Property ManagementFederal Assistance Program To Aid 40,000 Buyers This Year
Making good on a pledge from his election campaign, President Bush"s budget for fiscal year 2003 will include $200 million in grants to help would-be home owners with downpayments and closing costs.
The President"s "American Dream" initiative is intended to help 200,000 low-income families overcome the major stumbling blocks to buying homes over the next five years. Congress already has appropriated $50 million to operate the program for the first year, enough to help about 40,000 people become owners.
"Opening the doors to home ownership to more and more Americans is one of this Administration"s goals," said Housing and Urban Development Secretary Mel Martinez.
But the American Dream fund will mean far more than home ownership for the participants and their neighbors, the housing secretary said. "By giving as many Americans as possible an opportunity to become stakeholders in their community, we believe it will help to stabilize some neighborhoods and completely revitalize others," he said.
The President also will propose a new FHA hybrid adjustable rate mortgage (ARM) for low and moderate-income families looking to purchase their first homes. The program, which was approved by Congress last year, is expected to generate 40,000 new mortgages this year and help even more buyers in 2003. Additional help from Congress is required because while the ARM program has been approved, it now needs to be funded.
"Hybrid ARMs are mortgages that have a fixed interest rate for the first three, five, seven or ten years and then the interest rate adjusts annually thereafter," according to the Mortgage Bankers Association. "These are commonly referred to as 3/1, 5/1, 7/1 and 10/1 Hybrid ARMs. Because a Hybrid ARM converts to an adjustable rate mortgage after the initial fixed interest rate period, lenders can offer these loans with an initial interest rate that is lower than the interest rate for a 30-year fixed rate mortgage."
The entire fiscal 03 budget is scheduled to be unveiled Feb. 4th.
The downpayment fund will focus on low-income families who have not owned a home in the preceding three years. To participate, recipients must have annual incomes that do not exceed 80 percent of the median income for their respective areas.
The typical subsidy will be about $5,000, Martinez said at a press briefing.
The anticipated kickoff date is July 2002. The American Dream fund will become a part of HUD"s HOME Investment Partnerships Program (HOME), an existing program that helps communities nation-wide to expand the supply of standard, affordable housing for low and very low income families by providing grants to state and local governments.
Since 1992, HOME has encouraged participating jurisdictions to partner and leverage resources with non-profits, developers, private lenders and contractors.
By the government"s estimates, the partnerships have resulted in nearly 613,550 units being constructed, rehabilitated, or acquired. Also, 73,700 families have received rental assistance under the program.
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