City mortgage program funds spent

BARSTOW • First time home buyers hoping to take advantage of the city’s mortgage assistance program are out of luck. Due to an increase in demand, the funds budgeted for the program this year have been spent.

There are other incentives available for first time home buyers, including a federal tax credit of up to $8,000, but without the city’s mortgage assistance program many people have had to look for other ways to cover the down payments and closing costs. Some have had to put their home-buying plans on hold, local real estate agents say.

Barstow’s mortgage assistance program, offered through the city’s Redevelopment Agency, loaned first time home buyers up to $20,000 to cover the down payment and closing costs of their homes. The loan would decrease by 10 percent for each year the home buyer lived there. After 10 years the loan would be forgiven. The city budgeted $800,000 for the program this year and facilitated 53 loans, according to City Spokesman John Rader.

According to Redevelopment Agency  Chair Tim Silva, a mortgage banker who owns the Barstow branch of Golden Empire Mortgage, clients looking to take advantage of the city’s mortgage assistance program have more than doubled from last year. The people who want to take advantage of the city’s program are those who can afford the monthly mortgage payments, he said, but can’t afford the down payment or closing costs.

Last year, Silva said, mortgage assistance program funds lasted through the end of the year. This year the funds that were budgeted for were either reserved or spent about a month ago, he said.

“What happened this year is (there was) more demand on that program than there has been in the past with the low prices,” Silva said. “We’re (seeing) a lot more first time home buyers. That’s actually a major part of the market right now.”

Even though he couldn’t pull up exact statistics to note how many deals fell through because the funds in the mortgage assistance program isn’t available, Curtis O’Brien, broker for Exit Strategy Realty, said a few clients did have to pursue other means of buying their homes. One sale fell through entirely, he said.

The buyer and seller had agreed to a sales price, and the city’s mortgage program was going to cover down payment and closing cost, according to Carrie Seat, the Exit Strategy real estate agent who handled the sale. The seller had lowered the price already, and the buyer could come up with the down payment, but without city assistance, he couldn’t pay the closing cost, she said.

“With Barstow’s income, people don’t have money in their pockets,” she said. “I feel that if we didn’t have city assistance there would be a lot less homeowners. (The program) brings the value up in our neighborhoods because homeowners are more likely to keep their homes up well.”

Seat works with between five to 10 home buyers at a time. She estimated that between 80 and 90 percent of her clients are first time home-buyers, who want city mortgage assistance.

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(760) 256-4123 or jcejnar@desertdispatch.com