State offers mortgages at 4 percent $40 million program part of Glendening's Smart Growth agenda

34 selected communities

Buyers with moderate, low incomes targeted in one-time deal

December 03, 1997|By Peter Jensen | Peter Jensen,SUN STAFF

In the latest twist of his Smart Growth agenda, Gov. Parris N. Glendening yesterday unveiled a one-time-only $40 million offering of low-interest mortgages to encourage homeownership in targeted older neighborhoods.

The effort is aimed at stabilizing and strengthening 34 selected communities across the state by turning more renters into homeowners. The lure to low- and moderate-income buyers: a bargain-basement mortgage rate of 4 percent, the lowest subsidized mortgage rate the state has ever offered.

"We have an opportunity to invest in older communities," said Glendening. "That's what this program is all about."

The governor made his announcement at a YMCA in Riverview, an older southwestern Baltimore County community that he touted as a redevelopment success story. It is also one of five Baltimore County communities targeted by the program.

"Homeownership is a fundamental tool for neighborhood revitalization," said Baltimore County Executive C. A. Dutch Ruppersberger, who accompanied the governor. "One of our biggest problems these days are the 90,000 rental units we have in Baltimore County and the speculators who come in and buy them up."

The $40 million will come from one-time savings the state Department of Housing and Community Development incurred this year when the agency refinanced older, more expensive bonds dating from 1986 and 1987.

But rather than make the money available to qualified buyers as has been done, the agency asked counties and municipalities this summer to compete for the funds with proposals that specifically target older neighborhoods.

To create an added incentive, the agency slashed the subsidized mortgage rate from the current 6.4 percent to 4 percent.

The 34 communities are in 15 jurisdictions: Baltimore, Anne Arundel, Howard, Montgomery, Prince George's, Charles and Allegany counties; Baltimore; Frederick; Hagerstown; Cumberland; Salisbury; Denton; Chestertown; and District Heights.

The new loan program follows a wide range of efforts by Glendening to promote redevelopment of existing communities and discourage sprawl-type new construction. His Smart Growth law, passed this year, will require counties to direct growth to designated high-density areas -- or risk losing state aid.

But that law wasn't needed for the 4 percent loan program. Nor did the governor require legislative approval when he made the renovation of schools in older neighborhoods a higher priority for the state's school construction program earlier this year.

Such are the broad powers of a governor who has decided that promoting existing neighborhoods is a better use of taxpayer dollars than underwriting the destruction of open space.

"It just makes common sense to grow where we already have streets and water and sewer lines," Glendening told his audience at the Riverview YMCA, "and at the same time preserve our forests, fields and farmland."

Local jurisdictions have set varying limits on the maximum purchase prices for qualifying homes and how much potential buyers can earn and still be eligible for the loans. The loans are generally directed at first-time homebuyers. Statewide, the loans will range as high as $162,950. Buyers' income limits range as high as $80,920.

Most jurisdictions are combining the low-interest loans with other government subsidy programs, such as those that underwrite closing costs or help refurbish vacant properties.

In Baltimore County, for example, the county's neighborhood conservation agency will promote the purchase and rehabilitation of houses in the Hillendale, Gwynn Oak, West Inverness and St. Helena/Old Dundalk communities, as well as Riverview. About 65 families are expected to benefit from the county's $5 million allotment, with a limit of $66,470 and a mortgage limit of $140,634.

Baltimore also will loan $5 million -- focusing on five city neighborhoods: Washington Village, Sharp Leadenhall, Bolton Hill, Sandtown-Winchester and Cherry Hill. The city is donating land under three of the five projects, and some involve construction of homes. The income limit is $80,920 and the maximum loan is $152,362.

Anne Arundel County will target its $5 million in loans inside the Baltimore Beltway with added money for homeownership counseling and closing costs. The top income level for homebuyers is $66,470 and the top mortgage is $140,634.

Howard County's $3.5 million is directed at rehabilitation and tenant conversion programs for some existing homes in Columbia's Long Reach, Wilde Lake and Owen Brown villages. The maximum limits are $54,910 for income and $140,634 for mortgage.

For more information on how to apply, contact the Department of Housing and Community Development at 1-800-638-7781.

Pub Date: 12/03/97

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