KNXV, the local ABC affiliate, ran a story last night about Phoenix’s floundering $15,000 loan program for buyers purchasing foreclosed homes, first announced in March and written about extensively here.
The sense you get is the problem is the program isn’t well known.
“I didn’t even know about it,” said Phoenix resident James DiMartino.
“Never heard of it,” said Nick Calos, who also lives in Phoenix.
DiMartino and Calos both say they’re in the market to buy a home and have an interest in the program. It seems many people don’t know about the program or are discouraged with the requirements to get the loan.
First off … Nick, James … welcome to AllPhoenixRealEstate.com. If you were one of my readers you would have known about this program on March 17.
Onward … Forget the first half of the last sentence of the story. The biggest obstacle this program faces is the requirement that buyers purchase these homes at 85 percent or less of appraised value. In a market where there is barely three weeks of inventory of bank owned homes, that’s damn near impossible. (It’s also pointless and can damage the property values of any neighborhood where the program’s used, but that’s a post for tomorrow.)
There are other hoops . Potential homebuyers need to sit through eight hours of financial counseling and the $15,000 is a loan and not a giveaway – it needs to be repaid when the home is sold or refinanced.
Those presumably can be accomplished. It’s the 85 percent requirement that makes it impossible to get the loan, even if city officials believe appraisers will adjust their numbers and banks will sell for pennies on the dollar to help out a buyer.
And that’s why some three full months since the program began, not a single homebuyer has received a loan from the program. Phoenix is 0-for-the duration.
So how do you fix this problem and get the money to the people? Drop the 85 percent requirement. It’s really that simple. Allow buyers to use these funds to find and purchase properties at market value and you’ll see the money flow.
Until that time, the city may as well require buyers to grow a third leg before purchasing. It’s about as practical a requirement as the 85 percent limit.
[tags]Phoenix real estate[/tags]