Living the Florida Mortgage Dream… With Some Help

A South Florida family will soon be moving into a new $195,000 two-bedroom condominium at Aaron Arms in Miami Gardens.

But thanks to about $100,000 in Florida mortgage subsidies, the Melgars will only need to make payments on about half the purchase price.

“The subsidies have given us a chance to own our own home,” says Jorge Melgar, 57, who is now renting in Hialeah with his wife, Sandra, and 15-year-old daughter, Lica.

“In order to get the financial help, we all went to homeowner education classes, but it was certainly worth the time. Now our dream is about to come true.”

Darin Woods, sales manager of SunTrust Mortgage in Aventura, said the Melgars were among more than 50 first-time borrowers he has assisted so far this year.

The Florida home mortgage package for the Melgars included a $70,000 loan from Miami-Dade County’s documentary stamp surtax program, which takes funds from every real estate transaction to provide more than $12 million annually to first-time buyers.

Woods said the Melgars will not have to make payments on that Florida home loan until after they have owned their condo for several years.

In addition, the family received a $20,000 loan from the city of Miami Gardens with no payments due for 15 years and a third loan for about $12,000 from the Miami Metro Action Plan Trust’s homeownership assistance program, with payments deferred for 10 years.

“There is no question in my mind that these special assistance programs are the only means to provide affordable housing to South Florida residents,” said Bennett M. Lifter, president of Lifter Realty and developer of the 22-unit Aaron Arms. “And we are careful to sell only to people who will be living in our homes.”

In the past year, a Miami Herald investigation revealed that Miami-Dade’s Housing Authority provided millions to developers who pocketed money intended for affordable housing.

In other cases, developers have been criticized for selling affordably priced units to investors who promptly resold them for a profit.

Meanwhile, Miami-Dade and Broward County - along with some city governments and nonprofit agencies - have been providing assistance directly to households that typically have $30,000-70,000 in annual income.

Under the Miami-Dade County surtax program, a buyer can obtain a loan with an interest rate of 0-6 percent and deferred payments for one to 30 years, depending on factors such as income and family size.

Since January, when the Miami-Dade Finance Authority began administering this program, more than 160 loans have been issued totaling $8.5 million - roughly $53,000 each, according to Patricia J. Braynon.

Broward County recently approved a bond-supported subsidy Florida home loan program to assist moderate-income buyers.

The program allows qualified buyers to receive a 30-year fixed-rate mortgage at 5.25 percent, and a second mortgage of up to 20 percent of the sales price at a Florida mortgage rate of 6.25 percent.

Down payment assistance and other financing options are also available.

“We’ve seen very strong demand for these types of subsidies as the cost of housing has increased,” said Norman Howard, assistant to the director of the Housing Finance Authority.

He noted that more than 135 Florida home loans subsidized by the county’s 2006 bond program have been approved since October.

Because of the variety of subsidy programs, each with its own requirements, a developer or real estate agent will usually refer potential home buyers to a lender who has been approved by county or city governments.

The Miami-Dade Housing Agency works with about 25 Florida mortgage lender groups ranging from Bank of America and SunTrust to more local institutions like Gibraltar and Pointe banks.

Broward has about a dozen lenders on its approved list.

THE RIGHT THING

“These lenders are usually banks that are striving to meet obligations to serve low- and moderate-income neighborhoods,” said Patricia J. Braynon, director of Miami-Dade Housing Finance Authority.

“Many subsidy programs limit the amount a lender can charge, making them less attractive to a Florida mortgage broker. There’s really not a lot of money to be made when issuing a $55,000 loan, but it is the right thing to do.”

As part of the eligibility requirements for assistance, potential buyers must attend some type of homeownership education course. The goal is to be sure the buyer can afford not only the Florida mortgage, but the property taxes, insurance premiums and daily maintenance that go along with ownership.

Lenders also scrutinize an applicant’s income and credit rating to be sure a buyer qualifies for a Florida mortgage as well as a subsidy.

That’s important in today’s South Florida housing market, which has seen a high rate of loan defaults and foreclosures related to subprime lending - issuing loans to buyers with poor credit records.

“In today’s market with so many foreclosures, the subprime lenders are being very stringent about their products,” said Daniel Rosemond, director of community development for Miami Gardens.

“An applicant with what used to be a modest credit score is now having a hard time getting a mortgage loan. So buyers need to be aware on their credit score and start repairing it if necessary.”

GAP IN THE MARKET?

While Florida home mortgage programs are designed to help moderate-income buyers, they leave a gap in the market for higher-paid workers, Oscar Rodriguez, senior vice president and head of affordable housing for Related Group of Florida in Coral Gables, said.

“Someone making $80,000 a year, for instance, will find it difficult to buy in many South Florida neighborhoods,” he said.

Rodriguez believes subsidies should be extended for buyers who make up to 200 percent of median income, now about $47,000 in Miami-Dade. Currently, most programs limit subsidies to 140 percent or about $68,500.

Meanwhile, local nonprofit agencies as well as government agencies continue to support assistance programs for buyers like Catrina Carswell.

An accountant who purchased a three-bedroom $225,000 home in Miami’s Model City neighborhood in April, Carswell qualified for a second mortgage with deferred payments that covered 20 percent of the price.

“It’s great to have a backyard for my two kids, and it’s helped me to improve my financial situation tremendously,” said Carswell.

“Even with a subsidy, you still have to save your funds, be patient…”

SOURCE: Miami Herald