to wait at least four years. However, working with investors, homeowners can help the economic recovery by not needed to repair their credit report as quickly and not needing a sizable down payment.

Down Payment:

In order to protect the investor a down payment of at least $5,000.00 should be used and put into a trust account.

On time payments for two years:

The rent to own contract could be based on two years of on time payments, requiring payments to be make no later than the 15th of the month, to ensure the prospective buyer can afford the price point.

Marketing:

I would market this program with both top producing loan officers as well as top producing Realtors. I would probably also contact newer Realtors who have not sold a lot of home so they could have a competitive niche product to offer potential clients. Sometimes, newer agents are willing to do the footwork needed to go out and meet clients because they are eager to make money.

Investors:

In order to make a rent to own program make sense, you need private money. I would try to get an interest rate that is of course higher than what the investor would get if they simply put their money in a money market account but not too high that is scares potential buyers. I would shoot for 7 to 9% interest. This way, if the investor is borrowing money, the buyer is paying overage that will go towards the down payment so the investor has more security that the buyer will actually buy the home at the end of the intro period.

Price point of purchase:

I would make sure the total payment would include PITI so the buyer is actually making a payment that covers the full mortgage payment as well as putting

money into a trust account that could be used after 12 months or 2 years toward a down payment equal to 5% of the purchase price. The total payment should not be more than 30% of the buyer’s gross income, front end and no more than 50% dti.

This is a program that can be very effective for both the boomerang home buyer as well as the investor.