A young single guy is expected to become the first Downers Grove home buyer to benefit from the Illinois Housing Development Authority’s Mortgage Credit Certificate program. The attainable housing initiative was made possible locally by $1.3 million in village bonding authority ceded to IDHA last year.
The buyer expects to close on his first home sometime this week, said Kathy Doremus, a mortgage banker with Community Bank – Wheaton/Glen Ellyn, who has shepherded the deal.
“His reason for buying in Downers Grove was because of the program,” said Doremus. The deal is a bit more complicated than usual because it involves a “short sale.” The seller owes more than the house is worth, meaning the bank that holds the mortgage must agree to take less.
Doremus, who describes the IDHA program as “a passion of mine,” has been working with the program both locally and in West Chicago, where “the city has done a fantastic job of marketing it.”
She says the MCC program is a good way to minimize the impact of the growing number of foreclosures by bringing potential buyers into town.
“In this environment, a program that can help people come in a buy homes is what we need to stabilize the housing market,” she said. “The middle layer can’t move up if they can’t sell their homes.”
The Mortgage Certificate Program provides a federal income tax credit to qualifying buyers and can be used in conjunction with conventional, FHA or VA loans.
The program allows buyers to take 20 percent of the interest paid on their as a dollar-for-dollar reduction on their federal income tax liability for as long as they stay in the home. The remaining 80 percent of interest paid is used as a standard mortgage deduction
Buyers are also allowed to use the 20 percent credit to reduce their debt load in order to lower their debt to income ratios and qualify for a mortgage, she said. “And because they will be paying less in taxes, they can change their deduction and net out more take-home pay.”
In any case, buyers must meet the credit guidelines of whatever mortgage they are seeking.
“We’re not making bad loans, we’re making good, safe loans,” she said.
The first local buyer, who is purchasing a $210,000 home, “has credit in the high 700s and money in the bank,” she said.
Doremus also recommends buyers attend first-time homebuyer education at the DuPage Homeowner Center, a not-for-profit in Wheaton. Those who do “have a much, much lower rate of foreclosure,” she says. “It creates better borrowers.”
Downers Grove’s MCC program comes at an ideal time, as teardowns of starter homes ease up, the easy mortgages of yesteryear dry up and foreclosures ramp up, Doremus says.
“Because there are so many properties that are foreclosures or short sales, it will truly be a benefit to get homes filled up and someone living in them,” she said. “If we want the economy to recover, we need to promote home ownership and use any way we can to make it more affordable.”
Interest in the program has grown among local real estate brokers since IHDA introduced last fall. Buyers, too, are getting savvy to it. One is a police officer in a neighboring suburb who is actively seeking a home in Downers Grove.
Locally, the MCC program can help eight or nine such buyers purchase homes valued at up to $325,000. As home prices drop, the money may stretch even further.
“Realtors are realizing things aren’t going to change until we get the first-time buyers going,” Doremus says. “We’re in trouble, and here’s a good, solid way to help the community.”
Good deal. Another Waldack initiative that many residents lobbied openly and hard for, myself included, as a way to maybe sell some homes. Too bad the mortgage wasn’t generated locally, but maybe next time. This was a good example of how the village can facilitate residential RE activity with no direct investment and no risk.
The DG IHDA program has a time limit. Hopefully now that one is on the books another will get done too. And another.
It should be stated for the record, this program does not spend ANY Downers Grove taxpayers’ money. It’s a win for the buyer, the seller, the neighbors, the Village, and the realtors. It is especially important in these economic times that homes are not abandoned and left empty and unmaintained.
Please don’t flame me on asking for some clarification…. By ceding the bond cap to IHDA, does that mean we will have less ability to issue bonds to help fund for instance a new police station???
No, DG Resident, it should have no impact whatsoever on the Village’s ability to either: (a) use the allocated amount of industrial revenue bonds for future years; or (b) issue general obligation or other bonds for projects such as a new Police facility.
Ceding that portion of the bond cap that the Village has concluded it has no other use for is fairly easy. The question for future Village Council’s, however, will be whether to cede any portion of the cap to continue to support the IDHA program when there are deserving economic development projects that would otherwise utilize the maximum amount of IRB capacity allocated to the Village. I suspect there will be strong opinions expressed both ways.
No. Ceding Private Activity Bond capacity is separate from the debt of the village. It has no impact on the debt ceiling. Think of it as a bit of pork gravy the state tosses out each year to the cities and villages. In 2008 it was based on $8.05 (?) for each person living in DG.
In the past it’s been used to help companies get lower interest rates on loan payments, to help senior center lower interest costs on renovation and construction loans, and now for first time home buyers to locate here in DG.
This link will take you to one of the pertinent green sheets. We had given over some of our cap to Romeoville, and Waldack started the process of getting the remaining $1.3 million of cap for what ultimately became the mentioned IHDA Mortgage Credit Certificate program. He had also tried to move this forward in 2007, but that year the bond cap was used by VCT, a world-wide high tech company headquartered here in Ellsworth Business Park, which was used to expand operations and hire more employees.
Every year the business community is looking for companies to use this tool. Staff was initially neutral on it for the IHDA use, but I think they now see it as yet another way to help the village economically.
DG Resident,
The affordable housing issue is kind of my hot button issue in the village. The affordable housing proponents will have stiff competition should they want to push this issue again in the future. Feel free to email me if you would like to be kept in the loop.
