A house of one’s own

Rent (or own) with Section 8

The new homeowner, Reuben Darlington, would rather not talk at all. And if he must talk, he would rather talk about his job: time-resolved spectroscopy. But time-resolved spectroscopy, however interesting, is not why a bank, a loan underwriter and the Missoula Housing Authority held a little celebration on April 16. The occasion for that event was that Darlington had become the first person in Montana in two years to use a federal Section 8 voucher—commonly used to subsidize rent—to purchase a home.

The word “home” might be a stretch. More accurately, says Darlington, he “paid for the property and got a shack thrown on top of it.”

The Missoula Housing Authority (MHA) administers the Section 8 program, and it is only MHA’s poor luck that Darlington isn’t a gregarious up-stager yearning for the limelight. “I would rather just be left alone,” says Darlington, who showed up at the party because he was asked to do so.

A Section 8 voucher provides the difference between one third of a qualifying person’s income and the cost of rent. Anyone at or below 50 percent of area median income (AMI) qualifies. Most of MHA’s clients are at 30 percent AMI, says Peter Hance, MHA’s executive director.

“The Housing Authority was granted Section 8 in 1987,” says Rose Murphy, manager of the MHA’s occupancy department. But until four years ago, the vouchers were used exclusively for rent subsidies.

“Four years ago, Missoula Housing Authority was one of the first housing authorities in the country to say, ‘Let’s start using our vouchers for home ownership,’” says Hance. The Quality Work and Housing Responsibility Act of 1998 authorized such use. The MHA, which has approximately 750 vouchers, set aside 30 to be used for home ownership.

Between 2001 and 2002, MHA closed on five homes. The closings weren’t easy, and were especially complex for lenders, says Hance. They involved more paperwork than typical closings. And they took more time. A typical real estate loan can close in two or three hours, banks told Hance, and the Section 8 closings took 15 hours. At the same time, the market in Missoula skyrocketed. The banks were “really, really busy” with easier closings, says Hance.

Missoula’s booming market meant more complex transactions took a backseat and, in effect, ensured that MHA’s folks were edged out of buying homes.

“In about 2002,” says Hance, “the program comes to a screeching halt.”

For the past two years, MHA has been searching for a bank that would take on the extra burden of the Section 8 closings, and simultaneously, has been working to streamline the paperwork, say Hance and Murphy.

In October, says Murphy, she approved Darlington’s eligibility for an MHA home ownership voucher. All they needed was a bank. In December, First Horizon Home Loans came forward. Darlington, says Murphy, was ready to roll. “He had his down payment,” she says. “His credit history was good. He didn’t have any blemishes.”

He closed at the end of January, and Hance seems delighted and grateful that his clients are back in business.

“Reuben,” says Hance, “starts us up again.”

“I used Section 8 housing to get through school,” says Darlington, “to help pay for rental assistance.”

Now, he works full-time for the University of Montana. He won’t say how old he is—“Pretty irrelevant, don’t you think?”—but he’s something of a brainiac lab-rat who wanted to purchase a home in central Missoula for himself and his 6-year-old daughter. He took homeWORD’s homebuyer readiness class, where he found Realtor Rochelle Glasgow—“I could tell that she was a no-nonsense-type gal.” He completed MHA’s Family Self-Sufficiency program, which monetarily rewards its graduates for professional advancement and increased income. “The goal there is to sort of give you some incentive to move up in the world so you’re not going to suck off the government for the rest of your life,” he says.

He looked at two homes, and ended up purchasing the first one he saw.

“I walked in, and I had a sinking feeling in my stomach,” he says. A feeling, he says, “that it was going to be the best that I could get in this community.”

Fixer upper?

“You could say that,” says Darlington. “You walk in the place and the stench of too many animals in too small a space on one piece of carpet for way too long will knock you down.”

He replaced posts and beams. He ripped out the bathroom, which was rotted to the studs. He pulled up the carpet. A crew of four people spent four days ripping out layers of plywood that “came up in toothpick-sized pieces.”

The good news is that the house is in his preferred neighborhood, and it’s a double lot, which means he has an extra-large yard. He won’t say how much he paid, but he believes that for Missoula, he got his money’s worth.

Only a couple hundred housing authorities nationwide are using Section 8s toward home ownership, says Maureen Rude, director of the Montana Partnership Office of Fannie Mae, which purchases the loans from the lender, First Horizon. “It’s spotty,” she says. And in Montana, First Horizon, based out of Great Falls, is the first bank to accept the vouchers.

“Putting the deal together is really complicated,” says Rude.

A series of phone calls to local banks was met with a variety of responses, including unreturned messages, interest in participation and ignorance of the Section 8 program altogether.

“There are a lot of unknowns out there for banks,” says Murphy. Only a handful of banks have signed on, but ever since the April 16 celebration, interest is picking up.

“Now, other lenders are saying, ‘Gee, I’d like to do it,’” says Rude.

Murphy has at least eight other households approved for one of the 30 home ownership vouchers. Now, those families are shopping for lenders. Murphy is hopeful that more banks will agree to use the vouchers: “That’s always been part of our goal.”

Add a comment