City to help employees buy homes

September 11, 1994|By Lorraine Mirabella | Lorraine Mirabella,Sun Staff Writer

Hoping to encourage city government workers to buy homes near their jobs, city officials will offer financial assistance to employees buying first homes.

Workers who rent or haven't owned a home in three years can get up to $10,000 for down payments, closing costs and renovations through two new city programs unveiled Friday. The city has earmarked $2 million annually for an estimated 200 families.

"I have been trying to find a way to provide housing benefits to city employees for several years now," said Mayor Kurt L. Schmoke, who said he hopes to "increase the number of homeowners in Baltimore. The city is committed to its employees and the development of decent, affordable and convenient housing."

Any of the city's 28,000 workers -- regardless of income -- can apply for these noninterest-bearing loans when purchasing single-family detached or two-family homes, townhouses or condominiums within city limits, said Tom Jaudon, chief of the Homeownership Institute, which will administer programs developed to work with Fannie Mae-backed mortgages.

"We want to provide an economic incentive to every employee to purchase in Baltimore City neighborhoods," Mr. Jaudon said, predicting the program would generate a great deal of interest among employees. "The city is aware our settlement costs in Maryland are high. Often that is a dilemma and a negative in terms of buying a home in the city."

Under new residency requirements, municipal workers hired after July 1993 have a year from their date of employment to become city residents. Under the new loan programs, the city will make allowances for newly hired employees and residents of surrounding counties, waiving the first-time homebuyer requirement, said Clinton R. Coleman, the mayor's spokesman.

Now, roughly 70 percent of municipal workers live in the city, Mr. Coleman said.

The city will offer two options to buyers, who must first apply for mortgages through Fannie Mae-approved lenders. Fannie Mae guidelines set maximum mortgage amounts at $203,150.

Under one program, the city would match a borrower's savings of up to $2,500 through unsecured five-year notes. The borrower needs at least $1,000 in savings. The no-interest loan shrinks by 20 percent each of the five years. A borrower who lives in the home the full five years would owe nothing.

For example, if a buyer were purchasing a $75,000 house requiring a 5 percent, or $3,750, down payment and had only $2,500 in savings, the city would match the $2,500, giving the borrower enough for the down payment.

The city also will make 10-year secured loans, which would shrink by 10 percent each year. A borrower who lives in the home five years would have to repay half the loan, while a borrower living in the home the full 10 years would owe nothing at the end of that time.

Between the two programs -- both of which can be used for down payments, closing costs and renovations -- the city will provide up to $10,000 per employee or per household with more than one city employee.

Fannie Mae will finalize a list of some 15 area participating mortgage lenders by next week. Mortgages purchased by Fannie Mae can have more flexibility built into them, allowing higher than normal debt-to-income ratios, said Bob Detjen, director of housing impact for Fannie Mae's Atlanta regional office.

Mortgage loans totaling an estimated $15 million are part of $750 million that Fannie Mae pledged in April to help low- to moderate-income families buy homes in Baltimore over the next five years.

Fannie Mae offers one program in which buyers with household incomes of $40,000 or less would need down payments of only 3 percent, rather than 5 percent. The remaining 2 percent would come from the city loan program.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.