Council May Change Home Buyer Program

Council members today will consider changing the city’s First Time Home Buyer Program, which aims to help residents raise down payments toward the purchase of a house.

Since 1990, the city, in conjunction with the Federal Housing Administration, has offered loans to low-income, first-time home buyers.

One condition of the program was a prepayment penalty of 2% to 10% imposed on those who sold the home within five years of buying it. The sooner the home buyer sold the property, the higher the penalty.

The condition was meant to discourage buyers more interested in making a profit than in finding a home, said Mark Lazzaretto, economic development manager.

However, FHA officials recently scrapped the rule, saying it wasn’t in line with the program’s goals, Lazzaretto said. Instead, city officials will consider imposing higher interest rates to program participants who sell their homes within five years.

So far, $500,000 is available for 16 loans in 2001. The city has applied for more funds but has not received a response.