Aid to Middle-Class Home Buyers

January 04, 1993

It is improbable that many cities in the United States offer as many inducements to home buyers as does Baltimore City.

Lower-income families can, for example, buy completely rehabilitated row houses for less than a $400 month with modest closing costs. A number of co-operative apartments in such areas as Washington Hill and Reservoir Hill also offer unbeatable home values.

Yet the city has lacked a mechanism to encourage middle-class home buying. A new settlement-expense loan program goes a long way toward bridging that gap.

Starting this month, individuals or families buying a home in the $60,000-$100,000-range and lacking sufficient assets can borrow up to $5,000 from the city to cover settlement costs. There is no income limit or minimum requirement for the length of ownership.

There are strings attached, however. The borrower may not own any rental property or a second home. Properties must meet city housing and fire codes. Permanent financing for the acquisition must be secured from a participating lender. They include Signet Mortgage Corp., Maryland National Bank, Loyola Federal Savings and Loan, First National Bank of Maryland and the Municipal Employees Credit Union.

Once those conditions are met, the city promises to review and approve a settlement loan application within 24 hours.

This $2.5 million pilot program will be financed from a bond sale that city voters approved in the 1980s. If the program is successful, it may be continued or even broadened, officials say.

Is this a good use of the municipal government's money at a time when Baltimore City is confronted with so many financial needs but insufficient resources?

Absolutely. By lending money toward settlement costs, the city assures the continued viability of its middle-class communities by actively encouraging buyers to acquire homes they otherwise could not afford.

As the residential real estate market has stagnated during the recession, many Baltimore City neighborhoods have developed a glut of unsold properties. Well-appointed city properties can often be purchased fairly inexpensively these days. The settlement loan program should be a godsend in this situation, bringing more city houses within the reach of many more home buyers.


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