New Tustin 'Affordable' Homes Are Anything but, Critics Say

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Hanna
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New Tustin 'Affordable' Homes Are Anything but, Critics Say

Post by Hanna » Wed Oct 18, 2006 8:40 pm

New Tustin 'Affordable' Homes Are Anything but, Critics Say

Some who won a housing lottery at former Marine base find they can't qualify because down payments are nearly 50%.
By Jennifer Delson
Times Staff Writer

October 18, 2006

In Orange County's pricey housing market, even some winners of a recent affordable-housing lottery were too cash-poor to take advantage of their luck and buy a house — a situation one advocate called "ludicrous."

Of 700 applicants, 143 winners in the development's first phase were called in late September to make sure they financially qualify to buy low-cost homes being built on the former Marine Corps Air Station site in Tustin.

At least a handful of winners found they didn't have enough money to make required down payments on the properties, which were priced between $55,100 to $311,400, a fraction of the market prices.

Those units were advertised by Lennar Corp. and William Lyon Homes with the words "3% down payment required." But some buyers found that the down payments were nearly 50% of the purchase price.

The large down payments were required to meet redevelopment requirements. State redevelopment law requires that occupants not use more than 35% of their incomes on monthly housing payments, which include the mortgage, taxes, insurance and association fees.

Several prospective buyers have called Tustin City Hall to complain, said Assistant City Manager Christine A. Shingleton. Affordable-housing advocates who learned about the problem said they were outraged.

The requirement for large down payments from low-income families "is ludicrous," said Crystal Sims, director of litigation at the Legal Aid Society of Orange County. "No low-income family has the money for a large down payment. It makes a joke out of an affordable-housing project."

Lennar and William Lyon Homes are building 1,540 units in a redevelopment project at a closed Marine base. The complex includes 308 low-cost units, meeting a state redevelopment requirement that 15% of the housing be low-cost.

Eligibility depends on the number of people in a household and family income. For example, a family of four with an annual income of less than $62,640 is classified by the state as eligible for low-cost housing in Orange County.

The companies are meeting their obligation to build the housing and comply with laws guiding redevelopment projects, according to city officials.

With the median price of an Orange County home about $626,000, developers have enough qualified buyers of the low-cost units, even those requiring large down payments, so the developers won't provide any sort of financial assistance for those who don't have the down payment.

"On one hand, it's disappointing that the program is not for everyone," said Richard Knowland, Lennar vice president.

"On the other hand, it's exciting that it is affordable for many. It gives these families the ability to live and own in Orange County."

William Lyon Homes representatives did not return repeated calls for comment.

Knowland said any lottery participant could have talked with the developers before the drawing to see if they could afford the homes.

But one buyer, who asked not to be identified because she was still trying to find money for the large down payment, said she waited more than two years to try to buy one of the homes. The lottery advertising from both companies, she said, misled her into believing she needed only 3% down. After she won the lottery, she learned she'd need a $48,000 down payment for a $113,000 two-bedroom home she wanted, documents show.

"It was so disappointing," said the single mother, who earns $43,000 annually. "For a week before the lottery, I couldn't sleep, wondering if I was going to be picked. Then I was picked, and I couldn't believe that I was being asked for so much money."

Shingleton said city officials were also concerned about the developers' advertising, which read, "3% down payment required."

When Tustin officials asked about it, the developers said it was a "minimum down," Shingleton said.

Knowland said the advertising wasn't inaccurate because some buyers need only a 3% down payment, but said, "I think we should look at it" in future marketing materials.

"But anyone who does any kind of research will find out exactly what is needed" to buy a home, he added.

In some cases, in order to make housing affordable, developers offer second loans and other assistance, said Deborah Collins, attorney for the Oakland-based Public Interest Law Project.

Without other subsidies to low-income buyers, "it seems it would be impossible to get a very low-income resident into these units," she said.

Knowland said that even if some housing lottery winners find themselves unable to buy a house, others are waiting to take their places. "There is so much demand for anything affordable," Knowland said. "You can set up a line two miles deep of people who can make the down payment and income-qualify."


jennifer.delson@latimes.com

http://www.latimes.com/news/local/la-me ... california

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SLK230
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Re: New Tustin 'Affordable' Homes Are Anything but, Critics

Post by SLK230 » Thu Oct 19, 2006 4:28 am

Hanna wrote:New Tustin 'Affordable' Homes Are Anything but, Critics Say

Some who won a housing lottery at former Marine base find they can't qualify because down payments are nearly 50%.
By Jennifer Delson
Times Staff Writer

October 18, 2006

In Orange County's pricey housing market, even some winners of a recent affordable-housing lottery were too cash-poor to take advantage of their luck and buy a house — a situation one advocate called "ludicrous."

Of 700 applicants, 143 winners in the development's first phase were called in late September to make sure they financially qualify to buy low-cost homes being built on the former Marine Corps Air Station site in Tustin.

