September 2002 - Faces of Affordable Housing

The Faces of Affordable Housing . . . conjures up all kinds of stereotypes doesn't it?
But, truth be known, these faces touch us all daily. They belong to our school administrators and teachers, our computer programmers and store clerks, our police and fireman.

These are the faces of a single parent seeking a reputable school district, a grandparent wanting to purchase a retirement home close to their remaining family, a divorcee re-entering the work place, a blended family beginning anew and young couples looking for a safe environment to raise their small children.

Following are a few success stories and affordable housing programs that helped some of our local faces obtain their dream of homeownership.

Bank Repo/FHA Loan
Sometimes when helping a client in the affordable price range you have to be creative and very persistent. Our clients were newlyweds, a computer programmer and a school administrator, who were blending their families. They were looking for something out in the country with a bit of land. After a great deal of looking, we found a house out in Woodstock Ohio via the Internet, since it wasn't in our MLS. After some detective work we located the listing agent's name and number, and arranged a showing. When we looked at the house it was everything they wanted and then some.

The only hitch was that it was a bank repo and our folks were only approved for FHA. They also needed some help with closing costs. We added these costs to the listing price and made the offer. It took about 7 weeks and a lot of work from the listing agent and us, but we finally got the deal to come together and close.

My clients are now living in a 3 story, 3,000 square foot Victorian that sits on 4.5 acres. They paid just $106,000.
— John & Barbara Lowry, CAHR, Coldwell Banker King Thompson

DETAILS:  Federal Housing Adminstration (FHA) Loan

• Property must be owner occupied, 1-4 family houses, FHA approved condos, or FHA approved PUD's. 
• Gift Funds can be used for down payment, closing costs, prepaids and/or buydowns. Funds must come from an approved source.
• Maximum loan amount is $275,000 (Columbus MSA 1-unit property)
• Housing Ratio: 29% of gross monthly income Debt Ratio: 41% of gross monthly income
• Seller Contributions up to 6% of the sales price for closing costs and prepaids. Closing costs may also be financed.
• No geographic restrictions. Maximum sales price varies by area.

DAP/Home Buyer Counseling Program
I'm always elated when ‘good things' happen to ‘good people.' In April, a previous client referred a 27 year-old single mother with two children. She worked in data entry and was very excited about becoming a homeowner. I was truly blessed with this customer because she had done all the right things (with her credit and bills) in preparing to become a homeowner.

When we initially met, she thought she could only afford a home in the $70,000 price range. She had saved for her downpayment (assuming the loan would be FHA and she would need the normal 3%).

During our profile appointment, I explained to her that she would have additional expenses of closing costs and out-of-pocket fees for inspections, et cetera. She was a little dismayed and resigned to the fact that she may need gift funds from her family — a route she did not want to take. She decided to press forward to get a home for her family.

By the time the lender, LaTanya Johnson with Strategic Mortgage, and I had completed her financing, she qualified for the DAP and was enrolled in a Home Buyer's Class through Columbus Neighborhood Housing Services (CNHS) with Larry Christopherson.

Without having to pay closing costs, she was able to purchase a home for $87,500 and walk away with a credit! She was ecstatic! Not only was she able to afford a higher priced home, she could also afford new appliances and did not have to ask for gift funds from her parents.

Had it not been for the downpayment program, everyone working together and the seller's cooperation, we could still be searching. Kudos to everyone who is working hard to make home ownership possible!
— Gail Tate-Johnson, Coldwell Banker King Thompson

DETAILS:  City of Columbus Downpayment Assistance Program (DAP)

• Must be first time homebuyer purchasing (new or existing) principal residence 
• Grants up to 5% of the purchase price of the home, not to exceed $3,000
• Grants used for downpayment, closing costs, and/or a reduction in principal mortgage amount. 
• Buyer must have $500 of his/her own funds (no gift funds) for downpayment. 
• Purchaser must reside in the house for five years, or grant is subject to recapture
• Credit and homeownership counseling required
• Purchase must be within City of Columbus corporate limits and within the Columbus Public School District
• Contact: Jean Cocroft (614) 645-7255

Fifth Third Bank Good Neighbor program
Another great example of how the right loan program can work for you was with a buyer of mine who thought that she would need to wait 6 months or more until she had enough money saved for a downpayment. She was a single female, college graduate, no children working for a Social Service Agency. I had her check into Fifth Third Bank's Good Neighbor program which gives buyers an opportunity to “roll” their downpayment into their mortgage. As the home was in an appropriate census tract for the program, she was able to buy immediately without using the money she was saving for the purchase.
—Sharon Young, CAHR, Dooley & Co.

