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Kristy Dreyer and Matt Baker, first-time homebuyers, were eligible for the city of Woodbury's new home foreclosure program. Staff photo by Hank Long

A home of their own

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Talk about a busy week. Between ripping out their bedroom carpet in favor of a wood-finished floor, shopping for a stove and curtains, and transporting a second-hand fridge into their new home, Kristy Dreyer and Matt Baker also had a graduation to attend.

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Earlier this month Dreyer finished up her master's degree in special education at the College of St. Catherine. She is now on the job hunt.

But until very recently both Dreyer and Baker were on a different kind of hunt. A house hunt.

After several weeks of searching real estate high and low in the east metro area, the couple said they now feel relieved and excited to be in their new home, a town house on the 3000 block of Juniper Lane in Woodbury, which they closed on and moved into a little more than two weeks ago.

Their excitement is generated partially from the fact that Dreyer and Baker, who have been married three years, are first-time homebuyers. And the sense of relief?

Until a few months ago, they weren't 100-percent sure they would be able to afford the upfront costs of purchasing a home in Woodbury, which Dreyer's home town. Or the month-to-month mortgage payments that come along with responsibility of owning a home.

"Everybody kept telling us this is the time to buy," Dreyer said. "So we knew that with my graduation coming up and both of us having full-time jobs, that maybe it was. But we really weren't sure if Woodbury was affordable for a young couple like us, just starting out."

That notion became easier to swallow when the couple learned more about a new federal income tax credit for first-time homebuyers and also found out they were eligible for the city of Woodbury's new home foreclosure purchase loan program, which they say provided enough of a financial incentive to nudge them off the fence to purchase their first home.

Local stimulus for prospective homebuyers

The city of Woodbury's foreclosure purchase loan program, which was debuted in January, allows prospective homebuyers to take out a maximum $25,000 loan with the city's Housing and Redevelopment Authority to help towards the purchase of a foreclosed home within the city limits.

The loan has a fixed 3-percent interest rate and can be used to help with down payments and closing costs, which Baker said factored heavily in the couple's ability to make a down payment large enough to reduce their monthly mortgage and move into the town house they are now calling home.

The new home is part of a town house development along the west side of Pioneer Drive and just south of Bailey Road. Behind their home is a natural open space, which Baker said was a huge selling point.

"It's a great view, right out our dining room window, not something you'd necessarily expect with a town house," said Baker, who plans to start a vegetable garden in the backyard early this summer.

Baker and Dreyer are the first couple to use the city of Woodbury home foreclosure purchase loan program, and city housing specialist Karl Batalden hopes they are one of many.

The program, which was instituted with three other homeowner based loan programs via the city's Housing and Redevelopment Authority, aims to encourage the purchase of foreclosed properties in Woodbury by providing financing to low- and moderate-income purchasers. The program is in its pilot year and the city's HRA will evaluate its performance on a yearly basis, Batalden said.

According to the program guidelines low-interest, deferred loans of up to $25,000 are available to qualified families who earn no more than 115 percent of area median income, capped at $90,000 per household. The purchase price of the affected homes may not exceed $256,500. Single-family detached houses, town homes or condo units are eligible for this program.

But beyond the guidelines, Batalden, who works as the housing specialist in the city's community development department, said the loan program serves two major purposes: providing opportunities to families on the cusp of homeownership and improving neighborhoods affected the foreclosure crisis.

"With this program, in addition to the all the wonderful positive attributes of having a new home owner in town we are also reducing the number of vacant properties in the city," Batalden said.

Opportunity out of crisis

The city contracts the underwriting for the loan program with the Greater Metropolitan Housing Corporation, a non-profit organization that helps low and moderate-income families with affordable housing issues.

GMHC program administrator Laura Bolstad, said Woodbury's foreclosure purchase program is unique to Washington County, which has not been immune to the foreclosure crisis that has plagued other areas of the Twin Cities such as north Minneapolis and east St. Paul.

Bolstad said she believes Woodbury has developed the program at the right time, as many prospective home buyers are looking to take advantage of a situation presented by the drop in home prices and the foreclosed homes that are often priced well below their assessed value.

"From our perspective we have seen a lot of activity in terms of people who are looking to purchase foreclosed homes as a means of affordable housing," Bolstad said. "I think these are people who are renting and all the sudden they are looking at the numbers and saying, 'Maybe this is a possibility for me.'"

And those opportunities provided by the foreclosures on the market are still out there, even in Woodbury, which county officials say has not suffered as much as other similar communities when it comes to foreclosures over the last three years.

In 2007 Washington County recorded 225 sheriff's sales in Woodbury. In 2008 that number increased to 335. And in the first quarter of 2009, more than 90 homes were put into a sheriff's sale, which doesn't necessarily mean the home is vacant, but means it is in some state of foreclosure.

City officials have said that many of those foreclosed homes are eventually turned over to bank ownership and then sit vacant for several months. Many issues arise with the vacant homes that often become issues where the city may have to step in, including frozen pipes in the winter, mold issues in the spring and unmowed lawns in the summer.

In response to some of these issues, the city has organized a foreclosure task force among its staff members from various departments to look for proactive ways to tackle the foreclosure problem that has crept into the city.

Woodbury City Council member Paul Rebholz said the foreclosure purchase loan program is one way the city is trying to do just that.

"This is one way for us to try to make a small difference on these homes that are vacant (due to foreclosure)," said Rebholz, who as a council member is also a member of the city's HRA which allotted the funding for the loan program. "We're helping people who are already living in the community and renting. They are able to buy the home and then that's a way that we can help bridge the gap to get people in the home, and improve the neighborhood just by eliminating the presence of one more vacant home."

For Baker and Dreyer it's an opportunity to start a life in a community they didn't necessarily see themselves owning a home in so early in their adult lives.

"We looked in a lot of neighboring communities at first, because we figured Woodbury wouldn't have the price range we were looking for as a young couple starting out with plenty of college loans to pay off," said Dreyer, who grew up in Woodbury and has parents that still live in town. "We looked in Oakdale, Cottage Grove, and then some in St. Paul, but when we heard about the loan program the city of Woodbury has, we realized that was enough to push us over the edge to find a home here."

Baker said the couple looked at several foreclosed homes in town and noticed that many had neglect issues such as mold.

"The mold was probably the biggest issue we ran across with a lot of the houses we looked at," Baker said. "With this house, we saw it was in good shape, no mold problems, and didn't need a lot of work, so for us, it was perfect."

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