A close-the-gap loan from the Regional Housing Alliance of La Plata County is about as convenient a way as there is for a borrower to come up with that last bit of funding needed to get into a home.
“We’ve had only two defaults in 105 loans since the program began in 2008,” said executive director Karen Iverson of the homeownership assistance the agency offers. “Both were the result of job loss.”
The RHA gets clients into their own house by making up the difference between what a loan applicant can get from a commercial lender and the market price of a desired house.
If and when the owner sells the unit, the RHA gets back the amount of the loan, plus the same percent of the profit that the loan represented of the purchase price. The concept is called shared appreciation.
Among other ground rules: The RHA focuses on La Plata County residents; applicants can’t own other property in the county.
Brenda Giannelli, the 100th client, is ecstatic about her three-bedroom, two-bath house in Durango West I.
“I work hard, and want to stay in the community, but real estate prices are unreal, so I couldn’t have afforded it on my own,” said Giannelli, a chef who whips up omelettes for breakfast and deli items at noon at Mercy Regional Medical Center.
“The alliance walked me through it,” Giannelli said. “They taught me how to prepare by selling the mobile home I had in Hermosa, and by paying off my car and how to budget,” Giannelli said. “I’m glad the community has this program.”
To qualify, applicants must take an eight-hour class covering homeownership basics and individual counseling. Both programs are free.
“We get six to 10 applications a month,” Iverson said. “Our average loan is $19,600, and the total value of loans since the start of the program is slightly more than $3 million.”
The economy is pulling out of its 2008 recession, but it’s not helping would-be homeowners because income is lagging behind the price of real estate, Iverson said.
Iverson pointed to the agency’s fall newsletter, which reports median income in La Plata County rising 94 percent since 1995 while the price of a home rose 154 percent in Durango and 125 percent in Bayfield.
“The gap is widening,” Iverson said. “We need to ensure that workers remain in the county.”
The Department of Housing and Urban Development says homeowners are “cost burdened” if they spend more than 30 percent of total income on housing.
The program benefits more than chefs. Among program participants are construction workers, teachers, medical personnel, administrative employees, food-service workers, government and law-enforcement workers, tourism workers and workers in the nonprofit sector.
“It’s a wonderful program,” said Bill Lynch, 58, a single dad with a 12-year-old daughter, who closed on a two-bedroom house on the north edge of Durango in June. “I’d tried to buy before but couldn’t get a bank to go for it. I’m self-employed, so that makes it harder.”
Owning a home makes him feel more connected to the community, Lynch said.
“When you rent, your vested interest in the community is less,” he said. “My mortgage is only slightly more than what I’d pay in rent.”
Megan Krischke and her husband, Willie, were the first to buy through the RHA, acquiring a condominium on Florida Road in January 2008. They now have a 4-year-old daughter and a 2½-year-old son.
They work for the Inter-University Christian Fellowship, providing ministry to Native American students at Fort Lewis College. She additionally does freelance marketing for small businesses.
“We’d never been able to pull together enough for a down payment,” Krischke said. “This is an amazing program, and where we live is a great place for families.”
Krischke was particularly impressed by the help from the RHA staff. She felt someone was looking out for her best interests.
A $1.1 million seed-money grant from BP in 2009 and later grants provide money for loans. La Plata County, the city of Durango and the towns of Ignacio and Bayfield put up $285,000 annually for salaries and operations.
Forty percent of the loan recipients live in Durango, 19 percent in Bayfield, 38 percent in unincorporated areas and 3 percent in Ignacio.
The median purchase price is $217,000.
With few exceptions, the RHA works with applicants earning from $36,700 to $58,700 annually. The limits are for a family of four.
“On the whole, we work with working families,” she said.
The next free eight-hour education class is from 5:30 to 8:30 p.m. today and from 8:30 a.m. to 1:30 p.m. Saturday.
daler@durangoherald.com
La Plata County housing prices
A study by the Regional Housing Alliance/La Plata Homes Fund determined the median sales price of houses in La Plata County and required income to buy those houses. The study was based on the second quarter of 2013.
The following figures were based on several assumptions: 3 percent down, 30 percent of income for a housing payment, 4.75 percent interest rate, $800 per year in taxes, $800 per year insurance and 0.4 percent mortgage insurance.
La Plata County: median home price $346,000, required income $81,084.
Durango: $370,000 and $86,323.
Ignacio: $122,500 and $32,176.
Bayfield: $253,470 and $60,824.
