Pub. 4 2013 Issue 1

spring 2013 23 Even though record-low interest rates have made mortgage payments more affordable than ever, a major challenge to any potential homeowner is accumulating enough savings for the down payment and closing costs. To a low-income family, this task can seem insurmountable. S tudies have shown that owning a home is beneficial to both the homeowner and the surrounding community: homeowners move less often than renters, enjoy better physi- cal and psychological health and have children with higher levels of education and annual incomes. But many potential homebuyers find that even if they can afford the monthly mortgage payments, they don’t have enough to cover the upfront purchase costs. Targeted assistance programs are one way to help these first-time buyers achieve their dream of owning a home. In 1995, federal regulations addressed this by authorizing the 12 Federal Home Loan Banks to establish specific set-asides to assist low- and moderate- income, first-time buyers. The Federal Home Loan Bank of Pittsburgh respond- ed by creating the Home Buyer Equity Fund, later renamed First Front Door (FFD), program in 1996, offering down payment and closing cost assistance to first-time buyers at or below 80% of the area median income. The program was suspended in 2009 in the wake of the economic recession, but is being re- launched again this year. This re-launch will happen in two steps – first, mem- bers of FHLBank Pittsburgh can enroll in April to participate in FFD, and then member institutions can begin regis- tering home buyers in June for grant commitments. How the ProgramWorks Through FFD, FHLBank Pittsburgh supplements a homebuyer’s down payment and closing costs through a matching grant. The program will match a homebuyer’s contribution to their closing costs or down payment 3-to-1. For every $1 of funding provided by the buyer, the Bank will provide $3 in matching grant assistance, up to $5,000. Financial institutions that are members of the Bank can register a homebuyer for this matching grant while working with the buyer to finance the mortgage on their new home. The member institution then advances the grant to the buyer at closing and is reimbursed by the Bank. Funds are awarded on a first-come, first-served, homebuyer-by-homebuyer basis. Applicants must also complete a mandatory pre-homeownership counsel- ing program, which includes counseling on predatory lending and other topics that will help them achieve and main- tain their goal of homeownership. To date, the program has awarded more than $34 million in funds to more than 8,500 first-time homebuyers, including Mark and Julie Petras of Commodore, Pa. “We pulled up to the house and it was wow! This is the one,” Julie said of the home she and her husband Mark purchased in 2007 to raise their twins. “It’s great to know there are programs out there helping people who need it.” For Dave Lemine, who in 2006 was able to move his family out of a three- bedroom trailer and into a split-level Beyond the Sticker Price: Helping More First-Time Homebuyers Afford the American Dream By John Bendel, Director of Community Investment, Federal Home Loan Bank of Pittsburgh Q Sticker Price — continued on page 24