Housing Assistance Funds At Risk Of State Cut

The proverbial "silver lining" to the drop in home prices is that the Highlands County Housing Department has been helping more low- and median-income families become homeowners.

As home prices escalated between 2005 to 2007, many credit worthy and income-eligible families could not use the county's down payment assistance program because they were priced out of the housing market, said Nancy Hurley, county housing director.

Particularly over the past six months, Hurley said, more people have been applying for the state-funded down payment help because they are finding homes with monthly payments within their price range.

But, Hurley said, the growing demand for the down payment assistance program is now at risk of state budget cuts.

When the Florida Legislature meets in a special four-day session starting Jan. 5, she said, one item on the table will be taking state trust funds for housing assistance and using them to reduce the budget deficit.

"We don't know yet what the cuts might be, but any cuts would drop the number of clients we can serve in a tough economy," she said.

Hurley is asking people who support housing assistance to contact their state representatives and senator and express support for state funded housing programs.

In fiscal year 2007-08, the State Housing Initiatives Partnership (SHIP) program provided $886,862 to Highlands County, funding not only down payment help but also a foreclosure prevention program, grants and zero-percent loans for housing rehabilitation, and other programs.

Hurley said she hopes that level of funding can be maintained, especially because more people can afford a home now with down payment assistance.

"We're seeing many people who have good credit, and have enough income to make the monthly payments, but they need assistance in getting the down payment," Hurley said.

A zero-percent loan of up to $10,000 to help cover the down payment and closing costs is available for median-income people, defined for a family of four as an annual household income of $55,320 or less.

The same loan can go up to $15,000 for qualifying low-income families, where the annual household income limit for a family of four is $36,900.

The loan is paid back over 20 years, with a monthly payment that can be as low as $41 per month.

Down payment assistance is available to first-time home buyers, defined as someone who has not owned a house or a mobile home in three years. The three-year time frame is waived for divorced people, as long as they no longer have any interest in the marriage home or any other commonly owned home.

Susie Whitlock-Steeple, a vice president and loan officer for Bank of America, and also a member of the county's Affordable Housing Advisory Committee, said now would be the worst time for the state to reduce the number of families who can buy a home with state housing assistance.

"I don't know of any better way to stimulate the economy than to help people become homeowners," she said.

"I would say that last year, very few of our (home) loans went through SHIP housing assistance, because the housing market was so high," she added. "Now, I would say there has been at least a 50 percent increase, because the prices have come down and those folks (eligible for SHIP assistance) can now afford a house."

Of the 10 home loans she closed in November, Whitlock-Steeple said, eight were first-time home buyers and more than half the houses sold for $125,000 or less.

"That affords people a much better opportunity to buy a home," she said.

County Administrator Michael Wright said he cannot predict the chances of the Legislature saying "no" to raiding the housing assistance funds to deal with a projected $2.3 billion budget deficit.

"From the people I talk to in Tallahassee, this is probably the most difficult year that anybody can remember in three decades," he said.

Jamie Ross, president of the non-profit Florida Housing Coalition, which provides assistance to local governments and non-profit organizations working in affordable housing, said there is some reason for optimism.

"Every constituent group, whether it is low-income or affordable housing advocates, government or the business community, retail, homebuilders, citrus - every constituent group is in favor of protecting the trust funds," she said.

"We're definitely in a slump," Ross added. "But the truth is, they (legislators) have to find the money (to cover the projected budget deficit) in wiser ways," she said. "There's been an ideology for many years in the Florida Legislature to not close tax loopholes or raise revenues."

Helping eligible families with down payment assistance now that home prices are down is essential, she said, because "housing is an economic engine. It accelerates the economy.

"Even if some people may say there is plenty of housing inventory now and there is additional inventory because of foreclosures, that's even more reason why we have to fund these programs, so people can get into these homes."

"What's particularly important now," she added, "is that that we've never had better mortgage rates, so the federal government 'gets it.' And it's not often we can say that."

But, Ross said, many people who have good credit, a steady income and enough to make monthly mortgage payments won't be able to purchase a house without the state's help on the down payment.