More than 40 first time home buyers in Memphis now own home thanks to the Tennessee Housing Development Agency’s down payment assistance program through the $60 million Hardest Hit Fund.
THDA executive director Ralph M. Perrey visited Memphis on April 19 to raise awareness of the program’s availability and to check out some of the first homes sold to area families.
“We are very, very pleased with the initial response,” said Perrey. “It only really went live on March 1, and we have closed about 200 loans to which those new down payments are linked, with roughly 20 percent of that total being realized right here in Memphis.”
The $60 million fund will go toward as many as 4,000 potential home sales. The $15,000 down payment and closing cost assistance, given in the form of a forgivable second mortgage loan, is available to each home applicant using THDA’s Great Choice Home Loan program within 21 targeted zip codes in West Tennessee, including many in the Memphis area.
There are no monthly payments on the second mortgage loan during its ten-year term, and it does not accrue any interest. THDA will forgive 20 percent of the second mortgage loan each year starting in year six. Buyers must live in the home and not refinance, sell or move out during the ten years to reap the full benefit.
“All indications are that demand will remain strong and will probably pick up a little bit as more people are aware of it,” said Perrey. “At our current run rate, we could do 1,200 of these loans this year. At this current pace, I don’t think we’ll get too deep into 2020 (before the funds are exhausted).”
“The last three years has really been a shift for us historically,” said Perrey. “We’ve been pretty aggressive with lender engagement, community outreach and even some direct consumer marketing, and what we have found as a result is our loan production over the past three years has grown by 35 percent.”
There’s a chance additional resources from the U.S. Treasury Department could be allocated to the program in upcoming years if other states do not use all of the funds allocated to them. Seventeen states received money under the Hardest Hit program, and there is a “use it or lose it” provision. At the end of 2018, unused funds will be redistributed to states most in need of additional money.
“There are probably a lot of households in Memphis that have been thinking about home ownership, but also thinking it was probably something for two to three years down the road,” Perrey said. “Now they’re taking a look and finding that this is a product they can qualify for and is possible for their family right now.”
Enjoy this story?
Sign up for free solutions-based reporting in your inbox each week.