First-time homebuyers find themselves creditworthy

Melissa Sanchez

Apr. 13, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- YAKIMA, Wash. -- Here's further proof that Yakima is riding out the recession better than most places:

We're now among the nation's top cities where bank loans to consumers actually grew last year, according to a recent study by Moody's Economy.com and Equifax Inc. (NYSE:EFX)

That means that banks here -- unlike in many Nevada, Florida and California cities where the housing market collapsed -- feel the local economy is safe enough to lend more money to people.

For those looking to take out mortgages to buy homes, that's good news.

"We're seeing an upswing," said Nick Marquez, a real estate broker who credits Yakima's agriculture-based economy for his increased clientele. "I couldn't understand why Yakima isn't bigger on the map than it is now.

"Being in a smaller community where people know people, you're going to run into somebody you already know and have a lot more smart choices made."

The only places where consumer-loan growth was higher than in Yakima are Huntsville and Mobile, both in Alabama, and McAllen and Brownsville, both in Texas, according to the study of 207 cities. The Wall Street Journal first reported the study, provided by two data-gathering firms, Equifax and Moody's.

In Yakima, consumer loans -- such as mortgages, home equity, auto, credit-card and student loans -- grew by 10.69 percent in the fourth quarter last year when compared to the same period a year earlier.

That compares to an average of just 2.65 percent nationwide.

"So if you're a normal individual and already a homeowner, you're going to be able to sell your house fairly easily," said Mike Gilmore, CEO of Yakima Federal Savings and Loan Association, which deals primarily with home mortgages. "It's a pretty good market for homes. People can still get loans."

Octavio Saucedo is one of those people. The 25-year-old Yakima caregiver was recently approved for a $70,000 mortgage to buy his first home.

"This is the best investment any person can make," said Saucedo, who will soon move with his wife and daughter out of his parents' home and into a two-bedroom house of their own in Union Gap.

"I had to build my credit slowly, first taking a car loan," he said. "Now I was able to get a low-interest mortgage."

Lending growth in Yakima is attributed to the area's lack of mega-commercial real estate development, unlike other parts of Washington, said Scott Jarvis, who regulates 81 state-chartered banks as the director of Washington's Department of Financial Institutions.

"Everything is relative," he said, adding that Washington has one of the nation's lowest foreclosure rates. "Seattle is better than its compatriot cities. And you on that side of the state are better than us on this side."

Making big loans for high-valued real estate -- called "jumbo loans" -- was a risk banks took on the housing markets in places along Puget Sound. A jumbo loan is defined as one exceeding Fannie Mae's (NYSE:FNM) and Freddie Mac's (NYSE:FRE) loan limits and currently stands anything larger than $417,000 for a single-family home.

"It's the exposure they have that has them challenged," Jarvis said. "You don't have as many structures that might fall in the 'jumbo loan' category, and loans in the lower price ranges are more available."

Yakima brokers, who recognize that the housing market tends to pick up in springtime, say homes between $75,000 and $175,000 are selling within weeks. An $8,000 federal tax credit for first-time homebuyers included in this year's stimulus package helps, too, said Marquez, the broker.

All this positive attention for Yakima -- which was also projected to have the country's best employment outlook next quarter in a study published by Forbes -- may draw outside investors into the area, Marquez said.

"A lot of people are coming up here for the fact they lost their homes somewhere else and they've got to start from scratch," he said. "I've been courting some investors and some relocators."

Newstex ID: KRTB-0407-34107036