Seattle City Council
5/9/2005 2:47:00 PM
Mike Fong (206) 684-8808
COUNCIL EASES REQUIREMENTS FOR HOMEBUYER ASSISTANCE PROGRAM
New levy policies to help more low-income families with housing needs
SEATTLE –Today, the City Council eased requirements in the 2002 Housing Levy that make it difficult for many low-income families to become homeowners. The legislation reduces downpayment constraints and allows sweat equity to count toward eligibility for the homebuyer assistance program.
“Seattle’s working families deserve an opportunity to become homeowners,” said Councilmember Tom Rasmussen, Chair of the Council’s Housing Committee. “This is a clear message that we believe homeownership should be attainable for as many people as possible,” he added.
Every two years, the City Council must approve an Administrative and Financial Plan (A&F Plan) that establishes policies for implementing Housing Levy programs. Last September, the City and the Levy’s Citizen Oversight Committee began a review of existing policies and engaged community members and non-profit housing agencies in a discussion about potential changes to the current A&F Plan. A set of final recommendations was forwarded to the Council for consideration last month.
“Our city’s working families who are first-time homebuyers need the kind of assistance easing this requirement provides,” says Council President, Jan Drago. “This will mean more of them will be eligible to own their own home.”
Over the life of the levy (2003-2009) $7.8 million is dedicated to helping low-income, first-time homebuyers with low interest loans and downpayment assistance. The new policies are intended to expand the number of people eligible for the Homebuyer Assistance Program. Below are some of the key changes that have been adopted for potential program participants earning less than 60% of median income in Seattle:
- Allow sweat equity in lieu of the existing minimum personal downpayment requirement of $2,500 or 2% of the purchase price of a home. This enables families participating in programs such as Habitat for Humanity where individuals contribute physical labor toward the construction of their new home to access Homebuyer Assistance funds.
- Allow gifted funds from family and friends of people with long-term disabilities relying on Supplemental Security Income (SSI) to comprise up to 75% of the minimum cash downpayment requirement for homebuyer assistance funding. The amount of cash savings currently needed to be eligible for the Homebuyer Assistance program is extremely difficult to accumulate and could jeopardize the borrower’s eligibility for SSI. This policy change is critical to helping more people with disabilities become independent homeowners.
- Reduce downpayment requirements for individuals participating in Individual Development Accounts (IDA) to a flat $2,500. IDA programs are administered by non-profit organizations that help low-income families by giving them a financial match for every dollar they save. These combined funds are then available for certain purposes such as buying a home. IDA programs are only available for a limited time and the cash downpayment requirements currently in place for the City’s Homebuyer Assistance Program are too difficult to achieve for participants within the IDA program’s time period. The current requirement is $2,500 or 2% of the purchase price of the home (whichever is higher). The policy change will allow more IDA program participants to access the City’s homebuyer assistance funds.
“Easing our homebuyer assistance program requirements help hard working families, people with disabilities and those committed to achieving long-term savings a chance to have a home they can call their own,” said Rasmussen. “Today’s action speaks loud and clear that we’ve made increasing homeownership a priority in Seattle.”