Baltimore City has scraped together $500,000 to renew a popular loan program that has advanced more than 1,200 home- buyers millions of dollars to cover settlement expenses over the past two years.
Catherine Caskey, development director for the city's Department of Housing and Community Development, said her agency will primarily use existing residential bond funds that were earmarked for a variety of other programs but have not been used.
The funds may allow loans for more than 100 families over the next 12 months for middle-income prospective buyers hard-pressed to come up with thousands of dollars in closing costs.
"The city is very much focused on middle-income" families who want to purchase homes in Baltimore, Ms. Caskey said.
The program was not scheduled to receive any funds until the year that begins July 1, 1996, when it is tentatively set to receive another $1.4 million in bond funds. That disruption concerned City Council members, who had asked the Schmoke administration to fund the program in the current budget.
The interruption also was problematic for the Schmoke campaign, which was touting the program as one of the mayor's leading accomplishments.
The program was established in March 1993 to help middle-income families in the city pay settlement expenses, lending families up to $5,000 for closing costs.
The program became a victim of its own popularity. City officials expected the initial $5.3 million funding to last longer. "We did not anticipate spending the full $5 million that fast," said Thomas H. Jaudon, chief of the city's Home Ownership Institute development division. The program is for homes selling for between $60,000 and $151,750, and participants are required to live in the homes. There are no income limits for eligibility, but participants have to be without enough money to pay for settlement expenses.
Loans had a maximum term of 10 years and, typically, the loans were secured as second mortgages.
The program was praised by Realtors and lenders because applications for the Settlement Expense Loan Program were processed at the same time as the first mortgage. Lenders were responsible for servicing both loans.
Lenders included First National Bank of Maryland, Loyola Federal Savings Bank, Maryland National Bank, Municipal Employees Credit Union of Baltimore Inc. and Signet Bank. NationsBank became involved after it acquired Maryland National.
Ms. Caskey said the program will be opened up to additional lenders.