Director's Message
August 20, 2009

To: Employees and Partners of Oregon Housing and Community Services

From: Victor Merced

Re: Director’s Bulletin –

• Congressman Seeks Housing Solutions
• Foreclosure Mitigation Need is Huge
• Housing Opportunity Meetings Scheduled
• Project Openings
  

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Congressman Seeks Housing Solutions

Congress should inject liquidity into the bond market through Freddie and Fannie, I suggested late last week to Oregon Rep. Earl Blumenauer, who is holding a series of fact-finding meetings on housing in his district.

The 3rd District congressman, from Portland, is gathering information to respond to the housing crisis. I was honored to attend.

Oregon Housing and Community Services takes the position of many housing finance agencies across the country that government sponsored entities Freddie Mac and Fannie Mae have the opportunity – indeed, the obligation – to reinvigorate the housing markets by providing greater liquidity. And Congress should make it happen.

This is in keeping with the position of U.S. Sen. Barney Frank of Massachusetts, a leader in getting our nation’s housing back on track.

Meeting with Congressman Blumenauer, I also called for laws to strengthen the first-time homebuyer tax credit, which has been a powerful influence on the recent surge in home sales. But more is needed.

I suggested making it easier for states to “monetize” the tax credit to put cash in the hands of buyers for less complicated home purchases; increasing the credit from $8,000 to $15,000 to boost its effect; and changing rules to allow existing homeowners to upgrade.

Foreclosure Mitigation Need is Huge

Foreclosure mitigation counselors are in seriously short supply in Oregon, and OHCS is depending on a third round of federal funding through NeighborWorks America.

We expect that to come in September, and there’s talk that a fourth round will be needed because of the tremendous demand for counseling.

More and more Oregonians face loss of their homes. As many as 19,000 were in the throes of foreclosure through the second quarter of this year, according to RealtyTrac. (See more on the data in my next entry, discussing causes of foreclosure, below.)

Indications are that foreclosures are surging in Oregon, while the state faces a serious scarcity of counselors to help people facing loss of their homes, likely their most important asset. The shortage is critical.

I increasingly hear stories of desperate families, never before out of work, now faced with loss of their homes without benefit of income or foreclosure counseling. All too often, they have not engaged in discussion with their housing lender and the lender is soon to take back the house and sell it at auction.

Complicating the issue is the fact that in order for a borrower to negotiate a loan modification with the lender, the borrower must have a job.

This creates a vicious circle: The homebuyer cannot make her payment because she has lost her job, and she cannot work a deal with the bank to reduce the payment because…she has lost her job and has no income or has reduced income.

Oregon’s unemployment, at 11.9 percent in July, is still among the highest in the nation. The consequence is devastating families being forced from their homes.

Another phenomenon in today’s troubled housing market involves many sophisticated buyers, who have lost jobs and explicitly decide not to make mortgage payments, knowing they cannot make them consistently. Instead, they assemble enough money for first- and last-month’s rent, and simply wait until they lose their homes, whereupon they move to a rental.

There is a bright spot. Oregon Housing and Community Services is working closely with the Department of Consumer and Business Services to implement key legislation to inform borrowers about their rights to meet with lenders. Oregon Senate Bill 628 is planned for implementation October 1.

Housing Opportunity Meetings Scheduled

Please mark your calendars for the upcoming Housing Opportunity Implementation Forum in a city near you.

These are planned to take the pulse of Oregonians about putting House Bill 2436 into effect. It provides a dedicated source of revenue to our agency.

Oregon Housing and Community Services is seeking a broad range of opinions about strategies, as Deputy Director Rick Crager reported to you several days ago.

The concept is to gather information to best serve the needs of Oregonians who will be helped by the bill. Broadly speaking, they are the homeless, first-time homebuyers and those who live in subsidized, multifamily housing.

We are refining the exact times and places for the meetings within the framework of the following incomplete information. So, make a note of the meeting that suits your time and location.

If you cannot attend a Housing Opportunity Implementation Forum, or even if you can, please give your views in writing. Address ideas on strategies for distribution of revenues from HB 2436 to:

Lisa Joyce, Director of Policy and Communication
Re: Housing Opportunity Implementation Forum
Oregon Housing and Community Services
725 Summer St. NE, Suite B
Salem, OR 97301
Lisa.joyce@state.or.us
503-986-0951

Thank you in advance for your input.

Project Openings
Two OHCS-financed project openings were held in recent days —

All that is valuable in human society depends upon the opportunity for development accorded the individual

~ Albert Einstein

Victor Merced, Director
Phone 503.986.2005
Email: victor.merced@hcs.state.or.us
www.ohcs.oregon.gov

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