By SUE RYAN
News staff writer
November 14, 2007

While the collapse in the sub-prime lending market has not yet hit the Gorge region hard, housing advocates are preparing for when it does.

The Columbia Cascade Housing Corporation received $5,000 from the HOME Foundation in October, which it intends to use to educate people so that they don’t have to lose their homes to foreclosure.

HOME is a program that is part of Oregon Housing and Community Services. Realtors fund-raise for the foundation portion and recommend recipients.

Director Ruby Mason explained that when many buyers bought homes with sub-prime loans, they did so through an adjustable rate mortgage or ARM. Once rates escalate, buyers can find themselves unable to afford payments on their homes.

“When the ARM goes up, it’s frequently hardest for first-time house buyers or people who have refinanced their homes,” she said.

Mason warns that buyers whose mortgages are set to adjust in the next year to two may be those most at risk. She said the focus of their educational program will be targeted at them.

Mason has been working with John Hutchinson, a home ownership specialist with the corporation. He explained their strategy is to work with clients in pre-purchase counseling sessions as well as take the message to the public. His concern is for the more at-risk populations of the region.

“A foreclosure can happen to anyone but particularly vulnerable are people of color, low income and the elderly,” he said.

While foreclosures cost the borrower, especially impacting their credit record and wiping out equity, Hutchinson emphasizes that banks and the community are also impacted by the process.

His research shows that lenders can lose an average of $44,000 to $58,000 per completed foreclosure. Municipalities can lose money at an estimated $400 to $34,000 per foreclosure.

Although Oregon is ranked 27th with 725 foreclosure filings, the state’s average is up about one-half percentage since last year.

Nationally about two million sub-prime borrowers may lose their homes to foreclosure through 2009. Those losses will cost $71 billion in housing wealth.

“What saves us (the Gorge) is appreciation; but in a stagnant or declining property market people will face more problems,” Hutchinson said.

He believes while the Gorge housing market is not stagnant, it’s certainly not as robust as it was a year ago.

Realtor Ruth Chausse, who also serves as president of Mid-Columbia Realtors Association, recommended the Gorge program for the grant. She said while houses are on the market for longer, she still sees it as a healthy housing market.

“In Hood River, we’re so small we can be impacted by one sale so it’s very unique,” she said.

But housing prices have come down from forecasts. Chausse said the prices are as stable but are not as high as people expected.

“The average housing prices are the same as the last two to three years instead of what people anticipated, which was that the prices would increase by 20 percent each year,” she said.

For those already in a tight corner to make housing payments, selling the house might seem to be one solution to staving off foreclosure. However, that could not be an option if a sale doesn’t happen in time due to a slow market.

Hutchinson and Mason emphasize it’s precisely those kind of worries they want to help people work through so they don’t have to lose their homes.

“Our intent is to get out there and help people out,” Hutchinson said. “Unfortunately at times like these, there becomes another problem with foreclosure scams trying to take advantage of those already in trouble.”

He warned people not to trust anyone who offers to “quickly solve their problems” by offering instant cash. Hutchinson and Mason are working on the formal program for educating homebuyers but can be reached before then.