The city council has agreed to buy and re-sell a low-income
designated house that a local family had inappropriately refinanced
when home values were much higher, leading to foreclosure. In
October 2005, the prior owners borrowed the principal sum of
$334,000 from a lender. A year and a half later, they defaulted on
that loan. They then tried to sell the house, which is against the
resale restrictions for the home, according to the RDA.
HOLLISTER
The city council has agreed to buy and re-sell a low-income designated house that a local family had inappropriately refinanced when home values were much higher, leading to foreclosure.
RDA Director Bill Avera said the property at 431 Rustic St. is part of a 60-unit affordable housing development, Primavera Homes, which the agency originally provided the subsidy to fund. The house will be sold for $195,000.
“We are protecting an affordable unit in an affordable housing development,” Avera said.
Once the RDA purchases the home from the lender, it will be given the South County Housing, which will turn around and sell it to a low-income family with the proceeds going back to the RDA.
The bank-owned house is in the foreclosure process and was scheduled to be sold at a trustee sale. The RDA has been working with the Lender’s Council to purchase the house for $195,000.
Avera believes the buy was a good thing because the move “protected our housing.”
It came about because the low-income family in the house had defaulted on their loan when the owners refinanced when housing values were much higher than they are today.
In October 2005, they borrowed the principal sum of $334,000 from a lender. A year and a half later, the owners defaulted on that loan. They then tried to sell the house, which is against the resale restrictions for the home, according to the RDA.
This should never have happened because the home is below market rate and the owners can’t use the property to secure a loan that would exceed the value of it, said Renee Perales, projects coordinator with the RDA.
The lender takes some responsibility for the deal.
“The lender should have seen this house was resale restricted,” Perales said.
However, the city has been in contact with the lender’s lawyers and is negotiating to buy the house at the trustee’s sale for $195,000.
“If the lenders and title companies would have done their jobs, we probably could have avoided this situation,” Avera said.
