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| City's first-time homebuyer loans go unused |
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| Written by John Saiz / Patterson Irrigator / | |
| Wednesday, 29 August 2007 | |
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“No one showed up
Patterson’s community development department wants to give away $100,000 to first-time homebuyers, but so far, it hasn’t been able to do so.
The city has $280,000 available for hopeful homebuyers. However, none of the nearly 150 people who have shown interest in the city’s program have qualified.
City employees say an expensive housing market made it impossible for people to qualify until recently — and now, tentative lenders are the problem.
“They don’t make enough to qualify for the conventional mortgage,” assistant city planner Teresa Salas said.
The city’s first-time homebuyer program aims to lend people as much as $100,000 over 30 years to help pay for a home in Patterson. Of the loan amount, $56,000 would accrue 3 percent interest after the first five years.
The remainder of the loan — as much as $44,000 — need never be paid back if the homebuyers keep the home as their primary residence for the life of the loan.
Despite the cushy terms, the city has not been able to find people who pass the bureaucratic hurdles necessary to qualify.
First, people must not exceed a maximum income level. That level changes depending on how many people make up the household. For instance, a family of four must earn less than $44,800 annually.
Second, applicants must find a lender who is willing to give them a loan for what the city loan won’t cover, with a mortgage payment that would not exceed 30 percent of the prospective buyer’s income.
Third, they must find a home selling for less than $362,790 in Patterson.
So far, the criteria have collectively proven too much for anyone to be approved.
Finding people who make less than the maximum income has never been a problem, but finding a home selling in Patterson for less than $362,790 was extremely difficult up until recently.
As home prices drop, though, doing so is becoming much more possible. The median cost of a Patterson home in July was $363,000, according to the Central Valley Association of Realtors. In July 2006, the median price was $455,000.
However, it’s still a struggle to find lenders willing to work with people who make less than the city’s maximum income requirement.
“That’s what’s been the hardest on a lot of people,” Salas said.
“No one showed up but one lady. That was a big bummer,” Salas said. “She took the interest form but never returned. That happens a lot.”
In an attempt to kick-start the program, the Patterson City Council increased the maximum loan amount from $75,000 to $100,000 several months ago. It’s a technique that has worked elsewhere.
“Ceres was having problems, but when they jumped to $100,000 it was much easier,” Salas said.
But Patterson has not seen similar results.
“Their home prices (in Ceres) are much lower than Patterson,” Salas said.
The county also gives loans to first-time homebuyers who buy in unincorporated areas, with good success.
“We do about two a month,” said Aaron Farnon, a Stanislaus County associate planner.
The county’s unincorporated areas also tend to have less expensive homes than in Patterson, and the county’s loans are set up slightly differently.
The county lends people $37,500 at 3 percent interest for 55 years, with the first 10 years deferred. It also lends another $37,500 that never needs to be paid back, if the buyer keeps the home as the primary residence for the lifetime of the loan. “For us, that’s worked really great,” Farnon said. To reach John Saiz at the Irrigator, call 892-6187 or e-mail him at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it Comments
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What a scam..