Home-buying made easier? Plan would aid middle-income families

Chicago Sun Times

 April 4, 2001

Spielman, Fran

Middle-income residents struggling to remain in fast-growing Chicago neighborhoods could purchase their first homes with help from up to $40,000 in forgivable, no-interest loans under an affordable housing initiative unveiled by Mayor Daley Tuesday.

Daley took the wraps off his "Purchase Price Assistance Program" as a top aide acknowledged that a $100 million housing development program unveiled in November 1999 has yet to get off the ground. That plan called for the city to hire private developers to build 600 single-family homes on city-owned vacant lots, many in neighborhoods untouched by the housing boom.

The program unveiled Tuesday is unlikely to run into the roadblocks the 1999 plan faces.

The new program calls for the city to establish a $2 million pool and make no-interest loans of up to $40,000 to qualified, first-time home buyers who earn less than 120 percent of the median income. That's $81,480 a year for a family of four.

Would-be home buyers who agree to attend a six-week course in homeownership and financing would then be asked to obtain a conventional mortgage through a participating lender.

If there's a gap between the purchase price and the amount of financing the buyer can afford, the city would make up the difference. Homeowners who stay put for 10 years would have their loans forgiven. Those who sell or refinance sooner would have to repay the city on a prorated basis.

"That's a safeguard to keep the buyer from immediately selling the property and pocketing the subsidy," the mayor said.

Participating developers would be required to write down the price of designated units to an "affordable" price of $140,000. The difference between the market value and the affordable sales price would be treated as a second mortgage repayable at the time of sale or refinancing. Proceeds from the repayments would be used for affordable housing programs throughout the city.

Ald. Helen Shiller (46th) said she brought the concept to the city in a struggle to "end up not just with people with very low incomes and people who can afford relatively expensive condominium developments, but to be able to make sure we have a breadth of people with incomes in between."

Under the 1999 program, Austin, Humboldt Park, Washington Park, Grand Boulevard, Kenwood and Oakland were among neighborhoods expected to benefit. But Tuesday, Housing Commissioner Jack Markowski disclosed that city officials "don't have the first house in the ground" and are now moving ahead with just "four or five projects."

"The delay is finding where we have the land of a proper size that you can do a development and having sufficient market to make ends meet on the program," Markowski said.

Copyright Chicago Sun Times Apr 4, 2001