Federal program offers chance at American Dream

Begun in 2003 by the Bush administration, the ADDI program’s goals are to increase homeownership rates, create ownership opportunities for low-income households and revitalize communities.

Pam Smith, residential community development loan officer with the city of Springfield’s Planning and Development office, is in charge of approving and allocating the funds.

“The loans, up to $7,000, may be used for down-payment and closing costs, which seems to be the biggest use of funds,” she said. “Most of the recipients have applied them toward closing.”

There are three requirements for eligibility for the program. First, buyers cannot have owned a home in the last three years, unless they are displaced homemakers or single parents. Second, their income cannot exceed 80 percent of the Springfield median income. That would range from $28,800 for a one-person household to $54,300 for a household with eight members. Third, properties must be in the boundary area – between Glenstone Avenue, Grand Street, West Bypass and the northern city limits.

When Smith began working for the city in November 2005, she learned of the program and realized that the city needed to use the available funds or send them back to the federal government.

The city received its 2003 and 2004 entitlements at the same time in 2004, she said, adding that in 2005 only about $18,000 of the nearly $190,000 received had been used.

ADDI funds must be spent within five years.

“ADDI had fewer buyer restrictions in 2003, but in 2004 (the U.S. Department of Housing and Urban Development) wanted marketing to those on housing assistance and in mobile home communities,” Smith added. “In January of this year, we mailed 2,000 flyers and held seminars in conjunction with lenders.”

Smith said that fund allocation has decreased each year, and the city is expecting only $22,310 in 2006.

“We’ve seen cuts across the board, but in a way it pays off for us to offer loans instead of grants, because in time, the money will start coming back to the city and we can continue to offer the program and help other people, when HUD no longer gives us money,” she said. “Hopefully, the buyers will be refinancing, paying off the balance or paying off the amortized portion. It amounts to a continuing investment in neighborhoods and the city.”

Smith said that the area eligible for ADDI loans contains many rental properties, and the city wants to encourage ownership, in addition to helping increase property values downtown and in the Commercial Street neighborhood.

The loans, she added, are at zero percent interest, and payment is not due until the house is vacated or sold; buyers can make payments before that time, which will be applied to their balance.

Great Southern Bank mortgage loan officer Shirley Grimmet said she likes what ADDI offers buyers and the city.

“It works well for homes that are habitable,” she said. “Right now, we’re closing on a property that needed rehabilitation and was remodeled by the current seller. We got the loan, fixed it up, and it really is nice.”

She also emphasized the need for qualified buyers and said that the program helps make housing more affordable for everyone.

Brian Grim, a loan officer with North American Savings Bank, said that everyone involved receives benefits from the program.

“The advantages for us are obviously financial, but it’s part of the products we offer to clients and the real estate community – 99 percent of our business is through referral, so we include ADDI to be more comprehensive,” he said.

Prospective buyers, he said, get down-payment assistance as well as more manageable monthly payments.

“The effects on the local market and property values help maintain a fair amount of affluence in the inner city,” Grim added. “That leads to pride of ownership in the community.”

City loan officer Smith said eligible buyers should go to a lender and get pre-qualified soon.

“For a long time, ADDI was a sleeper, and now the office is busy responding to calls,” she said. “When (buyers) shop for a house and find one, then we can work with their agent – but they’d better hurry.”