Posted 3/22/2002 11:49 am
Updated 11 months ago
The lease-purchase initiative consists of a collaboration that also includes Metropolitan National Bank, Argenta CDC, In-Affordable Housing Inc., Crews & Associates Inc. and The American Homeownership Foundation, a nonprofit organization that sponsored the program.
"This program is innovative in its approach by making funds available to a wide range of hard-working Pulaski county families who aspire to achieve the American dream of home ownership," Villines said in a news release. "The Pulaski County Facilities Board Lease Purchase initiative addresses the needs of buyers who have credit issues or no credit, or simply need assistance with their down payment and closing costs."
Officials said the program is designed to help families with blemished credit, a lack of traditional credit, or a lack of funds for a down payment.
How it Works
After 39 months as a renter under the lease-purchase agreement, and resolving any credit history issues, the family takes ownership of the home and assumes the mortgage. As a result, families are supposed to be able to acquire a home at today's housing prices and can benefit from home equity growth during the lease period.
Home ownership counseling and credit counseling is a part of the program to ensure that participating families are successful homeowners in the long term.
The county issued $43 million in bonds to provide mortgage financing, which includes the borrower's down payment and closing costs. Metropolitan National Bank will originate the mortgages, which Freddie Mac will purchase to provide a continuous source of mortgage funds.
The Pulaski County Public Facilities Board will serve as the initial property owner until the lease-purchaser assumes the mortgage after the 39-month lease term. The lease-purchaser must make monthly payments to the Facilities Board in a timely basis and take adequate action to resolve credit issues in order to exercise the purchase option at the end of the lease term and assume the mortgage.
Although the lease-purchaser does not have to make a cash down payment or pay closing costs at the time the property is purchased, they are charged a commitment fee equal to 1 percent of the home's purchase price and must pay costs associated with the purchase and loan assumption when they exercise their purchase option and assume the mortgage. Down payment and closing cost assistance is funded out of the bond issue.
Pulaski County is one of the first Lease-Purchase Plus initiatives in the nation. Freddie Mac has launched similar initiatives in Virginia and California.
Freddie Mac is a stockholder-owned corporation chartered by Congress in 1970 to create a continuous flow of funds to mortgage lenders.