DETAILS:  Fifth Third Bank Good Neighbor Program

• Low to moderate income buyers
• Expanded debt ratios
• Reduced closing cost
• No PMI
• Five different Good Neighbor programs
• Must purchase in certain census tracts
• Contact any Fifth Third Bank Loan Officer

OSU Homeownership Incentive Program
One of my buyers was a single adult female with grown children. She was on staff at OSU and had continued to rent while she put her children through college. After all the kids had graduated, she was then able to do something for herself. Through The OSU Homeownership Incentive Program, she was able to buy a home of her own which was close to where she works.

The Ohio State University Homeownership Incentive Program is a wonderful example of how a partnership and an employee benefit can really work to help employees make home buying purchases closer to their workplace. I have sold quite a few of these properties and have really enjoyed the opportunity this benefit program has afforded many OSU staff and faculty. I wish there were more employers that would step up to the plate and help with any part of the buying process.
—Sharon Young, CAHR, Dooley & Co.

DETAILS:  OSU Faculty and Staff Neighborhood Homeownership Incentive Program

• Owner-occupied property must serve as principal residence (single family, 2- 4 family, condominium and new construction) 
• Must be in the University District. 
• 0% interest forgivable loan (second mortgage) in the amount of $3,000 must be used for down payment, closing costs and/or reduction in principal amount. 
• Recipients required to sign a loan agreement and second mortgage with the University
• Recipient must occupy the housing unit for a period of not less than five (5) years. 
• Second mortgage is forgiven at a rate of 20% per year with the entire second mortgage amount forgiven after year five (5) of occupancy. 
• Northside Development Corporation (NDC) Home Buyer Information, 614-299-9859

The Futures Program
One very fulfilling experience this year was working with a couple in their thirties whom I met at a Home Buyer's Seminar I held at the Karl Road Library. The husband is a painter, his wife is in the medical field, they had no money to put down but needed to find an affordable home in the Westerville School District.

The Futures program — a downpayment assistance program that allows the Seller to pay 3% of the purchase price and a flat $500 fee on homes priced $120,000 and below — was the perfect affordable housing program for this couple. This win-win program saved the seller money and allowed the buyers to purchase the home with 0% downpayment.

We got them pre-approved and, with patience, persistence and daily viewing of the MLS, we were able to find the perfect condo. However, the condo was in an estate and had already had a contract fall apart because the prospective buyers were not pre-approved. I always counsel my buyers on the importance of getting pre-approved and, as it turns out, this is what got our contract accepted.

Working with the Futures staff was great. They were professional, courteous and helpful. They made the job easier.

Did I mention that this was blended family with four children and, while in contract, they found out that they were going to have another baby. What perfect timing to be buying their first home.
— Victoria Brenes, CAHR, Coldwell Banker King Thompson

DETAILS:  The Futures Home Assistance Program

• Gives qualified buyer (1%-6%) downpayment and closing cost gifts 
• Can be used with any loan program that allows downpayments to come from non profits
• 24-hours from request to funding (if needed)
• Emergency same-day funding possible
• Home Buyer education is recommended, but not required
• No unnecessary certification or approvals for builders, agents, closing officers or lenders
• No income limits or asset restrictions
• Low service fee for Sellers
• Contact: Futures Home Assistance Program 800 672-4055, www.fhap.org

Section 8 Homeownership Program and Other Products
I am currently working with a grandmother who is eligible for the new Section 8 Homeownership Program. This is an FHA-based program (administered through the Columbus Metropolitan Housing Authority (CMHA) in Franklin County) that allows Section 8 tenants to use the same monthly payment they receive under the Section 8 rental housing program toward a mortgage. We are also trying to get some city or state DAP funds. This grandmother occasionally keeps her grandson and is employed by a local lumber company as a stock clerk. She is looking to purchase a home on the eastside.
— Carol Bakle, The Alt Company

DETAILS:  Section 8 Homeownership Program

• Allows Section 8 tenants to use the same monthly payment they receive under the Section 8 rental-housing program toward a mortgage payment. 
• Applicant required to attend homebuyer counseling program
• Contact: Tony Green, CMHA at 614-421-6250 or by email at tgreen@cmhanet.com.

