The city of Baltimore is holding a sale on mortgages, starting next week.
And like a giant J. C. Penney or Zayre Department Store preparing for Super Bargain Day, the city is girding itself for a flood of customers and a quick sellout.
"We're just swamped now" -- before the program had even started officially -- said Vincent Quayle, director of St. Ambrose Housing Aid, one of the nonprofit organizations participating in the plan. Adds Mark Sissman, Baltimore deputy housing commissioner: "If you have the time, come up next week and watch all the lines" at participating banks.
Of the lucky ones getting the loans, many will be lower-income persons to whom the discounts will mean they will be able to buy a home for the first time.
Some will be buyers of new housing that otherwise might not have been built.
A few will be making their own contributions to restoring parts of the city in return for the aid.
And a large number of the bargain-hunters are likely to go away bedraggled and empty-handed.
The mortgage plan, which city housing officials say is the only one of its kind in the country, is designed both to help low- and middle-income families buy homes and to further the city's broad housing and urban renewal goals.
The money for the mortgages was raised through a $50 million bond offering, and officials estimate they can back as many as 1,500 low-interest mortgages with the proceeds of the offering. Baltimore Housing Commissioner M. J. Brodie says another $50 million offering is planned before the end of the year, to finance another 1,500 home loans.
But that number represents only a handful of the families who already have shown an interest in the subsidized mortgages.
Housing counselor Quayle reports that St. Ambrose alone has a list of more than 2,000 names, accumulated over the past 18 months in anticipation of mortgage program, of families who may want to apply for the loans. And St. Ambrose is only one of about 20 nonprofit housing organizations in the city that are responsible for advising and certifying potential home buyers for the low-income portion of the program.
The counseling group hasn't been able to take on any new families to counsel since the announcement of the start of the mortgage offering, Quayle adds.
About 500 people showed up at a city-sponsored briefing session on the program earlier this month, and many of them took copious notes, commissioner Brodie reports.
While part of the mortgage money is being set aside for particular purposes, such as for low-income persons, most of it is available generally on a first-come, first-served basis, as long as household income doesn't exceed $25,000.
These loans for middle-income families are likely to be gone in "a few days," Quayle predicted, and the low-income funds probably will be committed in a few weeks, though they will take longer to process.
The program is divided into four parts, each with its own restrictions:
Low-income: 30 percent of the mortgages are set aside for low-income families, those with incomes up to $18,000 a year plus $1,000 per dependent. These families must receive prepurchase counseling from one of the housing organizations designated by the city.
Developers: 15 percent of the mortgages are for use by four developers who agreed to take on rehabilitation projects at specific sites in the city. These developers responded to ads the city took out asking for building proposals.
When the firms have finished their projects, the program guarantees them that they will have mortgage money at a fixed rate to offer to those buying in the new developments. The limit on the income of recipients of these mortgages is $35,000 plus $1,000 per dependent.
Rehabilitation: 10 percent is set aside for either individuals or developers who rehabilitate vacant buildings in the city. The income limit on these kinds of mortgages is $50,000 plus $1,000 per dependent.
Middle-income: The rest of the funds go into a general pool, expected to go mainly to middle-income families. To qualify for mortgages out of the general fund, a family's income may not exceed $25,000 plus $1,000 per dependent.
The subsidized interest rate for the low-income portion is 10.95 percent; for the rest of the mortgages it is 11.95 percent.
The mortgages are being processed by 15 city lenders, each of which is allotted a certain percentage of the loans.
Generally, the house to be bought with the mortgage may cost no more than 2.5 percent of the family's annual income, though the maximum price allowed under the developer part of the program is a flat $90,000.
The mortgages cannot be used to buy rental apartments converted to condominiums, but they may be used to purchase newly built condominiums or condos developed from vacant buildings.
One of the results of the program may be a flash in home sales, because to get the mortgage money the applicant must have a specific property in mind.
St. Ambrose already has prepared more than 50 contracts with sellers, contingent on the applicants getting the mortgage money, Quayle said. St. Ambrose is suggesting that renters make an offer to their landlords when possible because this often is easier and faster to arrange, he added.
Another major impact the city hopes to see is revitalization of stagnating areas and increase the amount of new housing in the city. "It clearly is going to spur some new building that wouldn't have taken place," Commissioner Brodie says. He adds that it will be "a giant step for a lot of renewal areas."
Low-income housing counselors see it also as a giant step for their constituents. Says Nancy-Jayne Hilman, housing counselor and community organizer at Neighborhood Housing Services, of many of the families she deals with: "Their parents didn't own a home; they've never owned a home. It's not within their family experience to see home ownership work."
With the help of low-interest, low-down-payment mortgages, such people can buy their own place and gain a sense of "personal power in the neighborhood," Hilman adds. After all, she says, "Then they own a piece of the block."