State Mortgage Guarantee Program OKd

Gov. Pete Wilson signed legislation Thursday that provides state-guaranteed mortgages for first-time home buyers with as little as 3% down.

Voters in November must approve the mortgage guarantee program.

The two-bill package, written by Assembly Speaker Willie Brown (D-San Francisco) and Assembly Republican Leader Jim Brulte of Rancho Cucamonga, would assist an estimated 55,000 families in purchasing homes.

“Three of the four most expensive housing markets in the nation are in California,” Wilson said. “In this very expensive state, it is necessary to give assurance to the lender” that the buyer can meet the payments.

The legislation creates a state-sponsored mortgage insurance fund for buyers with less than 20% as a down payment. It also enables buyers to put together a down payment through gifts from family members and employers.

To qualify, buyers’ incomes must fall within certain levels. For example, families with incomes up to $58,900 in Los Angeles County would qualify to buy a home valued at up to $199,988, with a minimum down payment of $6,000.

Similarly, an Orange County family earning $62,800 could buy a house for $213,230 with a down payment of $6,397. A San Diego family earning $51,900 or less could qualify for a $176,221 home, with a minimum down payment of $5,287. In Ventura, a family with an income of $61,100 could buy a home for $207,458 with a down payment of $6,224.

“It (the legislation) will certainly be a help to our industry,” said Walt MacDonald, president of the California Assn. of Realtors. Home sales and new construction in California have been crippled by the recession.