City gets involved in home loan program

Larry Matthews grew up in a Dothan housing project and remembers well the day his mother was able to move into her first house in the Young America subdivision off Kinsey Road.

“I remember the joy she had on becoming a homeowner,” said the District 1 city commissioner. “It was around 1970 and a lot of those people who moved into Young America are still there. Home ownership brings stability.”

And public officials know turning renters into owners brings a whole lot more – both to the people inside the houses and for the neighborhoods.

That’s why the city has launched a pilot Community Development Block Grant project whereby the city provides a $5,000 down payment for low- to moderate-income first-time homebuyers. The Home Buyer Assistance Program, approved on a 6-1 vote Tuesday, sets aside $50,000 for grants.

The money is to be used as a down payment for the house.

District 6 Commissioner Keith Seagle voted against the measure, saying it was not a good use of the funds from a business standpoint. He wanted the city to have a guarantee the money could be recouped if not used or used as intended.

“As a standard business practice, I want to (see them) repay the money. I take seriously safeguarding taxpayer money,” Seagle said.

“These are federal dollars,” Matthews said. He said many people struggle to get a down payment for a home.

When commissioners brought up the question of having a lien or second mortgage on the $5,000 payment, Matthews leaned into the microphone before him and said, “These are for low-income people and these are grants.”

“So we will do something with taxpayer money that a banker wouldn’t do with his money?” Seagle asked.

City Manager Mike West said there is a larger picture to see.

“The bottom line here is, we use a little money as a catalyst to improve depressed neighborhoods,” West said. “From a business sense, no you wouldn’t do this at all. But this is the whole purpose of the CDBG program – to help areas of distress. We can help create an environment where people want to live without drug dealers and crime. These programs have been successful.”

CDBG Administrator Maurice Head said cities across the country have down payment assistance programs such as this. Dothan has never had one.

Head has already received inquiries from about 40 potential homeowners. The funds will be given to banks and other lenders, not to individuals, and it will only be given to those who qualify and meet the strict CDBG requirements.

Head said all due diligence would be followed as with any home loan, with financial and credit checks, appraisals, and other information gathered. Head met with about 15 local lenders earlier this fall.

“We will monitor the success of the program and report back in 18 months and let the commission know how many people have participated,” said Head, calling the program a good move by the city.

The program requires new homeowners to stay in the home for at least five years.

In the past, CDBG funds have gone for infrastructure improvements like street paving, existing home repair, sidewalks downtown, and for other uses.