GovernmentLocal Opinion

City Council Considers Mortgage Assistance

By Leslee Kulba- Pulled from the agenda of the last Asheville City Council meeting was consideration of creating a $1.4 million municipal pot for mortgage down payment assistance. The reasoning begins with the facts that zoning codes have driven up the cost of housing and property taxes aren’t exactly low.

Progressives deem houses – not apartments – a right, but letting low-income families live in mobile homes or with in-laws would stigmatize them.

Stigmanauts imply there’s something wrong about not keeping up with the latest from HGTV. Then, they go one step further by fictitiously treating income level and race like linked-genes so they can call anybody who doesn’t approve of giving government authority over the real estate market racist.

What’s more, anybody saying this appears to be leading to the Medieval setup with lords and fiefdoms, which does not approach America’s democratic ideals, is told to hush because government not only knows best, it is beyond corruption.

According to a press release issued six hours before council’s meeting, “Staff is making technical adjustments to the language in the proposed policy to make it as easy to understand as possible.” The policy, in fact, is only eight pages of big print and highly repetitive.

The gist is the city will appropriate $1 million of its $25 million in Affordable Housing bonds to offset down payments on primary residences for “employees, agents, officers, and elected or appointed officials of the City of Asheville” and teachers in Asheville City Schools. To qualify, applicants must earn at most 80% of Area Median Income. Half that amount will be reserved for persons earning less than 60% of AMI.

Additional funds will support employees of the same organizations earning between 80% and 120% of AMI. This sum will consist of $100,000 from the Federal Home Loan Bank of Atlanta and $300,000 from city government’s Housing Trust Fund.

Some clarification would be needed to the line that reads, “To qualify, the City of Asheville team member must be a current, fulltime employee in good standing and have worked for the City of Asheville for at least one year, either currently or within the past 10 years.” They must also be “first-time homebuyers [who] may not have owned a home within the past three years.” While the document lists disqualifying criteria, it says any of those factors are negotiable.

The policy continues, “The applicant must be able to obtain a mortgage loan with an eligible lender for the maximum affordable amount.” Proof of poverty will be required. At the time of the loan approval, borrowers may not own other residential property unless it is an inheritance. They may, at a later date, acquire another home, but they may live in it no more than one month a year.

The loans would be for at least $5,000 and capped at 20% of a property’s current appraisal. Borrowers would have to provide $1,000 toward the down payment with closing costs. The loans may not be used in conjunction with each other, and they would be loans of last resort to get mortgage payments down to 33% of the borrower’s gross monthly income. Sharing a criticism of government rent controls, they will be made available on a first-come, first-served basis, which historically translates to a friends and family plan.

Borrowers would have to complete a course in homeownership prescribed by their lender, have a “minimum Credit Score rated from Exceptional to Fair,” and have a debt-to-income ratio no greater than 43. Additionally, unlike normal lenders, the city would “work with” borrowers. Should they default, the city could convene a meeting, refer clientele for financial counseling, and/or develop and track an action plan for remediating the default.

The property itself must be within the city limits and “a single-family residence, including condominiums and townhouses.” Before closing, it will have to be inspected and repaired, carry adequate insurance, and pass an environmental impact assessment.

No monthly payments or interest will be paid on the loan. Instead, the city would recoup funds in the sale price when the borrower moves. Should the home be purchased by another qualified homeowner, the loan would roll over. The repayment amount would appreciate at the same rate as the property value for the first twenty years and depreciate over the next ten at a rate equal to 10% of the net appreciation at 20 years.

Not long ago, a policy sloppily written would suggest its writers spent as much time researching as writing. But that would go back to stigma. Today, the name of the game is for government to sack debt big and hard on future generations to pay for warm and fuzzies for today’s constituents. The steady diet of bread and circuses, instead, only creates a sense of impending doom in the minds of the most casual students of history.

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