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Shasta County has run out of money. The city of Redding is scrambling to find more.

Welcome to DAP circa 2008.

DAP stands for down payment assistant program and with home prices plunging and mortgage rates low, interest in this aid is booming.

Shasta County, which also administers the city of Anderson’s DAP program, as already spent its $800,000 allotment in DAP funds, placing about 25 families in homes.

Redding has done 25 DAP loans – already exceeding the total for fiscal 2007-08 – and has another 45 loan applications (about $1 million in loans) on file. The city has discussed reshuffling Redevelopment Agency funds to help fund a portion of those loans.

Meantime, the city of Shasta Lake still has $700,000 in DAP funds, which it hopes lasts until spring. Already, Shasta Lake has closed 12 loans for $809,000 since February.

Loree Byzick, housing and grant administration program manager for Shasta Lake, said they’re seeing more DAP activity in new construction and in some subdivisions where home prices were once out of reach for applicants – for example, Windsor Estates and Oak Ridge.

The average home price in Shasta Lake for its DAP program is $161,800.

More affordable housing is a ray of light in an otherwise dreary real estate market.

Call 275-7463 for more information on Shasta Lake’s program. In Redding, call 225-4045.

Home for the holidays

The decision by Freddie Mac and Fannie Mae to suspend foreclosure sales on occupied single-family homes until January gives distressed borrowers more time to reconcile a risky loan and hopefully stay in their house.

“It’s pretty big. It includes the loans they’ve guaranteed and securitized, not just the ones in their portfolio,” Ken Lawrence of Silverado Mortgage Co. in Redding said. “This is pretty huge. Nobody gets kicked out for the holidays.”

The suspension of sales starts Nov. 26 – the day before Thanksgiving – and goes through Jan. 9.

The impact on Shasta County isn’t certain. What we do know is notices of default – the first stage of foreclosure – in Shasta County totaled 128 in July, 181 in August, 52 in September, 78 in October and 43 the first nine days of November, according to Fidelity National Title.

The numbers are down, probably due to state legislation signed in June that forced lenders to notify borrowers at least 30 days before filing a notice of default.

FHA or bust

If you’re a lender and you don’t do FHA home loans, you’re not busy.

An oversimplification? Maybe.

But take the case of longtime mortgage specialist Lon Alward, who e-mailed me last week with news he’s joining Mission Hills Mortgage in Redding after owning West Side Mortgage Co. since 2005.

Alward said the housing slowdown and the fact he didn’t have access to FHA financing was why he moved to a larger firm.

“The FHA availability is the big reason,” Alward said, adding that an estimated 85 percent of all financing in Shasta County today is FHA.

With homes getting more affordable by the day and underwriting tightening for other loan products, FHA has become more popular for first-time home buyers.

Eligibility requirements for the government-backed loans have basically remained the same.

Ironically, three years ago, when all you had to do is breathe to get a mortgage, FHA loans were scoffed at. Why deal with the paperwork when all you need to do is state your income to get that house?

“They were considered too rigid,” Amerigroup Loan Center President Tom Semb said of FHA circa 2005. Today, Semb figures about 60 percent of the loans he writes are FHA.

Original Article HERE