At least a handful of winners found they didn't have enough money to make required down payments on the properties, which were priced between $55,100 to $311,400, a fraction of the market prices.

Those units were advertised by Lennar Corp. and William Lyon Homes with the words "3% down payment required." But some buyers found that the down payments were nearly 50% of the purchase price.

The large down payments were required to meet redevelopment requirements. State redevelopment law requires that occupants not use more than 35% of their incomes on monthly housing payments, which include the mortgage, taxes, insurance and association fees.

Several prospective buyers have called Tustin City Hall to complain, said Assistant City Manager Christine A. Shingleton. Affordable-housing advocates who learned about the problem said they were outraged.

The requirement for large down payments from low-income families "is ludicrous," said Crystal Sims, director of litigation at the Legal Aid Society of Orange County. "No low-income family has the money for a large down payment. It makes a joke out of an affordable-housing project."

Lennar and William Lyon Homes are building 1,540 units in a redevelopment project at a closed Marine base. The complex includes 308 low-cost units, meeting a state redevelopment requirement that 15% of the housing be low-cost.

Eligibility depends on the number of people in a household and family income. For example, a family of four with an annual income of less than $62,640 is classified by the state as eligible for low-cost housing in Orange County.

The companies are meeting their obligation to build the housing and comply with laws guiding redevelopment projects, according to city officials.

With the median price of an Orange County home about $626,000, developers have enough qualified buyers of the low-cost units, even those requiring large down payments, so the developers won't provide any sort of financial assistance for those who don't have the down payment.

"On one hand, it's disappointing that the program is not for everyone," said Richard Knowland, Lennar vice president.

"On the other hand, it's exciting that it is affordable for many. It gives these families the ability to live and own in Orange County."

William Lyon Homes representatives did not return repeated calls for comment.

Knowland said any lottery participant could have talked with the developers before the drawing to see if they could afford the homes.

But one buyer, who asked not to be identified because she was still trying to find money for the large down payment, said she waited more than two years to try to buy one of the homes. The lottery advertising from both companies, she said, misled her into believing she needed only 3% down. After she won the lottery, she learned she'd need a $48,000 down payment for a $113,000 two-bedroom home she wanted, documents show.

"It was so disappointing," said the single mother, who earns $43,000 annually. "For a week before the lottery, I couldn't sleep, wondering if I was going to be picked. Then I was picked, and I couldn't believe that I was being asked for so much money."

Shingleton said city officials were also concerned about the developers' advertising, which read, "3% down payment required."

When Tustin officials asked about it, the developers said it was a "minimum down," Shingleton said.

Knowland said the advertising wasn't inaccurate because some buyers need only a 3% down payment, but said, "I think we should look at it" in future marketing materials.

"But anyone who does any kind of research will find out exactly what is needed" to buy a home, he added.

In some cases, in order to make housing affordable, developers offer second loans and other assistance, said Deborah Collins, attorney for the Oakland-based Public Interest Law Project.

Without other subsidies to low-income buyers, "it seems it would be impossible to get a very low-income resident into these units," she said.

Knowland said that even if some housing lottery winners find themselves unable to buy a house, others are waiting to take their places. "There is so much demand for anything affordable," Knowland said. "You can set up a line two miles deep of people who can make the down payment and income-qualify."


jennifer.delson@latimes.com

http://www.latimes.com/news/local/la-me ... california

Proving once again that there is no such thing as a free lunch.

The part I don't understand is why is it the builder deciding on how much your down payment should be?

Can't you go to your own bank for a mortgage. The builder is paid in full from the bank upon closing.

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Datsun 510
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Re: New Tustin 'Affordable' Homes Are Anything but, Critics

Post by Datsun 510 » Thu Oct 19, 2006 6:55 am

The large down payments were required to meet redevelopment requirements. State redevelopment law requires that occupants not use more than 35% of their incomes on monthly housing payments, which include the mortgage, taxes, insurance and association fees.
Sounds like maybe the lender had their hands tied with the "redevelopment law". To lower the monthly payment down to 35%, a bigger down payment or lower price would be necessary. Just a guess 8-[

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Re: New Tustin 'Affordable' Homes Are Anything but, Critics

Post by John Q. Public » Thu Oct 19, 2006 7:23 am

Hanna wrote:But one buyer, who asked not to be identified because she was still trying to find money for the large down payment, said she waited more than two years to try to buy one of the homes. The lottery advertising from both companies, she said, misled her into believing she needed only 3% down. After she won the lottery, she learned she'd need a $48,000 down payment for a $113,000 two-bedroom home she wanted, documents show.

"It was so disappointing," said the single mother, who earns $43,000 annually. "For a week before the lottery, I couldn't sleep, wondering if I was going to be picked. Then I was picked, and I couldn't believe that I was being asked for so much money."
I'm trying to figure out why a "single mother, who earns $43,000 annually" needs to pay her mortgage down to $65,000 to qualify. What kind of rates are they charging? Or how many kids does she have??? Seems to me that she should be able to qualify for the whole $113K.

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