The City and County of San Diego, along with the City of Chula Vista, are launching a neighborhood stabilization program designed to transform renters into homeowners, while simultaneously helping to revitalize some of the hardest hit neighborhoods in San Diego.

Subsidized loans that offer significantly lower monthly mortgage payments will be available to low- and middle-income households.  The one catch is that it must be a foreclosure property in a designated "high foreclosure rate" community.  There is also a federal stipulation that the home be purchased at 15% below appraisal value, which may be challenging here in San Diego's highly competitive REO market.  Officials are hopeful that this requirement will be reduced to 5% below appraisal value soon.

Home purchasers must make a down payment of 3%-5% of the purchase price.  The financial assistance comes in the form of a second loan that does not need to be paid back on a monthly basis.  It is paid back in full upon the sale of the home and, if the home is sold within the first 15 years of ownership, the appreciation must be shared with the City.  The County's program requires the loan be paid back in full, along with 3% interest, at the sale of the property if it has been held for less than 15 years.  If owned for longer than 15 years, the loan is forgiven.

Since the program's launch in March, none of these loans has closed successfully, so it will be interesting to see if officials can synch it up with San Diego's fast-paced REO market.

For more information, please visit: http://www.sdhc.org/NSP.shtml