Proponents of El Paso County’s single-family mortgage bond program say it encourages home ownership, but some experts warn of mortgage woes encountered when not carefully planning the purchase of a home.In cooperation with the city of Colorado Springs and the El Paso County Housing Authority, the county has made $22 million available with the issuance of the county’s Single Family Home Mortgage Revenue Bonds.The single-family mortgage bond program, offered to El Paso County residents since 1979, provides a grant in the amount of 4 percent of the loan to be used for a down payment or closing costs.For example, buyers of a $150,000 home would receive a $6,000 grant for a down payment and closing costs, said DeAnne McCann, El Paso County economic development manager.”It’s a really great opportunity to partner and to be able to provide those types of benefits for residents of El Paso County,” McCann said.Yet, not everyone agrees the program is a good idea.”I don’t support the program,” said Douglas Bruce, El Paso County commissioner. “It is not the function of county government in the first place.”Bruce said the program guidelines are irresponsible. “It facilitates people going into debt,” he said. “You shouldn’t encourage people to do something that is going to land them into debt.” Life-changing events such as divorce or loss of a job could subject people to losing their home if they do not have a way to make payments, Bruce added.The 30-year fixed-rate loan offers a 6.125 percent rate on a house priced up to $244,000. First-time homebuyers may purchase a home anywhere in El Paso County, while buyers who have owned a home in the past three years may only purchase a home in certain target areas, and they must adhere to higher income limits and purchase prices.First-time homebuyers in a one- to two-person family are not eligible if their annual income exceeds $65,400. The annual income for a household of three or more cannot exceed $75,210. McCann said the average income for applicants is $44,000.The average home purchased through the program costs $175,000; a $25-million bond could help 140 families purchase a home, she said.”Home ownership is something we would like to promote. It benefits our community because a neighborhood of homeowners is more stable,” McCann said.Since its inception, McCann said the program has aided 5,500 families in El Paso County, with a distribution of $440 million in loans. McCann said no taxpayer funds are used for the program.”It really helps so many people who may not be able to qualify under other types of programs,” she said.Falcon-based Sierra Lending owner Michael Tune said that as the housing market gets tighter, lenders loosen their requirements for loan approval.He said FHA and VA loans might give better-than-prime rates and allow a substandard credit history.Loan approval for a person with a high debt-to-income ratio is also detrimental, Tune said, and FHA and VA loans typically require a ratio below 45 percent of a person’s gross income, while homebuilders sometimes allow a 50 percent ratio.”They’re not doing someone a favor when they aren’t stressing to them how tight things will be,” he said.Holly Williams, El Paso County public trustee, said RealtyTrac, a realty tracking forecast company, ranked Colorado as having the nation’s highest rate of foreclosures, but Colorado’s ranking is due to an inconsistent tracking method for state foreclosure rates.”Other states base the foreclosure rate on when they sell the property. Colorado rates are based on when foreclosure starts,” Williams said.An Aug. 16 RealtyTrac study stated, “With one new foreclosure filing for every 480 households, Colorado documented the nation’s highest state foreclosure rate for the fifth month in a row. The state reported 3,810 properties entering some stage of foreclosure, a 3 percent increase from the previous month and a 55 percent increase from July 2005.”Williams said 40 percent of Colorado foreclosures never get to the final sale of the property, and, with consistent tracking guidelines, Colorado would not be in the top-10 of states with the highest foreclosures.For those who need assistance with home buying ins and outs, financial counseling is available to prospective homeowners through the Consumer Credit Counseling Service, a Department of Housing and Urban Development approved agency.CCCS Colorado Springs north office branch manager Catherine Carter said awareness of one’s financial situation can reduce the risk of foreclosure.”Sometimes, they have gotten into loans they shouldn’t have gotten into, which can cause foreclosure,” Carter said.She said the agency provides a variety of services regarding the purchase of a home, including pre-purchase counseling and ownership counseling workshops. Home ownership issues addressed include budget and credit report review and affordability of a home.”People are not necessarily ready to purchase a home because of credit issues,” Carter said. “Or they haven’t considered all the costs involved.”Know exactly what you are getting into. Do your research. Know your affordability range. Make sure the decision is appropriate at that time.”
