A house built through an affordable housing program went on the auction block Wednesday, which could have wasted the money and effort that built it.
Through some quick action on the part of Mountainlands Community Housing Trust, another candidate for affordable housing won the auction.
The home was built in Kamas in 2008 as part of a federal “self-help” program administered by the Department of Agriculture’s rural development office and Mountainlands. Program participants receive home loans subsidized by the department and then assist in building their own home.
According to Loomis, Mountainland’s executive director, this home was sold through a trustee’s sale on Wednesday after a lengthy foreclosure process. The original participant was a minister at a local church that closed. It was some time before he found a new job and moved out of state.
He tried to sell the home on the open market, but in the depth of the recession, there were no takers, Loomis said. Once the homes in the “self-help” program are completed, they wholly belong to the participants. There are no deed restrictions. Owners may sell the home for market value. Unfortunately, the market value in 2009 was depressed.
The family then filed for bankruptcy, after which time they were no longer motivated to sell the home through traditional means.
Loomis said the Department of Agriculture has taken so long to foreclose on the home because it exercises patience with delinquent owners.
“They have a great deal of flexibility. If someone loses a job, they can defer payments do quite a bit to work with them. It’s different from these stories of banks where you can’t even talk to people,” Loomis said.
This home going through complete foreclosure is rare, he added.
“We’ve done 63 homes under the ‘self-help’ program and assisted 25-to-30 people in Summit County in getting these subsidized loans and this is the only one I’m aware of that’s been foreclosed,” he said.
In fact, the entire affordable housing program has a good record, Loomis added. Only three deed-restricted properties have gone through foreclosure, and on two of those Loomis said he blames the lender for approving more money than the homes could sell for in any market.
Had the Kamas home been purchased by a traditional buyer, the profit from the home would have been returned to the federal government’s general fund, but not its affordable housing program, Loomis said.
Because he had been following the foreclosure process, Loomis said he was able to introduce several families to the home. One was able to secure lending in time to bid in the trustee’s sale and will now take the property.
“She got a good price with a subsidized loan and it will be a very affordable home for her,” he said.