Twenty-nine OK’d for discount home loans after local lottery

BY CHRIS CLARK | JULY 09, 2009 7:21 AM

Applicants trying to receive a discounted home in Iowa City are one step closer to moving in.

As of the 4 p.m. deadline Wednesday, only 29 of the first 40 people selected actually turned in their housing preferences and were approved for loans, said Tracey Achenbach, the executive director of the Johnson County Housing Trust Fund.

With the number of people who dropped out, Achenbach said all 51 applicants in last month’s drawing ended up having the opportunity to purchase homes. In June, Iowa City City Councilor Mike O’Donnell selected names from a bingo cage to determine the order in which 40 of 51 potential homeowners would be able to choose which house they wanted from six builders’ designs.

Achenbach said there are exactly 40 people left in the program, and those who weren’t originally selected have extended deadlines to receive approval for a loan.

Brenda Greenway was the 33rd person chosen on the list, but she said she could not get a sufficient loan to pay for the house and was forced to drop out.

Greenway, who has lived in Iowa City since 1991, said she applied with the hope builders might lower their prices.

“I’m going to keep an eye open for new developments in the surrounding areas to see if they build condos or something I can afford,” she said.

There are no restrictions on the minimum price builders can list a house, but none of the 14 home designs can exceed $180,000.

Selected applicants can receive a forgivable loan from the city in the form of down-payment assistance that could cover up to 30 percent of the home’s sale price.

Further, the city will relieve 20 percent of the loan every year the resident lives there. So, after five years, the loan would be completely erased — lowering the maximum final cost of a full-price home to $126,000, Achenbach said.

That’s the price Iowa City native Carissa Chesnut is looking to pay for her first-choice home: a one-story Charleston design by Southgate Development to be built in Sandhill Estates, a neighborhood south of Highway 6. Chesnut, the 17th person selected, said she could make use of the nearby trail with her new bike.

“I didn’t ever really plan on staying here this long,” the 26-year-old said. “But I got a job at the university, and the program was too good of an offer to pass up.”

Fifty-three people originally applied for houses funded by the $2.3 million federal initiative, but two dropped out before the drawing. The four flood-affected residents were given priority in the drawing, followed by first-time homebuyers in Iowa City.

If any of the 40 people selected for a home fail to get a loan or decide to drop out, Achenbach said she would most likely accept new applications or allow people to reapply.

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