Payment loan

Affordable housing down payment loan is now a grant

William Scott of the Montclair NAACP and Housing Commission lobbied that a loan to help first-time homebuyers in affordable housing be a grant instead.

By Tina Pappas
for the Montclair local

Prospective homebuyers who now purchase affordable township-administered housing will not have to repay a loan offered to help pay down payments.

The loan, now a grant, allows a buyer who did not have sufficient funds for a down payment to borrow up to two percent, a maximum of $ 2,500, to cover the costs of the first purchase of the loan. ‘affordable housing.

Council members unanimously passed an ordinance amending Montclair’s Affordable Housing Code converting the loan into a grant on July 24.

William Scott, chair of the Montclair NAACP Housing Committee and co-chair of the Montclair Housing Commission, said the lending process requires buyers to take out a second mortgage, resulting in an immediate lien on the home. The grant process is also simpler, he said.

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“It really supports the first-time home buyer which will make a real difference,” Scott said. “It will help them pay for closing costs and other related costs.”

The Assistant program is only for qualifying buyers of affordable housing units subject to deed restrictions and is distributed by developers who participate in the program, said city planner Janice Talley. HOMECorp de Montclair is one of many non-profit organizations that acquire and develop rental and owned housing specifically for low, middle and middle income residents. They also offer financial education programs and services, Talley said.

Housing Commission co-chair Megan York said turning the loan into a grant would better help buyers of affordable homes in Montclair.

“The loan program was underutilized by homebuyers because loan conditions prevented applicants from qualifying for their mortgage. A grant will not require a lien on the house, ”she said.

Developers are required to create one affordable housing unit for every five units they build. Funding for the grant comes from the Township Affordable Housing Trust Fund. Builders, if licensed by the city and in the case of smaller developments, can choose to pay cash instead of building. The order fixes the amount of $ 150,000 for each unit. These funds can be used by the city to create more affordable housing or as a mechanism for homebuyers who qualify to purchase a qualifying home.

The trust fund also helps Montclair, nonprofit organizations and for-profit developers with financial assistance to develop affordable housing.

“This funding does not come from taxpayer dollars,” Scott said. “We have made major changes to the Affordable Housing Ordinance and the fund has been increased to provide up to $ 2,500.”

Scott said the change in the ordinance was a step in the right direction and overall feels positive about the significant changes over the past year. He said progress was being made based on the amount of affordable housing unit development available to township residents.

With Montclair’s median income at $ 102,349, households earning less than $ 71,000 can apply for moderate-income housing. Households earning less than $ 44,000 are classified as low-rental housing. The state generally concedes that no more than 30 percent of income should be spent on housing. According to the US census, more than 39 percent of residents of Montclair pay more than 30 percent of their income for housing. The median rent is currently $ 1,422.

Affordable housing for sale in Montclair includes units at The Siena, Bay Street Commons and 192-194 Bloomfield Ave. Piazza & Associates, Inc. was retained by the township to coordinate numerous affordable housing opportunities on its behalf.

In May, the council passed two ordinances regulating affordable housing with the goal of maintaining a 20% affordable housing quota for the new Montclair development, creating flexibility in where affordable housing would be built and citing a local preference for those who live or work in Montclair. Both codes reflect the now defunct Council on Affordable Housing (COAH), which aims to bring the city into compliance with current state regulations.

“It’s a really good progress,” Scott said. “Will this solve all of our problems?” No, but at least we are now able to get more affordable housing in the township.

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