City tightens restrictions on homebuyer's assistance program
By Darleen Principe darleen@theacorn.com

Citizens who want to apply for Simi Valley's First Time Homebuyer Assistance Program must now meet stricter credit requirements to qualify for help, according to a resolution unanimously adopted by the City Council Monday night.

According to the amended program policy, applicants who've been discharged from bankruptcy within the last four years or who have a FICO credit score of less than 600 no longer qualify for the program- which offers down payment assistance to income-qualifying first-time homebuyers.

Last October, the city's Affordable Housing Subcommittee put the program on hold due to growing concern over the decline of home prices throughout Simi. The committee then reviewed and strengthened the city's lending criteria in order to reduce the city's financial risk.

According to a city staff report, 12 of the 32 loans funded over the past three years by the program have a loantovalue ratio that exceeds the current property value.

"The city could be at risk in the event that the owner suffers a job loss, death of a spouse, or an illness that renders him or her incapable of earning sufficient income to make the monthly mortgage payment," the report stated.

Under the new policy, applicants with a FICO credit score of 700 or more will be eligible to pay the minimum 3 percent down payment, while those with a score between 600 and 700 pay 5 percent.

Prior to the amendment, the minimum score for the 3 percent level was 675 and those with a score below 600 qualified but were required to pay a 10 percent down payment.

The criterion for bankruptcy was also more lenient, allowing those with a bankruptcy discharge date two to four years prior to participate in the program as long as they could demonstrate good post-bankruptcy credit history.

Councilmember Steve Sojka expressed concern about allowing applicants with prior bankruptcy history to be eligible for the program.

"Why do we even want to look at applicants that have a bankruptcy?" Sojka said. "My thinking is that there are enough qualified applicants. We shouldn't have to look at anyone with a bankruptcy even if it's two years or four years out."

Councilmember Barbra Williamson said bankruptcy could be the result of a number of issues, including medical reasons.

"When you're talking medical bills, that's a lot of money," she said.

Despite the concerns, the City Council approved the changes to the program policy as well as a supplemental budget request of $650,000 from the Simi Valley Community Development Agency Housing Fund to provide funding for up to eight additional loans.