$52 million program goes live today
New Orleans Mayor Mitch Landrieu launched a long-awaited homebuyer subsidy program Thursday that could help as many as 1,000 families buy new or restored homes in the next two to three years.
The city is today launched a long-promised $52 million subsidy to help first-time homebuyers acquire affordable homes."This program's gonna work, and it's gonna work because we've finally figured out how to put all the ingredients together," Landrieu said.
The $52.3 million "soft-second mortgage" program has endured many starts and stops over the years. The program was approved nearly four years ago by the state and former Mayor Ray Nagin, but it never got off the ground.
The faith-based Jeremiah Group, however, continued to fight City Hall for the money until it finally became a reality.
"We're ecstatic, but now we're all eyes ... so we'll be watching," said Jeremiah organizer Jackie Jones.
The program offers second mortgages of as much as $65,000 to families of modest means, as long as they participate in homebuyer training, qualify for first mortgages and have not owned a home for at least three years. The lower a family's income, the larger the forgivable loan they can get to help pay for a restored house. The most that can be forgiven is $65,000.
People making less than 80 percent of the local median income, which works out to $48,980 for a family of four, can get a $65,000 no-interest loan that will be partially forgiven after five years and completely forgiven after 10 years if the buyer stays in the home.
Families with slightly higher incomes can get $25,000, $35,000 or $55,000 in assistance if they buy a rebuilt house in one of 11 "place-based" zones. A family of four making as much as $73,320 would qualify for the $25,000 soft-second mortgage.
Those making less than 90 percent of the local median income, or $49,550 for a family of four, can also qualify for closing-cost assistance under the program.
The place-based zones include parts of Mid-City, Algiers, Hollygrove, eastern New Orleans, the 7th Ward, the Lower 9th Ward, Pontchartrain Park, Central City, St. Roch and Gert Town. Smaller forgivable loans are available for home buyers outside the zones.
A second component of the subsidy program, which will launch in the coming weeks, lets the city select developers to rehab blighted houses and build new homes on empty lots. As an incentive, the city will commit to pay up to $65,000 to buyers of the homes as long as they meet the income and credit requirements.
Brian Lawlor, head of the city's housing and community development programs, said while the money won't go to developers, the city's commitment to pay buyers will help defray construction costs. The city will put out a request for proposals from developers in coming weeks, Lawlor said.
Information about how to get started in the homebuyer program is available at www.nola.gov/softseconds or by calling 504.658.4900.
The $52.3 million is the city's piece of a $75 million statewide Hurricane Katrina recovery program. That money was moved out of a failed rental property rehabilitation program in 2008.
Using another pot of federal Community Development Block Grant money, New Orleans had a smaller $27 million soft-second program in 2008-09, and it was credited with helping 400 families get instant equity in homes rebuilt after the storm.
Lawlor's team has been meeting with real-estate agents, homebuyer counselors and the lenders who will administer the loans. So far, there are 10 participating lenders, 15 participating real estate agents and 12 homebuyer training agencies.
Organizers said they went to great pains to design a program that will foster responsible homeownership. They emphasized that buyers will still have to qualify for traditional first mortgages and undergo training.
"We're going to make certain these buyers are well-trained, well-educated and we're not going to force-fit people into mortgages," said Fred Johnson of the New Orleans Neighborhood Development Foundation. "So, for the public out there is saying, 'Oh, here we go again.' If you look at the history of foreclosure in this country, the people who are trained have fared much better."
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David Hammer can be reached at dhammer@timespicayune.com or 504.826.3322.