Fund for home-repair loans based on income weighed

November 16, 1995|By Adam Sachs | Adam Sachs,SUN STAFF

The Columbia Council is considering creating a revolving loan fund to help income-qualified residents make repairs on their homes to comply with the new town's architectural guidelines.

Two banks -- the Columbia Bank and First National Bank of Maryland -- have expressed interest in financing and running the one-year pilot loan program, with the nonprofit Columbia Association as the underwriter, said Maggie Brown, the association's director of community services.

Under tentative terms, the fund would total about $50,000 and would provide up to $3,000 per household for repairs by residents whose income is no more than 25 percent above the income-eligibility guidelines of the federal Department of Housing and Urban Development. That would be an income of about $50,000 for a family of four, Ms. Brown said.

The banks are considering offering reduced interest rates that would be half the prime rate, which now is 8.75 percent, Ms. Brown said.

The program, intended to help maintain Columbia's property values, would serve about 15 to 20 households in its first year, council members said. The 10-member council directs the association, which, along with Columbia's villages, enforces strict property maintenance guidelines.

"It's an attempt to try to show a little bit of carrot and not so much stick for families who really want to fix up their homes and can't afford to do it," said Gary Glisan, the Oakland Mills village representative who heads a council committee on covenants. "It's aimed at maintenance, where we feel the biggest problem has been."

Another committee member, Hope Sachwald, said a bank's administration is crucial to the program. "When we got into us putting out money to do this and being bankers, I was ready to dump it," said the Harper's Choice village representative. "The idea of banks forming a partnership solved the whole problem."

The loans would be secured by deeds of trust and promissory notes issued by a bank, association officials said. The risk to the association would be $50,000 plus fees -- if all borrowers defaulted on loans, Mr. Glisan said.

He said the council would keep the program small initially "so we don't oversubscribe. We want to see how many people are applying and at what income level."

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