New Va.Beach program can help with homeownership

VIRGINIA BEACH

Since Virginia Beach ended its down payment assistance program nearly a year ago, residents looking for financial help purchasing a home have had some difficulty. Without the city program and no state grant funding available through the U.S. Department of Housing and Urban Development, the Virginia Beach Community Development Corporation saw a need.

So, the local affordable housing provider created The Ocean Trace Homeownership Program, which gives qualifying residents the opportunity to own one of 14 condo units. The nonprofit corporation purchased the homes last month.

The two-bedroom, two-bath units off Birdneck Road near Interstate 264 are part of Ocean Trace Condominiums, a gated community the corporation will begin renovating in January. Qualifying applicants will also be offered down payment assistance, making the approximately $180,000 units even more affordable for potential homeowners. The idea, said Ashley Jarvis, the corporation’s community development administrator, is to create a program that provides down payment assistance to buyers, similar to the city’s former program.

“They stopped providing that so it’s kind of left a little bit of a gap in Virginia Beach,” Jarvis added. “So, we thought we wanted to do something to bridge that gap and provide affordable home-ownership opportunities.”

Already, two of the approximately 1,000-square-foot units are available for sale, and Jarvis expects the remaining units will be ready for purchase in the spring and summer of 2012. During that time, the interior and exterior of all the units will be renovated with new plumbing, flooring and cabinets.

The property, located within the Cox High School district, is about one mile from the Oceanfront.

Qualification process

The nonprofit has a list of criteria that applicants must meet in order to be eligible for the new program.

Most importantly, they will have to meet certain income limits based on the household size. For example, a family of four could earn no more than $85,080 in order to be eligible to purchase a unit.

Applicants also must have 12 months of good credit and sufficient income to qualify for a mortgage from about $155,000 to $180,000.

Those approved for the down payment assistance program will receive up to $20,000 in funding, depending on how much loan they qualify for.

Buyers will also have to be the owner occupants of the property – meaning they can’t rent it out after purchase through the program – and take a Prepurchase Homeownership Education Seminar offered by the corporation, along with undergoing post-purchase counseling for two years.

Jarvis said these requirements are meant to ensure homebuyers in the program are well-educated and remain financially stable after purchasing their new homes.

Previous program risks

Sharon Prescott, housing development program administrator with the city’s Department of Housing and Neighborhood Preservation, said defaults on loans issued through its down payment assistance program were the reason Virginia Beach ended the program a year ago.

A condition of the city’s loan program required that homeowners receiving the federal financial assistance maintain the property for 10 years and be the principal resident.

When some residents moved out before that time and either rented out the properties or had them foreclosed on, the city was responsible for repayment of the down payment loans to the U.S. Department of Housing and Urban Development.

“I had no source of funding to meet those defaults,” Prescott said, who added that repayment had to be made using nonfederal funding.

“Our option had to be taken off the table,” she added. “Basically, anytime in 10 years that a hiccup happened, we were at risk. And that’s a long time to be at risk, especially in this market.” Prescott said the city will look at bringing the program back in a few years, when there’s less instability in the housing market.

“We’ll look at it each year and in the context of foreclosures,” she said. “And try to make a fact-based decision whether the benefit exceeds the risk.”

Until the city restores the down payment assistance program, residents in need of financial assistance will have to take advantage of programs like Ocean Trace. Already, the applicants are lining up to participate in the new program.

“We’re just starting to get calls from buyers,” Jarvis said. “We’re trying to determine eligibility. People should call now if they’re interested.” 

Prospective buyers can call the Virginia Beach Community Development Corporation at 463-9516 to determine eligibility and submit an application for the new Ocean Trace Program.