Veterans Administration (VA) Loan

A young married couple with two children purchased a rehabbed home owned by Columbus Housing Partnership (CHP) on a lease/purchase agreement. The husband was a veteran and was completing his apprenticeship training with a Columbus union. Once the training was complete, they were able to close the VA loan through Bank One. CHP has more new homes coming on the market in 2003 that buyers can lease/purchase through a tax credit program.
— Carol Bakle, The Alt Company

• Must have a Certificate of Eligibility
• Property must be owner occupied, 1-4 family houses, VA approved condos or PUD's.
• No downpayment required within VA guidelines.
• Gift funds may be used for downpayment (if any), closing costs, prepaids, and/or buydown. Funds must come from immediate family member.
• Maximum loan amount is currently $203,000
• No geographical restrictions

Ohio Housing Finance Agency (DAP) Downpayment Assistance Program

Another young couple I am working with would like to purchase a rehabbed house on the Westside. He works at Fed Ex, his wife is a pharmacy assistant and they have no kids. They are working with a housing non-profit and hoping to get bond money through the Ohio Housing Finance Agency (OHFA) to help with the purchase. They also anticipate getting a seller contribution to help with closing costs.

An older divorcee in her mid-to-late 50s was looking to purchase a home for retirement. She is employed with a Credit Reporting Agency here in Columbus. She was able to purchase her retirement home in Southeast Columbus through the Columbus Housing Partnership (CHP), using City of Columbus Downpayment Assistance (DAP) funds and an FHA loan.
— Carol Bakle, The Alt Company

• Property must be owner-occupied, 1-2 family houses, approved condos and approved PUDs.
• Loans up to $2,500; nine-year deferred second mortgage carries 0% interest rate. A portion of the loan is forgiven each year and is completely forgiven after nine years.
• Balance of the DAP loan becomes due if the home is sold, transferred or refinanced within the nine-year period.
• Applicant's income cannot exceed 80% of the median gross income, adjusted for household size. A portion of the DAP funds are also reserved for individuals and households earning less than 65% and 50% of median gross income.
• Ohio Housing Finance Agency, Office of Homeownership, 77 S. High St., 26th Floor, P.O. Box 1001, Columbus, Ohio 43216-1001, 614.466.7970

These and other affordable housing options are featured in CBR's Affordable Housing Manual. The manual is available for purchase in the CBR Member Service Center for $10 plus tax and will be available later this year on the CBR web site.

Following are excerpts from her presentation during which she sited several projects/programs administered by the Columbus Board of Realtors® Affordable Housing Committee.

“Today there are young people in this country who can't live where they grew up. There are people who can't live where they work. Instead, they must commute great distances because they're priced out of the market and there's a lack of decent affordable housing.

At risk are not just the indigent and working poor. Our nation's teachers, firefighters and municipal workers now are among those with the most critical housing needs. Fewer and fewer can live where they work. Will our own children and grandchildren be able to afford a home?

This is a big problem. Realtors® didn't cause it, but we're in a position to help solve it. We see the face of this problem every day when buyers come to us for help.

Housing opportunity means more than just affordable housing in the traditional sense. Much of the national debate has focused only on the very poor. Certainly this segment of society faces critical housing needs and we will work to help meet them, but we also hope to expand the debate to include economic barriers limiting housing opportunities for Americans of all income levels.

I want Realtors® to become known for helping to create healthy communities

Realtors® have a critical stake in this issue. Real estate markets require healthy communities to thrive, and healthy communities require a plentiful supply of affordable housing opportunities for all economic groups.

First-time buyers make it possible for other homeowners to move up the homeownership ladder. But without an adequate supply of affordable housing opportunities for first-time homebuyers, healthy homeownership markets begin to fail.

I believe that, as Realtors®, we could find no higher purpose than to do everything in our power to see that all American families, no matter where they live, enjoy the choice of a full range of viable housing opportunities.”