Faith fund to aid affordable housing in Howard

Interfaith group to offer `silent second' mortgages

Regional

April 23, 2004|By Liz F. Kay | Liz F. Kay,SUN STAFF

An organization of Howard County religious groups concerned about skyrocketing housing costs is working with a faith-based financing institution and county housing officials to promote homeownership and neighborhood revitalization.

The Interfaith Coalition for Affordable Housing has teamed with the Baltimore-based Faith Fund, a community development financial institution, to provide "silent second" mortgages for people who live or work in the county but can't afford to purchase a home in the area, in exchange for a share of the appreciation when the house is sold or loans refinanced.

Owners would pay nothing on the "silent second" mortgage until they sell or refinance the house. Investors such as foundations, congregations, financial institutions or individuals would then receive a portion of the increased value - as much as 50 percent in some cases, said the Rev. Kent Marcoux, an Episcopal priest and Faith Fund's executive director.

`Something in return'

"Part of the goal is really to try to bring new capital to address that situation around housing by offering them [investors] something in return," Marcoux said. The goal of the fund, which draws leaders from different religions, is to advance affordable housing, local businesses and markets.

It will also allow members of the groups that belong to the coalition to actively address the problem.

"As faith communities, this is our responsibility," said Rabbi Sonya Starr of the Columbia Jewish Congregation, who leads the subcommittee working on the effort.

"All share the common desire to make sure that everyone has a livable home," she said.

Last year, the coalition lobbied the County Council to promote more affordable housing throughout Howard, particularly as part of the Rouse Co.'s recent petition for increased housing density in Columbia.

Members also researched ways to use their financial resources and expertise to provide housing, Starr said.

Starr said the group expects to begin fund raising in June and hopes to raise its first $100,000 by the end of the year.

Howard is an ideal location to pursue these programs, Marcoux said, given the demand and appreciation of its housing. Last month, the average home price was more than $365,000, according to the Howard County Association of Realtors - up from $291,000 in March last year.

As a result, many people in Howard who earn between $30,000 and $60,000 - police officers, firefighters, teachers and others - can't afford down payments in the communities they serve.

Also, the county already has experience in this field. Howard County has a "shared equity" program, using a variety of funding sources and techniques, said housing director Leonard S. Vaughan.

Of the 33 homes in the program that have sold since its inception in the mid-1990s, more than $775,000 has been returned to the county. Some homeowners have received as much as $35,000 after expenses to invest in a new house, Vaughan said.

Final details about the housing equity partnership program are still being worked out, Marcoux said.

Potential homeowners would have to meet income requirements and qualify for a mortgage for up to 75 percent of the cost of the home, plus a down payment, he said. The program would provide an additional 20 percent of the purchase price.

More offerings

"It's meant to widen the range of offerings to prospective homebuyers, many of whom are struggling," Marcoux said.

Owners would pay nothing on the "silent second" mortgage until they sell or refinance the house. Investors such as foundations, congregations, financial institutions or individuals would then receive a portion of the increased value - as much as 50 percent in some cases, Marcoux said.

In other programs, homeowners had to refinance within 14 years, although they could apply for extensions, Marcoux said. But homeowners are typically able to refinance within less than five years, he said.

"Part of our world, programmatically, is to keep an eye on the rates and the market ... and encourage them to refinance when appropriate," Marcoux said.

A potential drawback could be created by low inflation, Vaughan said, but he said that's unlikely to happen in Howard.

"We're producing more households than houses," he said.

Vaughan sees the new partnership with the Faith Fund and the coalition as a possibility for neighborhood revitalization - a way to help homes in different communities that need work.

The coalition - and the new homeowners - will provide "sweat equity" to rehabilitate older houses as well as mentors to help owners stay on the right track, said Starr of the Columbia Jewish Congregation.

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