The 69-year-old owner of a printing company said medical bills caused him to fall behind on mortgage payments and forced him out of his Pompano Beach residence, but he and his wife, Amparo, hope to return to the housing market this fall as “boomerang buyers.”
Last year, they qualified for a new program through Home Partners of America that allows them to lease a Margate home with the option to buy later at a predetermined price. They now can focus on qualifying for another mortgage without the added pressure of competing with renters and buyers in a red-hot real estate market.
“Moving is not a lot of fun,” Amanzio said. “This takes a step out of that process. Now we don’t have to worry about going to find another house.”
Home sales and values have been on the rise for the past three years, and this spring has been especially busy as buyers rushed to take advantage of an improved economy and mortgage rates in the 4 percent range. But many people hit hard by the housing bust aren’t participating in the recovery because they can’t qualify for a mortgage.
With some exceptions, Fannie Mae and Freddie Mac, the government agencies that back more than half of all home loans, require a borrower who completed a short sale to wait four years for another federally insured mortgage. A foreclosure requires a seven-year wait.
By 2022, more than 300,000 South Floridians who lost their homes during the bust will have cleared up their financial issues and become eligible to buy again, according to a report this year from RealtyTrac Inc., a foreclosure listing firm.
Paul Muolo, managing editor of the Inside Mortgage Finance newsletter, said borrowers who endured foreclosures or short sales should be able to own again, as long as they’ve rebuilt their finances and secured steady jobs.
“Yeah, sure, why not?” Muolo said. “It’s just like anything. Just because you were caught smoking behind the locker room in high school doesn’t mean you should be tarred and feathered for the rest of your life. It’s a new era.”
To reach those potential owners, Home Partners launched its lease-to-own program in 2012 and moved into South Florida last summer, so far investing $18 million in purchasing 58 homes. The Chicago-based company says it has bought more than $700 million of single-family homes in more than 30 markets nationwide.
Residents qualify for the program by proving they have sufficient income and no excessive debts. They select a real estate agent of their choice to help them find properties. Home Partners negotiates with the seller, paying cash in hopes of securing the deal.
After the sale, the company may repaint or make other minor cosmetic changes. The tenant moves in and rents the home but is under no obligation to renew the lease or to buy the property.
The rent increases annually at 3.75 percent. During the first year of the lease, the resident can buy the home at any time by paying 5 percent above Home Partners’ total acquisition costs, including renovations.
For example, if the company spent $300,000 on a house, the resident can buy it at any point during the first year for $315,000. The price increases by 5 percent each year after that.
Home Partners doesn’t provide financing, so buyers have to obtain their own loans.
“It’s straightforward,” said Ayoub Rabah, senior vice president of marketing for Home Partners. “We want to be extremely transparent.”
The Amanzios picked out a three-bedroom lakefront home with a pool. Home Partners bought it last fall for $286,000 and made minor repairs and upgrades before they moved in.
The couple pay about $2,500 a month in rent. They hope to buy the home in November for $316,000.
Henry L. Kaplan, office manager of Century 21 Tenace Realty in Boynton Beach, said the program provides rent and purchase price security at a time when renters and buyers face uncertain price hikes.
Kaplan said residents probably can find less expensive rental homes without being in the program, but the major benefit is that it puts people who want to own on the path back to homeownership.
“Nobody has a crystal ball, there are no guarantees, but the resident has a chance to buy a house at below today’s market values,” he said. “The worst-case scenario is they move out after a year. This is a no-brainer.”
© 2015 the Sun Sentinel (Fort Lauderdale, Fla.), Paul Owers. Distributed by Tribune Content Agency, LLC.