$50k free to buy a foreclosure?

From today's Oregonian:

"If you meet the income guidelines, the government might have a house deal for you. You may be eligible for a $50,000 interest-free loan to help move into a foreclosed home. The program, adopted by Congress last year, is aimed at preventing foreclosed houses from standing empty, bringing down neighborhood livability and property values."

I honestly don't see much downside to this program.

For the buyers you get free money, which you only have to pay back when you sell.

They are limiting it to Bank Owned properties, which limits the buyer's risk (we bought a bank owned home last year, I'll talk more about it soon) and is what I feel the best way to get a good deal on a foreclosure.

This program isn't keeping people in homes they can't afford, it's just helping keep houses from sitting vacant and gives banks an incentive to sell them at realistic prices.

Unfortunately there are only 160 bank owned houses in Multnomah county at the moment, so the pool of available properties is limited. But they are out there.

One Problem We Aren't Facing

This isn't strictly Portland related, but I thought you guys might be interested.

We had dinner with a friend from Boston who's been watching the housing market there, waiting for prices to drop to the point where they can afford something (patience...) and she had a great story.

Apparently there are so many houses that went into foreclosure, or were bought back by banks last winter, and ended up sitting vacant over the winter. The banks would turn down or turn off the heat to save money, and of course the pipes would freeze and burst. SHe has seen a number of houses that at a minimum have holes in the floor from water damage, and in the worst cases have developed nasty cases of mold.

I can't imagine that banks did this intentionally, but it speaks to the volume of properties that they must be dealing with, overwhelming their reduced staff.

Luckily we shouldn't have that problem here. But I have been seeing more and more houses that look like they've been empty for a while.

Update - 2815 NE 57th Ave Sold!

A reader sent in an update on 2815 NE 57th Ave. (see previous post).

Quick summary: The house sold for $485k in Dec 05, after only 2 days on the market. It was bought back by the bank at auction in August 2007 for $400k.

The bank initially listed the house at $339k in May this year, and it just sold for $285k in July, after 62 days on the market.

For those keeping score that's a 41% decrease from the previous (fishy) sale at $485k.

It's also a 16% reduction from the recent listing price of $339k.

That comes out to $96.54 per square foot of finished space, way below recent rates, which according to Trulia have been closer to $200 / square foot.

I'd say it's fairly priced, if not cheap. Granted it's not oozing charm, but it is over 3000 square feet and has been redone recently, hopefully properly.

Granted this is a foreclosure, but if that's the new going rate for price/square foot, a lot of people are in for a shock.

Thanks for the update James!

Reader Sightings – 2815 NE 57th Ave

Jamie found this gem while searching recent RMLS listings. It's currently bank-owned and they're blowing it out the door for 20% less than the amount for which they bought it back.

2815 NE 57TH AVE, MLS# 8038680

Here's the recent sale history:

08/16/2007	Bank reposession		$400,000.00
01/13/2006	Sale (remuddled?)		$485,000.00
08/18/2005	Sale		$222,500.00
09/18/2002	Sale		$159,900.00

Judging by the photos it was remodeled within an inch of it's life before the sale in Jan 2006. I swear any character this house had was restored right out. Who needs that pesky wood trim, and those hard to clean hardwood floors?!? Let's put in nice beige carpet and the finest Home Depot cabinets!

At only $155 per square foot it didn't seem like a horrible deal at $485k, but somehow that still seems way overpriced to me.