Critics Warn Expanded Home Ownership Program May Drive Up Prices

A new loan program has been expanded in Washington State to help thousands of people become first-time homebuyers.

A BILL SIGNED BY THE GOVERNOR LAST WEEK EXPANDS THE PROGRAM

The expanded Covenant Homeownership Act program helps families cover closing costs and down payments opening up the possibility of homeownership to a portion of the state's population, low income and people of color that the governor says face serious barriers to buying and owning a home.

DOWN PAYMENT MONEY MADE AVAILABLE

According to the Washington State Housing Finance Commission the program gives help first-time homebuyers help in the form of a down payment and help with closing costs through what's called a "secondary" loan besides the primary mortgage loan. There's good news about the loan. It has a 0% interest rate and is paid back from the sale or refinancing of the home. $150,000 is the maximum amount of down payment help available which can be obtained by working with lender in the Yakima valley.

THE NEWLY EXPANDED PROGRAM OFFERS LOAN FORGIVENESS

Under the newly expanded program the income eligibility threshold has been increased to 120% of the Area Median Income (AMI). Additionally, the new legislation offers loan forgiveness after five years for households earning 80% or less of the AMI.
The Washington State Homeownership Hotline is 1-877-894-4663. Commission officials say call the line if you have questions or concerns.

SOME CRITICS DON'T LIKE THE PROGRAM AND SAY IT COULD INCREASE HOUSING COSTS

While state officials and the governor back the program as a way to address housing discrimination critics say it is discriminatory. They warn that program may actually cause an increase in home prices making them tougher to purchase by first-time buyers.