Our View: Down payment program merits praise
April 21, 2010
The Yampa Valley Housing Authority's down payment assistance program has started distributing loans, and that's excellent news.
The affordable housing discussion in Routt County and Steamboat Springs often has raised more questions than answers. As a community, we have some programs in place but still are trying to figure out what works best and how to make it happen. This down payment assistance program is one much-needed tool in the toolbox.
YVHA started with more than $200,000 in its fund, $100,000 of which came from the city, and has approved $88,000 in loans to help people enter the housing market. That represents 10 approved loans, some of which are multiple loans for a single buyer. The payments are financing the purchase of five homes, said Mary Alice Page-Allen, YVHA asset and program manager. One has closed, and she expects several more to close this month and next.
One noteworthy point is that these aren't gifts; they are loans that recipients must pay back. The program gives people single payment deferred loans, requiring them to pay off the money upon refinancing, when they sell the home or after 30 years.
The interest rates on those loans range from 3 percent for people or families who make 100 percent or less of the area median income to 5 percent for those who make 101 to 150 percent of area median income. For a family of four, 100 percent of AMI is $80,600, according to figures as of January. For that size family, 150 percent of AMI is $120,900.
Most of the loans are going to people who make about 75 percent of area median income, Page-Allen said last week.
Because recipients are paying back loans with interest, this system creates a revolving fund that can continue to help new families enter homes. That's ideal, and it's an appropriate use of public dollars dedicated to creating affordable housing. The down payment assistance program also doesn't restrict the type of property. At least one person has bought a market-rate unit, which means there aren't restrictions on its appreciation.
Those beneficiaries could then eventually hit the point where they can resell that home for a profit and possibly upgrade locally.
Page-Allen said the program doesn't work with risky borrowers. Loan recipients must put down at least 1 percent of the purchase price, and one has put down nearly 10 percent, she said Tuesday.
"The YVHA and its predecessor, RALF, have done probably over its lifetime 30 down payment assistance loans, and I'd like to reiterate that they are indeed loans, they are not grants … and we have never, ever had a default," she said.
In the Steamboat area, based on home ownership patterns, YVHA could receive its money back before the 30-year cutoff if all goes well with the homeowner. Page-Allen said the typical turnover in the housing marketplace is five to seven years.
This down payment assistance program isn't necessarily a be-all, end-all solution to Steamboat's affordable housing issues. But it's a solid program during a tough economic time, when potential buyers need help, and building units and larger-scale assistance might not be feasible.
"If people really want to understand what this program is and what the criteria are, they need to take the time to pick up the telephone and talk to me and find out what's involved in the program," she said. "We do require that we have capable and ready buyers, and it means that people have worked hard to … become responsible home buyers, and I think that's really important to understand, that we aren't working with people who are just looking for a handout. They're looking for a hand up."
It's good to see these public dollars being put to their intended use — helping eligible residents enter the housing market. Kudos to the Housing Authority and the city of Steamboat Springs for the ground already made on the down payment assistance program.