On October 12, 2011, my husband and I signed two hours’ worth of paperwork and forked over a $2450 earnest-money deposit on a four-bedroom, four-bath townhome in Chula Vista.
For years, we’d fantasized about escaping the constraints of our 860-square-foot, $1300-a-month condo rental in City Heights. Now, our three-year-old daughter would be able to move out of our closet (yes, our closet) and into her own room, and our cologne-obsessed 13-year-old would have his own lair, two floors down from the other bedrooms. Along with 1850 glorious square feet and extra bathrooms, we’d have canyon views and a two-car garage that led into the house: no more lugging groceries in the rain. And — oh, yeah — mortgage and property tax combined would add up to $1147 (not including HOA fees), $153 less than our rental.
In the parking lot outside the real-estate agent’s office, I sent a text blast to family and friends: “It’s ours. We’re in escrow!”
My husband sighed. “It’s not ours yet, Lizzie. Anything can happen between now and the time we close.”
I dismissed the comment with a wave of my hand. Despite his previously discouraging experiences with sellers (one deal fell apart the day escrow was due to close), my optimism would remain intact. I’d heard about the hassles of purchasing a home through first-time-homebuyer incentive programs, but this place was meant to be ours, and I believed that everything would go swimmingly.
Twenty days later, our listing agent Joe sent us a Notice of Termination.
I panicked, let loose a string of profanities, and went into fight mode.
Our agent later told me that, for a 60-day escrow like ours, 20 days wasn’t too terribly deep into the process. But we’d been at this longer than the length of the escrow, and the future of our down-payment assistance was uncertain. We were relying on it to help with the purchase, and I feared we might not get another chance.
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In late 2008, during an online search for first-time homebuyer programs in San Diego, my husband (hereafter referred to as “M”) located an organization called Community Housing Works. The “About Us” page on the website boasted: “Our coaching, realty and innovative loan funds have created approximately 100 new homebuyers across the county every year.” The “Lending” page offered “an array of Down-Payment Assistant loans that may help you purchase your first home!”
In order to take advantage of these loan programs, one or both of us would have to participate in an eight-hour, HUD-approved first-time-homebuyer education course. So, early one Saturday morning in January 2009, two weeks after the birth of our daughter, off M went to the Price Charities building on University Avenue.
He came home tired, carrying a stack of program details and checklists for potential borrowers. M felt that unless his work picked up significantly, we would probably not qualify for a loan.
The good news was that when we were ready, there was money out there. Maybe as much as $70,000, if we bought a house in City Heights. If we wanted to look as far from the city center as Chula Vista (we didn’t), the number might go as high as $100,000. And, said M, his participation in the course wouldn’t expire.
At the time, exhausted from mothering a newborn, I let M take the lead. But later I would learn that, along with providing education classes and financial counseling, Community Housing Works offers a Cal-Home loan, funded by the State of California (through bond funds) and intended for first-time homebuyers from “low to moderate income” households. The organization also underwrites and administers down-payment-assistance loans offered by the cities of Carlsbad, Chula Vista, National City, and Santee.
Dee Sodano, vice president of lending at Community Housing Works, estimates that, in 2011, the organization provided loans to approximately 70 people.
“We’re not a big bank,” Sodano says. “I used to work for a big bank, funding $34–$40 million a month. But here we’re way less. If we fund $2 million a month, that’s huge.”
The lending department at Community Housing Works also provides first mortgage loans to qualified homebuyers. Some are Community Reinvestment Act (CRA) loans, which Sodano explains as the “affirmative action” of the housing world. They allow for a competitive interest rate, and, in some cases, no mortgage insurance — even if the home buyer doesn’t have a down payment of 20 percent.
“A lot of banks with lending programs are required by the federal government to do a certain amount of lending in low-to-moderate-income areas, and to minorities,” Sodano says. “You can’t redline anymore — they used to call it redlining. You can’t pick and choose your borrowers. They’ve had to force some of the banks…[via] the Community Reinvestment Act. What some banks choose to do — not all of them — is to roll out programs” specifically designed for these populations.
Rather than seek out borrowers who fit the bill, banks provide these programs to Community Housing Works and other nonprofit organizations that have already established themselves as resources in the community.
To those who criticize the programs, Sodano says, “It’s a loan. It’s not welfare. It’s a helping hand, not a handout.”
She emphasizes that strict minimum and maximum debt-to-income ratio requirements are intended to qualify potential homebuyers and to avoid subsidizing those who don’t actually need the help.
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In early 2009, those maximum debt-to-income ratios looked like they’d keep our family on the books as renters for another few months. The holidays were a slow time at the shipping company where M worked as a truck driver. He spent more days at home. With a brand-new baby, my income was uncertain. But, as we did every January, we anticipated that M’s hours would pick up soon.
They did not.
“Date night” became Sunday-afternoon walks through North Park, South Park, and Hillcrest, fantasizing about home ownership. It was another year and a half before my husband landed the steady, full-time income that would, along with my freelance writing gigs, deem us loan-worthy at last.