The Morning Report
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Remember the snag in the plan to spend more than $17 million locally to stabilize San Diego neighborhoods by helping people buy foreclosures?
Anyone who wanted to use government assistance to get into the foreclosed homes had to first negotiate a steep discount — 15 percent — from the appraised value. That’s a tall order as low-end foreclosures attract multiple offers and all-cash investors who want to rent out the homes for a profit. It’s quite tough already for regular first-time homebuyers to beat out the heap of offers and be selected, let alone to then ask for a discount.
Federal agencies recently lowered that discount requirement to 1 percent — which applies to the initial pots of money allocated as well as future grants in a second round of the program.
“The program will work now,” said Rick Gentry, president and CEO of the San Diego Housing Commission, the agency managing the city of San Diego’s allocation of the money. “The amount of the required discount will finally work in San Diego.”
I still have yet to hear of a homebuyer closing escrow using the stabilization grant.
Chula Vista is close, said Dee Sodano, assistant vice president of lending at Community HousingWorks, a nonprofit administering the program for that city.
In Chula Vista, which was allocated $2.8 million under the program, more than $600,000 has been marked for homebuyers who’ve completed the classes and been approved to participate, she said. Plus, she said:
I understand that two [homebuyers] are very close in getting transactions accepted. It has been tough but it looks like it is happening.
Gentry is traveling and didn’t have numbers at hand to share about the program’s progress within the city of San Diego. I put in a call to find out how many people have qualified and purchased homes under the program in San Diego; I’ll let you know what I hear back.
There’s another round of federal grants identified for helping with the purchases of foreclosed homes. Where the first phase’s allocations were tallied in relation to population and foreclosure activity, the next phase will award regions money based on their proposals.
A bunch of cities in San Diego County have teamed up to submit their plan together. Community HousingWorks this week submitted a regional proposal on behalf of several local cities for that second phase of the stabilization grants. Gabe del Rio, the organization’s director of lending and homeownership, said the application asks for $22.95 million for helping first-time homebuyers buy and rehabilitate foreclosed homes.
That’s about $5 million more than was allocated across the county in the first round.
Twenty-five percent of the funds must be used for households earning 50 percent or less of the area’s median income, which is currently pegged at $41,300 for a family of four. The cities of Chula Vista and San Diego, along with the county of San Diego, proposed satisfying that requirement in the first phase by purchasing rental properties and renting them to households in that income bracket.
Community HousingWorks has included two options in its proposal to satisfy that requirement. One would give up to $110,000 to first-time homebuyers at that income level to help them purchase a home, del Rio said.
The other would give the agency the option to find, acquire and rehabilitate a foreclosed apartment complex and rent that out to individuals at that level.
Del Rio said the grants are scheduled to be announced in the fall.