YOU ARE HERE: HeraldMail HomeCollectionsLoan

County to help secure loan for housing program

December 01, 2009|By HEATHER KEELS

WASHINGTON COUNTY -- The Washington County Commissioners agreed Tuesday to help the Housing Authority of Washington County secure a loan to start a lease-to-own program that would help moderate-income families become homeowners.

The commissioners voted 4-1 to purchase a $400,000 certificate of deposit from Centra Bank as part of the collateral for a $2 million loan for the new program. Commissioner William J. Wivell voted against the purchase.

The Housing Authority plans to use the $2 million loan from Centra Bank to buy 11 or 12 single-family homes costing $140,000 to $150,000 each, fix them up and lease them to qualifying families, Housing Authority Executive Director Richard Willson said.

The Housing Authority will provide the families with homeownership counseling and will contribute a portion of their monthly rent to a savings account for an eventual down payment to buy the homes they rent, Willson said.


To qualify, participants would have to be employed in the county, be willing to enroll in a self-sufficiency program, be unable to qualify for bank financing when they start the program and have household incomes below 120 percent of the local median income, he said. For a family of four, 120 percent of the local median income is about $80,000 a year.

Willson said those moderate-income families would have a greater chance for success in the program than those who participated in a similar Housing Authority program in the 1990s. That program, which accepted participants making less than half the median income, led to successful purchases of only two or three of the 25 homes involved over a 15-year period, he said.

In the proposed program, Willson said the length of the lease period will depend on the amount of credit repair needed, and could be as short as one to three years.

The Centra Bank loan will be revolving, allowing the Housing Authority to use the proceeds from the homes it sells to buy new homes for the program, Willson said.

The loan would also be tax-exempt, lowering the interest rate by about one-third, he said.

As collateral for the loan, the bank proposed taking a lien on 75 percent of the value of the properties purchased and holding $500,000 worth of CDs, Willson said. The Housing Authority will put in $100,000 of that total, he said.

If the project fails, the bank will seize the real estate first, then the Housing Authority's CD, then, as a last resort, the county's CD, Willson said.

The commissioners approved the proposal with four caveats:

o They specified that, in addition to the ceiling of 120 percent of the local median income, the program should not accept participants who make less than 80 percent of the local median income.

o They specified that the Housing Authority cannot spend more than $200,000 on any one property, including money spent fixing it up.

o They stipulated that when selling the homes to lessees, the Housing Authority should accept only fixed mortgage rates.

o They specified that the agreement with the bank must release the strings on the CD after eight years, if not sooner.

How they voted

The Washington County Commissioners voted 4-1 to purchase the certificate of deposit.

John F. Barr -- yes

Terry Baker -- yes

Kristin B. Aleshire -- yes

James F. Kercheval -- yes

William J. Wivell -- no

The Herald-Mail Articles