Down Payment Aid to Reduce Foreclosed Homes

The city of Big Bear Lake in California has launched a program that aims to help first time homebuyers purchase their own houses and reduce the number of foreclose homes in the area. The First-Time Homebuyer Down Payment Assistance Program was approved by the Big Bear Lake Improvement Agency.

Under the program, up to 5 percent of the sale price or $19,000, whichever is the lowest, will be provided to first time property buyers who become eligible for the Federal Housing Authority (FHA), Federal Home Loan Mortgage Corp. or Federal National Mortgage Association 30-year fixed rate mortgage.

To qualify for the program, prospective homebuyers must have worked or lived in the Big Bear Valley for a year, have an average income of 81 percent to 120 percent of the Area Median Income, provide their own money to close escrow for an amount of about 2 percent of the total home purchase price, must make the house as their principal residence and must have no more than 10 percent of the property sale price in savings, cash and other liquid assets.

The properties eligible for the program must be situated in the city and should have a maximum sale price of $380,000. The house must be a short sale, foreclosure or listed on the Multiple Listing Service for sale for not less than six months.

The program is aimed to help reduce the number of repo properties in the area to help stabilize home prices and the housing market and aid first time homebuyers.

The funding for the program comes from the Low and Moderate Income Housing Fund. It also features a deferred, second loan with 3 percent interest rate and no monthly payments. The repayment of the loan is deferred until the house is refinanced, sold or titled transferred. In this case, the loans and accrued interest are due and payable.

Meanwhile, in case the homeowner does not refinance, transfer the title or sell within 10 years, the loan is forgiven. Homeowners may also required to repay the loan and accrued interest if he fails to submit a copy of his annual California or Federal Tax Return and an affidavit certifying that he is occupying the property as his principal residence.

The city hopes that the program will make a big difference in helping reduce the foreclosed homes in the area and stabilize the housing market.

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