Chadmacc@yahoo.com
Not affordable housing again…LOL
This MCC program has nothing to do with that. It has everything to do with providing a limited tool so first time home buyers might take more interest in what DG has for middle income, attainable starter homes.
MT,
I will do everything I can to make sure that this MCC program is used only as a “limited” tool here in our village.
Affordable housing again??? Come on. Anyone look at the sale price of home in DG and how every week the price keeps going down??
We have more important things to worry about in DG then another Waldack issue.
Jill,
Don’t kid yourself Jill, the affordable housing crowd was out in force at the TCD3 meeting held at Downers Grove South High last month. If you feel as I do that this is is a non issue you need to attend the TCD3 meetings. Also you can go online and fill out a TCD3 survey and make your voice heard. Visit the village website to fill out the survey. This is your town, make sure that the pundits that attend every meeting in town don’t shape this village the way they see fit. The Village needs your input in the TCD3 process. Thanks Jill.
I was at the meeting at South High. I have encouraged all of my friends and Family to go to the webiste for TCD3 and fill out the survey.
Why didn’t you run this year for Council Chad? We missed you. Now we are stuck with either Waldack or Norris. It is ashame no one ran………………
I second Chad’s comment you should make your opinion known on village matters via the TCD3 process. Tell your friends too.
The DG issue this MCC program addresses is finding buyers for unsold DG homes, which is an economic issue, not a Waldack issue. Waldack was the council member who brought it forward.
Affordable housing is a different subject entirely.
Jill,
That is awesome, I wish I would have met you there. I was sitting with Bob Barnett and Dan McInerney. The TCD3 process is very important and I hope many more residents show up to the meetings and or fill out the survey online.
Thank you for the kind comments about running for council. I would love to one day. The kids are so young and my first job is to raise good citizens! I have much to learn about the village, its government and its process. I want to have more experience in village matters and process before I think about a council run. Thanks again Jill and I hope to meet you at a TCD3 event in the future.
210k?? For a house?!?! Does that come with the land? Unless the ghosts of the original owners roam the hallway and human bones keep popping up in the plumbing, I can’t imagine a home anywhere in Downers worth that little, unless it was being sold originally as a knock down.
Affordable housing? As a local realtor I see plenty of it in Downers Grove. Sure, it’s a starter home, and probably needs some work…but I think it’s affordable for middle income.
I bought a house in Bolingbrook last summer, JUST before the bottom fell out of the housing market. I sure wish I waited another couple months, I would have killed to be able to but a house in the town I work in, but at the time there wasn’t anything that fit my family’s needs within my price range. Now? I can throw a stick and hit 3 or 4.
Zig,
I don’t know what kind of house you were looking for at the time, but I can say with reasonable certainty that you could have found something that would have worked with in your budget if you had wanted to live here badly enough. Sometimes we have to sacrifice location for home size or options. Hopefully, you bought a home in the part of Bolingbrook that goes to D99 schools. If your goal is to live and work in Downers Grove I hope you get the chance to move here.
Maybe one day, but I did get a pretty nice house!
For those of you out there who thought “oh no” not affordable housing again. Here is the latest news. It’s BAAAACK!
The current issue of the Sun newspaper on page (6) has some news. The state is almost certainly going to pass a bill which would give counties the right to take land they currently own and grant contracts to builders to build “workforce” housing in DuPage county and counties all over the state. Most of the land is unincorporated and not being properly utilized at this time. The county believes we need to find a way to use this land. I agree we need to find a use but I do not agree that we need to build housing with it.
The program works like this, the county retains ownership of the land and the buyer pays a mortgage on just the physical house portion of the real estate. You must be a DuPage county public servant who makes under $84k per year to qualify. Sorry to the rest of you who make under that, you don’t qualify for this program.
I would like to see the county sell this land outright to builders or to ask villages to annex the property and use it the way they see fit. I am sure that local villages could find a local use for this property which would benefit the village as a whole instead of just a few homeowners.
This bill opens up Pandora’s box and will allow any housing assistance plan to take shape. The government needs to stop bailing people out and find better ways to use the assets they have to their advantage. What happened to hard work and saving money in this country? How are you helping the rest of us who pay our mortgages and purchased our homes the conventional way? We are sending the wrong message about home ownership by participating in this program, which is supported by a very good Republican county board member. There is one thing that your are entitled to in this country, the opportunity to succeed.
So just when you thought the issue had gone away the proponents for affordable housing rear their heads again. If you feel as I do about this program please contact your county board member and tell them NO we don’t want any affordable housing initiatives in the county.
We are trying to use this and are being told it is our of money. Also we are informing the brokers, banks and realtor about it nobody has any idea about it or just are not wanting to use it.
Only thing we are hearing from most banks is that they don’t like using it because it always falls through at the last minute.
I meant out of money!
Just so you know Greg in this case it was a short sale which means that this buyer is taking advantage of the IHDA program and the low sale price in a short sale situation. I applaud this capitalistic minded individual, but over all the low sale price will continue to lower home values in that neighborhood. So the win, win that all the proponents of this program see is not really going to have that much of a positive impact on Downers Grove real estate in general. In my opinion there isn’t a problem in the first place. The market corrected, lets move on.