Wells Fargo offers down-payment grants
The San Francisco Chronicle
By: Carolyn Said
November 26, 2012
Wells Fargo will give $20,000 down-payment grants to assist 250 low- and moderate-income families with buying homes in the East Bay as part of a fair-lending settlement.
Reservations for the money will be allocated Dec. 7 and 8 during a home-buyer workshop at the Oakland Convention Center Marriott.
"This is super-positive help for a lot of people," said Sheri Powers, director of the homeownership program at the Unity Council, an Oakland nonprofit that will administer the grants. "Even throughout this crisis, people still want to own a home. They say, 'It will be mine, a place to raise my kids and take pride in it.' "
Wells' CityLIFT program is part of its settlement of U.S. Department of Justice charges that it allegedly steered black and Hispanic borrowers into high-cost subprime mortgages. Wells is providing $50 million nationwide and $5 million in the East Bay for the down-payment grants, as well as paying another $125 million directly to borrowers believed by the Justice Department to have been adversely impacted. The bank has not admitted wrongdoing.
The down-payment grants are earmarked for people buying homes in nine cities that were particularly hard-hit by the housing downturn and foreclosure crisis - Antioch, Bay Point, Brentwood, Concord, Pittsburg and Richmond in Contra Costa County, and Fremont, Hayward and Oakland in Alameda County.
"We've got an opportunity to make a big impact in those markets to help stabilize geographies that are still seeing stagnation and aren't seeing the price appreciation" going on elsewhere, said Jim Foley, president of the greater bay region for Wells.
Prospective buyers must earn no more than 120 percent of area median income (the 120 percent figure amounts to $112,200 a year for a family of four) and must be able to qualify for a mortgage. They don't have to get their mortgage through Wells. Recipients must take eight hours of home-buyer education workshops with HUD-approved counselors.
Buyers can tap some other state and city grant sources for down-payment assistance, but must contribute some savings toward the purchase so they have "skin in the game," Powers said. The homes must be used as primary residences, but buildings with up to four units qualify if the buyers live in one of the units.
"We want to make sure we have customers that can afford these homes and will potentially stay in them a bit longer," Foley said. "We are trying to find people who have all the attributes we think will help stabilize these markets, but just may be short on down payments. This will take some great buyers and get them off the sidelines."
Wells is underwriting all administrative expenses on top of the $5 million in direct grants.
To deter flipping, the money is being given out as forgivable, zero-interest loans, also known as "silent second mortgages." One-fifth of the loan amount ($4,000) will be forgiven annually; after five years, the entire loan would be forgiven. For instance, a family that got the assistance and sold their house after three years would have to pay back $8,000 of the down-payment money. A family that sold after five years would not have to pay anything back.
"We want to make sure that everybody who wants to has a shot at this money," said Grace Mejia, regional diverse segments manager for Wells. "We strongly recommend people sign up to have a slot."
Prospective buyers have 60 days after receiving a commitment letter from Wells to enter escrow on a property. If that time elapses, the money will go back into the overall pot and be available for others.
Powers and her Unity Council staff have helped out at events in other regions for CityLIFT and a similar program called NeighborLIFT sponsored by the Wells Fargo Foundation.
"It is like Christmas," she said. "We see people leave with a big smile on their faces, saying, 'Cool, I didn't know I could buy a house until now.' "
Wells Fargo CityLIFT
What: Wells will give $20,000 down-payment grants to 250 East Bay home buyers.
Who: Buyers must earn 120 percent or less of area median income (120 percent amounts to $112,200 for a family of four) and must be able to qualify for a mortgage and meet other criteria.
When: Most grants will be allocated at an event Dec. 7 and 8 from 10 a.m. to 7 p.m. at the Oakland Convention Center Marriott, 1001 Broadway, Oakland. Preregistration is strongly advised.
Where: Grants support home buying in nine cities: Antioch, Bay Point, Brentwood, Concord, Pittsburg and Richmond in Contra Costa County, and Fremont, Hayward and Oakland in Alameda County.
Why: The money is part of Wells' settlement of charges that it allegedly discriminated against minority home buyers.
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