- About Us
Down payment assistance in Federal Way: Applicants may qualify for up to $50,000
A program designed to encourage first-time homebuyers to purchase foreclosed and abandoned properties in Federal Way has been restructured to include families with moderate incomes.
In November, the City of Federal Way, in conjunction with the Washington State Housing Finance Commission (WSHFC) launched House Key Federal Way, a down payment assistance program. House Key funding stems from the federal Neighborhood Stabilization Program (NSP), which is funded by stimulus money, offered through the Department of Housing and Urban Development and aimed at addressing the impact of abandoned and foreclosed homes.
"The mission of the HUD funding is to create communities that are viable," said Kolya McCleave, Federal Way human services grant coordinator.
The funding was awarded to states and municipalities that are staring foreclosure in the face. Awardees have a significant percentage of home foreclosures, have a high percentage of homes financed by a sub-prime mortgage related loan, and are likely to face a significant rise in the rate of home foreclosures, according to the NSP action plan.
Federal Way was allocated $651,688.
"The City of Federal Way was impacted pretty hard," said Karen Carlson, WSHFC second mortgage program administrator. "They had 600 (homes in foreclosure or bank owned) at one point."
The House Key Federal Way loan is a 0 percent interest, deferred payment second mortgage that must be used in conjunction with the WSHFC's House Key First mortgage program. Applicants may qualify for up to $50,000. The money can only be used for a down payment and closing costs on foreclosed, bank-owned, 90-plus days delinquent or abandoned single family residences, including condominiums, in Federal Way. The loan must be repaid within 15 years, or upon the sale or refinance of the home.
Geographic and income qualifiers for the program have recently become more lenient, opening the door for more affluent families to qualify for funding. Families of up to three, making $97,000 annually, and two-person families making up to $90,000 a year can now apply for a House Key Federal Way loan. The income levels reflect the median incomes of Federal Way residents, McCleave said.
When the House Key program launched late last year, the City of Federal Way took a phased approach to allocate the money. Staff attempted to offer the program as a type of social service by first targeting residents earning 50 percent of the median income. Little interest was gleaned, largely because home values in Federal Way outpace, even with down payment assistance, what is affordable to this income bracket, McCleave said.
"It's really tough when you're low income trying to find something in Federal Way that you can afford," Carlson said.
The city, on a tight deadline to either find qualified applicants or risk losing the funding, restructured the program. In addition to loosening the income restrictions, geographic restrictions have been lifted. The funding previously could only be used toward purchasing homes in specified tracts reflecting high foreclosure rates. It can now be applied toward any foreclosed, bank-owned, 90-plus days delinquent or abandoned home in Federal Way.
"While those areas (reflecting high foreclosures) would be preferable, we don't have the luxury of time anymore," McCleave said.
Filling empty homes stimulates the city's economy by keeping its neighborhoods vibrant, McCleave said. It results in an increased tax base, used to provide residents public services. Keeping homes occupied helps prevent the area from becoming depleted.
"It's more about the neighborhoods that need the help, not the people," McCleave said.
But reducing the number of empty residences also boosts neighborhood morale. As a homeowner, being surrounded by foreclosed homes can be depressing, McCleave said.
"Who wants to live in a neighborhood where nobody lives?" he asked.
The city hopes to use House Key to fill 19 vacant homes before mid-September. City staff wishes to see a minimum of 10 homes in the closing process by the end of June. All funds must be allocated by Sept. 18. In order to receive the down payment assistance by this date, the applicant must be engaged in a purchase and sale agreement. Applicants do not have to currently reside in Federal Way.
Check it out
For more information or to begin the application process, call WSHFC at (800) 767-4663 or visit the website at www.wshfc.org. Potential homebuyers, real estate agents, lenders and interested individuals are also encouraged to attend a May 25 summit on the House Key Federal Way program. The summit will be held from 12:30 to 2:30 p.m. at Federal Way City Hall, 33325 8th Ave. S.