City offers new program to increase home ownership

Published: Jun. 10, 2016 at 7:26 PM MST|Updated: Jun. 10, 2016 at 8:54 PM MST
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TUCSON, AZ (Tucson News Now) - Tucson has unveiled a new program to help low and middle income home buyers afford a down payment.

Since the housing bubble burst nearly ten years ago, rules have changed which make a down payment a requirement when buying a home. But with stagnant wages and large debt for college grads, coming up with a down payment has become difficult. As a result, Tucson has had a difficult time recovering from the housing bust.

Tucson home ownership rate in near 42 percent but it's more than 60 percent nationally. Tucson had 27,208 vacant homes in 2015 while only 16,700 in 2000, during the housing boom.

It is a number which caught city leaders by surprise but one which has compelled them to find ways to reverse the trend.

In his state of the city address five months ago, Mayor Jonathan Rothschild said "over the next four years, we will increase home ownership in the City of Tucson."

This is a big step towards that goal. It's a program which the mayor has brought the public, private, and non-profit sectors together to achieve it. 

The program is called "Pathway to Purchase", a state program which has a $70 million fund which will provide up to $20,000 in down payment assistance for anyone making less than $93,000 a year, providing the home is less than $371,000.

There are 16 communities in the state which participate in the program. Tucson is the largest. 

For Tucson, it means about 4,200 homes will be eligible for assistance. When the target is reached, the program ends. 

However, it's not totally free money. Unlike the "liar loans" which were available before the crash, these "loans" come with a catch.

The homeowner must live in the home for five years before the "loan" disappears. There will be no payments on the down payment loan even though it's considered a second mortgage.

But this is not "deja vu all over again" we are told.

"This isn't 'oh no, here we go again,'" said Ray Desmond, founder of Nova Home Loans. "It's not."

Today's home buyers are subject to rules as are the companies which make loans to them.

"You've got to look at every borrower individually, make sure they have the ability to repay and make sure they follow the rules," said Desmond. "That didn't happen back then."

"I think people have learned their lesson," said Eric Gibbs, President of the Tucson Association of Realtors. 

It is an opportunity for people who have had a bad experience to get back into the market albeit on surer footing.

"Even those buyers who have lost their homes through foreclosure and short sales have an opportunity to get back in the market through these programs," said Gibbs. "We call them boomerangs."

For the mayor, it is the ability to keep a promise he made in the state of the city address.

"You know, we are in a very different place than we were 10 years ago," Mayor Rothschild said. 

Tucson has recently been buoyed by recent economic news such as the arrival of Caterpillar, Comcast and the Arizona Coyotes and now this.

While the high number of vacant homes and the blight they can cause is a serious issue, the Pathway to Purchase at least offers a solution. 

"Home ownership is part of the American Dream," said Rothschild. "But it's a dream you have to go into with your eyes open."

In this case, the city will make sure of it.

"Before you can qualify, you have to go through a counseling program, a credit counseling program, and a home buyers education program," said Rothschild. "Then we will try to place you in home ownership." 

There's more information on the mayor's website 

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