Efforts to put home-buying families into Manteca foreclosures will get a boost in the coming months from the Neighborhood Assistance Corporation of America.

Realtors are working with NACA to set up a series of workshops in Manteca to help educate potential buyers to take advantage of the organization’s unique no down payment, no fees, and no closing costs loans that are at the below prevailing interest rates of 3.85 percent for 30-year fixed mortgages. The mortgage program is made possible by a $3 billion commitment from Bank of America.

It is seen as a solution to a problem identified by Manteca leaders early in 2011: There is a large pool of renters who have the income to make monthly housing payments but can’t buy because they can’t come up with the down payment and closing costs plus they are being aced out by investors paying cash. In the case of Bank of America, anyone in the NACA loan program gets first crack at homes they foreclose on in Manteca and also would receive a slight price break.

Realtors believe the NACA program will help accelerate the market absorption of foreclosures to rid Manteca of the shadow inventory that is weighing down the housing recovery.  Manteca has chalked up four consecutive years of 1,160-plus existing homes being sold annually due largely to the number of foreclosures. There is a shadow inventory of additional foreclosures that haven’t come to market yet that need to be sold before prices can completely stabilize.

NACA’s most high profile effort in the housing market has been to bring struggling homeowners together with banks to try and modify loans to avoid homes being foreclosed. The NACA home buyers program is aimed at increasing home ownership and significantly reducing the potential of future default by educating buyers.

Jenny Darling of EXIT Realty noted the NACA program is tailor-made to help communities such as Manteca hard hit by the foreclosure crisis. It is designed to fight the growing tide of investors snapping up foreclosed homes as well as to make it possible for households that couldn’t otherwise qualify for mortgages to become buyers. It also is part of an effort to help put people in homes by taking advantage of the lowest housing prices in Manteca since 1998.



Loans at 3.85% translate into $859 a month for a $180,000 home purchase

At 3.85 percent, a buyer would pay $859 a month for principal and interest to buy a $180,000 home. The median selling price of an existing home in Manteca in 2011 was $179,950. The only money required at the loan signing are funds for the impound account for property taxes and homeowners insurance. There is no mortgage insurance per se required.

Loans can be for 110 percent of the appraisal to provide money for repairs upfront.

Monthly payments also include funds for the impound account to cover property taxes and homeowners insurance plus  a $50 membership fee for NACA that is in place for five to 10 years. Buyers also have to pay for inspection fees such as for termites as well as have one or two months of reserves to make mortgage payments that NACA can verify.

The bottom line, on a $100,000 loan with a traditional 5 percent down mortgage requires $11,500 up front while NACA requires $2,284 with at least a third of that funds a reserve for future mortgage payments.

For hard hit neighborhoods - of which virtually all of Manteca qualified - there is no income limit for those seeking NACA loans. The only financial restriction is the upper price of the home being bought as they cannot exceed the FHA loan maximum for the community. In Manteca’s case, almost every resale home sold in 2011 was below the FHA cap.

The mortgages are open to those who have had bankruptcies, credit issues, and foreclosures as well as to those who have never owned a home. The qualifying criteria is fairly simple.

Buyers must:

• Have 12 months straight months of not missing payments on any of their bills including rent.

• Take budgeting and financial workshops so they can effectively manage their money.

• Participate in a “payment shock” program if their future mortgage payment is going to be higher than their rent by setting aside the difference between the future mortgage and current rent in an account for three to six months without increasing credit card balances or loans.

• Volunteer four times a year for 10 years with a NACA program.

Another unique feature of the NACA loan is the ability to buy the interest rate down. For every one percent to the mortgage amount or “point” that is paid up front, the interest rate is reduced by a quarter of percent (0.25) for the life of the loan.

If a buyer had $9,000 to buy down the interest rate on an $180,000 home, that would translate into 5 points or a 1.25 percent drop in the interest rate dropping it down to 2.6 percent for the life of the loan. That would drop the monthly payment for principal and interest on an $180,000 home from $859 a month to $711.

NACA, with roots going back to 1998, is the nation’s largest homeownership and advocacy organization.

For additional information on the upcoming NACA workshops that are in the process of being established contact either Darling or Felix Sosa at 823-1234. The two also plan to help other real estate agents in Manteca become familiar with the NACA mortgage program.