Perfect Circle Credit Union in Richmond, Ind. is piloting a different method of disposing of the REO houses it obtains in foreclosure, by fixing them up, furnishing them and making them available in a rent-to-own sale.
Under the plan, rent on the home will be $350 per month for two years, and then the $350 becomes a monthly mortgage payment. The rent payments will go toward the mortgage.
The credit union is calling these mortgages Lend Right loans, or “story” loans, because they are based on the applicant's story, if they have good explanations for the problems on their credit and the wherewithal to move forward.
As part of a pilot, the credit union spent $6,000 to renovate an REO property that was put on display Sunday during an open house. Most of the furniture was bought on Craig's List and at garage sales. Credit union employees did personal renovations on furniture and chairs after learning how by watching a YouTube video.
Sunday's open house and a second open house Jan. 15 will introduce the house to people seeking to buy the fully furnished property. Potential buyers are being asked to join the credit union, which is open to anyone who lives or works in Wayne or Henry counties; fill out a loan application; participate in a budgeting course and answer five questions in a video interview. Several judges will choose from the applicants the recipient of the house and that recipient will be announced in late February.
The applicants who complete the process favorably will be pre-approved for loans they can use on similar homes.
A house-warming and move-in party is planned for the new homeowner March 3. The credit union plans to give the family a digital camera and hopes to have them blog about their experience as homeowners.
