Christmas will come early for 15 East Palo Alto families whose numbers come up in the city of East Palo Alto's First-Time Homebuyer Program lottery.
The prize will be a $35,000 home loan from the Department of Housing and Urban Development (HUD). The loan will be silent--not due and hidden from credit reports--for the first five years of ownership and payable at 3 percent interest starting in year six.
"It's a federal source of funds to try to promote home ownership and to try to put people in a position to purchase homes who have never done so before," said Jerry Groomes, East Palo Alto's city manager.
The city has had access to the funds for two years, said Sherry Nikzat, the city's environmental and housing services coordinator. "We just didn't have the resources to implement the program," she said, adding that staffing problems were partly to blame.
Applications for the loans, available by calling 853-3122, are being accepted until April 15.
The availability of the funds couldn't have come at a better time, Nikzat said, since development projects like Whiskey Gulch, Gateway 101 and potential interest in part of the Ravenswood Industrial site will breathe new life into the city, and possibly drive home prices up.
The 15 loans will help prevent displacement, an inevitable consequence of redevelopment.
"This is one of the best ways to let people benefit from the good fortune of the city," Nikzat said.
In addition, if the buyer stays in his or her home for five years, $5,000 of the loan will become a grant and will not be subject to repayment. This, said Nikzat, is to encourage long-term home ownership and occupation by the home owner.
"It's to put people in houses, not to give people investment properties," she said.
Loan applicants, of which there were 75 before the program was even advertised, must meet certain requirements. There is a cap on annual income ranging from $31,450 for a single homebuyer to $59,350 for a family of eight.
Loan recipients must purchase a single-family dwelling or detached unit in East Palo Alto, and the home must be owner-occupied for the duration of the loan period. Applicants must be East Palo Alto residents and the home they purchase can cost no more than $252,700.
After all applications have been received, eligibility numbers will be drawn on a lottery system.
San Mateo County offered a similar program about two years ago and 16 loans were granted, officials said.
Elisabeth Traugott
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