California is helping first time homebuyers buy foreclosed properties—at a bargain.
The California Housing Finance Agency received $200 million to use for a program that offers below-market-rate loans for first time homebuyers in the state, according to The San Francisco Chronicle. The special project is called the Community Stabilization Home Loan Program, and according to the newspaper, it will help an estimated 800 to 1,000 Californians purchase their first home.
The program was announced by Gov. Arnold Schwarzenegger Monday as an effort to help first time homebuyers in areas hit hardest by foreclosures.
“We have taken a number of actions to help prevent foreclosures, but we also want to address the many already-foreclosed-on homes that sit vacant in our neighborhoods today,” Schwarzenegger said in a press release on the program. “This program will not only make it easier for families to purchase their first home, but will also help stabilize neighborhoods that have homes sitting empty. No one single effort can solve our nationwide housing crisis, but together these measures make an important difference in California's neighborhoods.”
The program will offer 30-year loans at a 5.5 percent fixed interest rate and does not require a down payment, although borrowers must pay for mortgage insurance, according to the San Francisco newspaper.
But there’s a catch.
The program only applies to specific foreclosed properties owned by one of the institutions participating in the program including—Wells Fargo, HomeEq, CitiMortgage and Fannie Mae—who have agreed to price the properties at 12 percent below market value, the newspaper reports.
Areas covered by the program include four California counties as well
as a number of ZIP codes in Alameda, Contra Costa, Los Angeles and San
Bernardino counties, according to The San Francisco Chronicle.
For more information on the program, visit www.calhfa.ca.gov.