The state of Tennessee has $80 million in taxpayer money to give out so people can buy new homes.
Congress allocated this money to Tennessee two years ago, said Ralph Perry, executive director of the Tennessee Housing Development Agency.
THDA eligible borrowers who want to buy an existing home in areas of Tennessee where people suffer the most from bankruptcies, foreclosures, and unemployment will get $15,000 for a down payment closing cost. Exactly 62 Tennessee zip codes qualify, Perry said.
This, Perry said, is the second phase of the Hardest Hit program, started in 2012, to give to people affected by the 2008 recession.
“It really came as a surprise to us because while Tennessee used all its money I believe there was well over $1 billion left unspent in other states,” Perry told The Tennessee Star.
“So it was a surprise when some senators added some additional money to it. And our share was relatively a small part of the pot but we have some $60 million we were able to put to use in this way.”
THDA officials have until the end of 2020 to give all the money out, Perry said.
By the terms of the program, if recipients stay in their home and in that mortgage then over time that $15,000 is forgiven, Perry said.
The forgiveness doesn’t start until year six, he added.
About 16 or 17 other states got federal money, including Michigan, Florida, Nevada, and California, among others.
To get the money, eligible THDA borrowers must start the process through private sector lenders who originate the mortgages. They must purchase a house in one of the specified 62 zip codes before they get the $15,000 in down payment closing costs. Recipients must take a homebuyer education course.
“We have done 3,600 of these since the start of the program at $15,000 a piece. We think we have enough left to continue offering the down payment assistance at least through the first of the year and into the star of next year,” Perry said.
“It does not accrue interest. In addition, no payments are required on the loan during its ten-year term,” Perry said.
“If the homeowner does not refinance, sell, or move out of their home by the end of the tenth year, the second mortgage is forgiven.”
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