WATE 6 On Your Side staff - KNOXVILLE (WATE) - The Tennessee Housing Development Agency (THDA) is working to help new homeowners purchase a house in certain zip codes that were hard hit by the housing downturn.
THDA Executive Director Ralph M. Perrey announced details on the new program Thursday in a joint news conference with Knoxville Mayor Madeline Rogero. Perrey said he hopes to boost home sales and stabilize home values in neighborhoods hit hardest by the housing crisis by attracting home-buyers and stimulating home sales.
"Our goal is to provide a shot in the arm to the neighborhoods and housing markets in Tennessee where the effects of the housing crisis have been most difficult to erase," said Perrey.
The program is funded by $60 million in federal funding from the U.S. Department of Treasury as part of their Hardest Hit Fund. Applications open March 1 and funding is dispersed first-come, first serve.
The down payment assistance programs is targets in 55 Tennessee zip codes in 30 Tennessee counties based on a number of "stress" factors, including foreclosures, short sales and negative equity rates. Qualifying Knoxville neighborhoods include North Knoxville, Old North Knoxville, Edgewood, Parkridge, Park City, Whittle Springs, Burlington, West Haven, Lonsdale, Norwood and Pleasant Ridge.
"This program will complement the city's existing programs to decrease blight, stabilize neighborhoods and help more of our residents become homeowners," said Knoxville Mayor Madeline Rogero.
Eligible borrowers can apply for a $15,000 in assistance toward their down payment and closing costs in the form of a forgivable second mortgage loan. Home buyers will make no monthly payments on the second mortgage loan during its 10 year term and it does not accrue any interest. In addition, THDA will forgive 20 percent of the second mortgage loan each year starting in year six. Therefore, if a homeowner does not refinance, sell or move out of their home by the end of the tenth year, the second mortgage loan would be completely forgiven.Find out if you qualify:
"We're creating a substantial incentive for homeowners to buy in areas that are struggling for sales right now," Perrey said. "Increased market activity in these areas will help stabilize property values of existing homeowners, thereby reducing the risk they will fall into delinquency or foreclosure."'
To be eligible, you must purchase an existing home (new construction is not allowed) using a Great Choice first mortgage loan in an eligible ZIP Code, and you must complete a THDA-certified Homebuyer Education class with a qualifying agency.More: Find an approved class
For more information visit THDA.org.
Participating ZIP codes