Finance Authority of New Orleans' soft-second mortgage program was in limbo for months
A program that succeeded in getting more than 400 first-time homebuyers into rebuilt, storm-damaged homes -- after various fits and starts -- is finally winding down after staggering to the finish line.
View full sizeDiah Stephenson was one of those who had trouble selling their houses because the buyer had problems getting money from the FANO program. He was photographed in October. The Finance Authority of New Orleans' soft-second mortgage program helped first-time buyers of moderate means with forgivable home loans of as much as $65,000 and up to $10,000 in closing cost assistance. The $27 million effort worked well in 2008 and a second round was about to begin in 2009, until the plug was suddenly pulled.
Unfortunately, the second round of the subsidy had already been announced, and about 62 home loans were approved for the program before the Finance Authority pulled the money back.
State officials expressed concern about compliance with federal grant rules, and when Mayor Mitch Landrieu came into office in May 2010, the 62 applicants and the $10 million set aside for the program were back in limbo. At the start of 2011, none of the files had moved, and applicants and their real estate agents were angry.
But the process has finally come unstuck. As of Friday, 17 of the loans had closed, 15 more were scheduled for closing, three are awaiting final approval from the state and 23 applicants were ruled ineligible, according to Ryan Berni, a Landrieu spokesman.
Stephanie Woodside, a real estate agent who has been a leading advocate for the applicants, welcomed the progress.
"It's good news that some of them have closed," she said. "The ones that were found ineligible are unfortunate, but some of them had problems with the income requirements. There should be less than 20 left to close and we'll be happy when they close."
She added: "But they're closing two or three every other week, and that's not acceptable, considering how long people have been waiting and under contract."
Deputy Mayor Cedric Grant said in December that he was concerned about how long people had been forced to wait, and emphasized he wanted to get closings done as quickly as possible. But there are about a dozen approval steps each file must pass through, from the lending bank, to the Finance Authority and then to the city and the state.
The city ruled nearly two dozen of the deals ineligible. Berni said some applications were dated before the second round of the program opened in 2009, other applicants were found to have owned a home previously, and others had household incomes that exceeded the limit of about $70,000. Woodside said she thought some applicants were approved by banks because their individual income was low enough but were later rejected because of their spouse's income.
The city could have as much as $7 million left after all eligible grants are paid, and it is trying to start a similar soft-second program with $52 million from the state, an effort spearheaded by the Jeremiah Group. Any money left over from the aborted second round of the city's program is likely to be added to the state's soft-second fund.
Woodside said she is meeting with city officials next week to discuss the $52 million program.
David Hammer can be reached at dhammer@timespicayune.com or 504.826.3322.