After stints as a nurse and a cattle farmer, Aileen Baker was seeking a new career in 2007. Switching jobs and communities in her early 50s was certainly hard. But she was determined.

 

“I went back to school to be a teacher,” she said. “I had to start at the bottom.” That was only one of her challenges. She also had to find a home. “I could not afford a house around here,” Baker said.

 

Baker was fortunate to benefit from the changing Northern Virginia real estate landscape, which had foreclosures and short sales in great supply. Her biggest support system came from the Virginia Housing Development Authority. She signed up for VHDA’s first-time home buyers class, which helped her understand the intricacies of obtaining an appropriate home loan. Working with a patient, value-seeking Realtor® helped, too. In November 2008, Baker located the right townhouse – a foreclosure – in Chantilly, her home today.

 

Helping The First-Time Buyer Fulfill That Dream

Each year, VHDA helps thousands of home buyers throughout the Commonwealth just like Baker. The organization devotes itself to providing the tools and knowledge needed for low- and moderate-income Virginia residents to earn—and keep—their slice of the American dream.

 

“We like to get the word out because we have a good story to tell,” noted Susan Dewey, VHDA’s executive director for the past decade. “Not everyone is familiar with us.”

 

Providing important consumer education has a ripple effect throughout the local economy and ultimately makes communities more secure. “We think the first-time home buyer is the key to market recovery,” Dewey explained.

 

The Role Model for Housing Finance Agencies

Also serving as the President of the National Council of State Housing Agencies, Dewey currently leads the nation’s association for all state Housing Finance Agencies (HFAs) and related businesses. NCSHA is a non-profit that focuses on federal advocacy efforts for affordable housing and provides programs for its members.

 

No question that VHDA is the nation’s role model among all HFAs. “We are one of the top nationally by every measurement,” noted Dewey, “our earnings, production, assets, and our Standard & Poor’s and Moody’s bond ratings.”

 

First-Time Home Buyer Education Is A Priority

NCSHA members can learn from VHDA’s best practices. “First-time home buyer education is the hallmark of what we do,” said Dewey. The free, bilingual VHDA home owner education classes are offered online or in classrooms. Attendees learn the basics about balancing a budget, plus everything from learning about finance to FICO scores, lenders to loans, escrow to appraisals, closing documents to deposits, pre-approvals to pre-qualifications. It’s all about understanding the home buying experience, and its alphabet soup of acronyms.

 

A state-chartered organization, VHDA formed in 1972 to implement the Commonwealth’s affordable housing programs. Operating independently, with a board appointed by the Governor, it raises money by selling bonds to private investors and uses no state funding. Realtor® Kit Hale from Roanoke serves on the current board.

 

As a result of the recent mortgage market overhaul, “we have moved to Ginnie Mae as a securitization vehicle,” Dewey explained. “We don’t get any state tax payer money. Most of our financing now is through the FHA program. FHA grandfathered governmental entities, which allows us to continue to provide down payment and closing cost assistance with a second mortgage to qualified loan applicants.”

 

Just launched this past June is the Homebuyer Tax Credit Plus loan, which lets borrowers finance the down payment and closing costs. “First-time home buyers can have a vehicle for their down payment and closing costs from the second trust,” Dewey explained. The first mortgage can be for the maximum FHA mortgage, and the second mortgage can be up to 5 percent of the sales price with no cash back. There is no interest on the second mortgage for the first year to allow home buyers to take advantage of the federal $8,000 first-time home buyer tax credit as long as the loan’s close date is no later than November 30, 2009. If the borrower elects not to use the federal credit to repay the second trust, the amount is simply amortized over the remaining term of the mortgage.

 

While many banks have loss mitigation departments that are overworked with short sale and foreclosure cases, VHDA has a much lower foreclosure rate. However, market realities in the past two years have made keeping a perfect score for solvent loans nearly impossible, primarily because of unemployment. “You can’t always do it,” Dewey admitted.

 

Taking On the Right Level of Risk

Still, VHDA did not put itself out on a limb with risky mortgages the way some other lending institutions had. “We were pressured quite a bit… when [the real estate market] was hot about how we are able to serve our clients in Northern Virginia. We have our advisory board, and we wrestled with [offering ARMs].”

 

Leveraging greater debt with risky loan types was not part of VHDA’s plans, which turned out to be fortuitous. “We basically said that [such risk] does not feel like it is right for first-time home buyers,” Dewey explained. “It meant giving up production, but we did stick it out, and we are glad now.”

 

It is a stretch to say that the state organization does not have an eye toward profit. But profit is not its raison d’etre, since profits ultimately go back into its programs. VHDA’s top priority is to serve home-seeking clients by guiding them into secure loans that stick. “Our mission is what drives us,” beams Dewey. “Getting people in homes and keeping them in homes.