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Many counties slow to launch state home loan program

A new state program that offers loans to first-time home buyers is running out of time — and short of expectations.

Legislators this spring committed $30 million to counties for down payment loans to first-time home buyers. Those home buyers would repay the loans as soon as they got their federal tax credit of up to $8,000.

Realtors cheered the Florida Homebuyer Opportunity Program as a way to help fill all those empty houses around the state. But the tax credit is set to expire Nov. 30, and only about $821,000 in loans have gone out statewide, according to the Florida Association of Realtors.

Pasco County got its game plan approved by the state relatively quickly and is seen as being ahead of the curve — and it has approved only about 15 loans.

Around $500,000 in state money is earmarked for Pasco, enough to give loans to at least 62 people who buy a home in the county. Last week, Pasco County Commissioners expanded the pool by allowing people buying manufactured homes that meet certain conditions — they have to be tied down and can't be on rented lots — to qualify for the loan.

"It hasn't moved that quickly," said George Romagnoli, Pasco's community development manager.

Realtors, lawmakers and housing officials blame a combination of factors for the program's middling performance thus far: Lack of public awareness, confusion over the requirements of a new program, a high number of time-consuming short sales and complications with one major lender.

(Of course, another obvious explanation: People struggling to find — or hold onto — jobs aren't exactly in a home-buying mood.)

The loans are aimed at helping people who are trying to close on their first home but need help with their down payment and can't wait for their federal tax credit to come through. The loans are for the amount of the tax credit.

Congress could decide to extend the tax credit, and is being lobbied heavily by Realtors associations to do so.

Singles who make up to $75,000 a year and married couples who make up to $150,000 may qualify. First-time home buyers are defined as those who haven't owned a home in the past three years.

The sale price of the home cannot exceed $240,000. Recipients who pay back the loan within three months won't pay interest. After that, the interest rates match those of the first mortgages under Pasco's program.

Hillsborough just launched its program this month. Pinellas County has yet even to receive any of its $442,500 from the state, so it has not taken applications from potential home buyers, said Karmen Lemberg, a program manager in the Pinellas community development division.

State Sen. Mike Fasano, the New Port Richey Republican behind the program, said some counties had wasted time getting their plan together. And he thinks residents simply aren't aware of the program.

"I just think it's a lack of information," he said. "People are like, 'Wow, we didn't know that was available.' "

Marla Martin, spokeswoman for the Florida Association of Realtors, said many counties were slow to put the program into action because there were so many questions. "There's a learning curve," she said.

But there have been other hangups. Romagnoli and New Port Richey Realtor Greg Armstrong say they've both noticed that some applicants trying to get loans through the Federal Housing Administration, one of the major lenders for first-time home buyers, have run into some problems.

In simplest terms, the down payment loan would skew the formula so that people who already have a lot of debt may not qualify for the FHA mortgage. So the small Pasco loan wouldn't do them much good if it made them ineligible for the FHA loan.

One other problem: State money for the program has been slow to trickle in. The program is financed with a portion of state real estate documentary stamp taxes, which officials have to collect. So far, a little more than half of the $30 million has been disbursed to the counties.

Fasano devised the new program after the House of Representatives voted to spend nothing on the affordable housing program known as SHIP. Senators wanted to keep at least $30 million dedicated to housing assistance. But Fasano said that $30 million would not go far under the traditional SHIP program and figured that the best option was to use the state funds to leverage the federal tax credits.

So what will happen to the money if Congress does not extend the tax credit? Romagnoli said he figures counties will have to come up with new plans for how they propose spending the funds.

Many hope that the program will get more time to work if Congress extends the tax credit. "The word I get is that there are a lot of (federal) legislators … pushing for it," said Martin, of the Florida Association of Realtors.

But some have their doubts that will happen.

Armstrong said he hears Congress is too focused on health care reform to think about the first-time home buyer tax credit.

In his view, he said, "We're standing at the finish line right now."

Jodie Tillman can be reached at jtillman@sptimes.com or (727) 869-6247.

Fast facts

Help for housing

For information on Pasco County's housing programs, visit tinyurl.com/pascohousing. Or call the county's Community Development Division at (727) 834-3445, (352) 521-4274, ext. 3445 or (813) 996-7341.

Many counties slow to launch state home loan program 10/10/09 [Last modified: Saturday, October 10, 2009 5:31am]

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