With the help of an Oakland-based company that is buying up hundreds of bank-owned properties in Contra Costa and Solano counties, an Antioch family is the new owner of the same home it lost to foreclosure almost two years ago -- and at less than half the price it originally paid.
"We're so lucky. I mean it's the kind of thing, you tell it to the guy on the next bar stool, he thinks you did something illegal," said Darren Gates, a 40-year-old contractor and father of four.
Gates and his wife, Zelena, are the beneficiaries of a program started by Waypoint Homes, which was founded in 2009. Among its partners is former National Football League placekicker Doug Brien, who played football at Concord's De La Salle High School and Cal, where he earned a bachelor's degree. He began investing in real estate in 1997, three years into a pro career that started with the 49ers' 1994 Super Bowl championship team.
Brien says one of Waypoint's top goals is getting foreclosure victims back into stable homeownership, a business model that appears new to the Bay Area, according to mortgage experts.
Waypoint bought the Gates' home when it went into foreclosure in 2009 but made a deal with the family: It could continue living there as renters and, under a special program, could start earning credit toward buying a home again.
Although Brien cautions this is a rare outcome, and a first in the company's history, the Gates family succeeded in buying
Fewer than 10 percent of Waypoint renters are in that program, Brien said, though the company is pursuing another model in a similar spirit. More than half of Waypoint's renters are former homeowners, many having lost their homes to foreclosure, and under a "lease with rewards" program, the company is grooming those renters into a second customer base that can use Waypoint as their agent to get back into homeownership.
Waypoint is focused primarily on Contra Costa and Solano counties, where home prices are lower, though the partners say they plan to spread into Alameda County this year.
Foreclosures remain high throughout the Bay Area, according to census information and foreclosure data website ForeclosureRadar.com:
In all three counties, the notices were down about a third from the previous year but remain a severe problem for many residents -- and possibly an opportunity for local investors.
Waypoint started off buying about 900 foreclosed homes, Brien said, mostly in East Contra Costa County and in Solano County, and hopes to maintain most of them as rentals. But under the special leasing program, tenants in good standing can get free counseling to improve their credit and earn 10 percent of what they pay in rent to put toward the purchase of any home at the end of their lease, as long as they use Waypoint as the buying agent.
The partners tout the program as the first of its kind in a new, quickly growing housing market for single-family rentals in the wake of the nation's mortgage crisis.
GI Partners, a Menlo Park-based equity firm, announced Wednesday it will be investing at least $100 million in Waypoint's efforts, which Brien said will allow it to leverage as much as $250 million in buying power to acquire foreclosed housing.
John Holmgren, a mortgage broker with Oakland-based firm Holmgren & Associates, said he's not familiar with Waypoint and has not yet seen the model the company proposes elsewhere in the local market.
"I haven't heard of it, but it's a very ingenious idea in this market," he said.
Oakland real estate broker Paul Valva -- who agreed he hasn't seen the model applied anywhere in the Bay Area so far -- said investing in rentals is a good idea right now, with rents going up across the Bay Area as former homeowners flood the rental market.
Brien says the "lease with rewards" model is preferable to the one the Gates family used, because it provides flexibility to both parties and offers a better chance for a strong return on Waypoint's investment in the houses.
Partner Gary Beasley said the ideal time frame to hold on to a property is about five to seven years. The company expects housing values to begin recovering in about two years.
Darren Gates said he and his wife bought their house in Antioch's Mira Vista Hills development in 2005, near the height of the housing boom, after a long struggle to compete with other buyers.
"We looked at 30 or 40 houses," he said. "We would offer $5,000 or $10,000 over the asking price, and somebody else would offer $20,000 more."
Though modest in size, the home they found is close to a charter school the children attend, as well as a park for them to play in.
The home cost $455,000, and when the market went badly south a few years later, Gates says he was paying as much as $3,400 a month -- in interest only -- for a house that had plummeted in value. Compounded with a drastic drop in work for his self-owned contracting business, the family decided that "walking away was the only choice that made sense," Gates said.
So the family did what thousands like them have done: They stopped making payments and waited for the notice of foreclosure to arrive. It took almost a year.
"We'd boxed up our important stuff and put it in storage in case we had to get out on one day's notice," Gates said.
But when the Waypoint partners visited their home and spelled out the plan -- allowing the family to rent it with an end-goal of repurchasing it -- it was a no-brainer.
"It was a relief, a blessing, luck, anything you can call it," Gates said.
The purchase price this time around? About $180,000.
In 2009, Waypoint paid $143,000 for the house at auction, which is where it pays cash for most of its properties.
"We're buying about 30 houses a month right now and plan to be at about 100 a month by the end of the year," Brien said.
"It's hard to see during a recession how things can turn around," Beasley said. "But on a regional level, we've seen booms and busts even more drastic than what we're going through now on the national level."
Contact Sean Maher at 925-779-7189. Follow him on Twitter at @OneSeanMaher.