D.C. housing officials have routinely subsidized home purchases that low-income buyers could not afford, paving the way for foreclosures, liens and financial hardships.

Nearly one in five buyers participating in the city’s 35-year-old loan program for first-time homeowners is behind on mortgage payments, city officials said — a default rate that’s at least three times higher than the overall rate in the region. Nearly 50 buyers have received notices of foreclosure in recent years, while more than 50 others have struggled with homeowner association or utility liens, The Washington Post has found.

DeAngelo McDonald, a Metro bus driver and father of six who earns $61,000 a year, financed a $338,000 house in 2008, in part with a loan from the city, paying double what city loan officials had estimated he could afford. His three-bedroom home in Southeast is now in foreclosure.

“I was a first-time home buyer thinking that everything was on the up and up,” said McDonald, 48, who declared bankruptcy in 2009. “At any minute, we could be out on the street. It’s heartbreaking. It’s scary. I don’t know what could happen, especially with my kids.”

For more than three decades, the District has helped buyers offset the cost of housing with loans for as much as $77,000.

Buyers complete a pre-purchase program with credit counseling and home-ownership classes. On their own, buyers shop for houses and identify lenders willing to provide a first mortgage. The D.C. Department of Housing and Community Development provides second mortgages with generous terms — no interest and deferred payments for five years — designed to make home ownership affordable, even for families of limited means.

Some of the money comes from the U.S. Department of Housing and Urban Development, which provides grants to local governments for affordable housing. The money can be a lifeline for working families in the District, which has wrestled with steep rent increases and an acute shortage of affordable housing.

But the program has put some families in financial distress.

The Post tracked more than 1,300 loans, about 80 percent of the loans awarded by the District between 2005 and 2009. The analysis found that about one in three were made on homes priced at $250,000 or more, with some houses topping $375,000.

The practice appears to run counter to a city guideline that suggests a buyer in a four-person household have the ability to purchase a $218,000 house. The price point has fluctuated somewhat in recent years: In 2006, it was $235,000.

Erica Shorter bought a house in Southeast for $275,000 in 2008 and said she is struggling to pay the bills.

“I just told my daughter, ‘You might not have a real Christmas,’ ” Shorter, a receptionist, said recently. “If I pay the mortgage, if I pay the utility bills and there is food in the refrigerator, okay, that’s Christmas.”

City officials defend the Home Purchase Assistance Program, known as HPAP, saying it has helped more than 12,500 buyers since its inception.

Loans are made on a case-by-case basis, and some buyers can afford houses priced above the city guideline, said Najuma Thorpe, a spokeswoman for the Department of Housing and Community Development. The guideline was developed by a previous administration based on housing sales in the District and is “by no means a cap or requirement,” she said.

“Affordability is very subjective,” ­Thorpe said. “There are a lot of factors that go into that.”

Thorpe said loans are reviewed by the Greater Washington Urban League, a nonprofit group that administers the program for the city, as well as underwriters at the banks that provide buyers with first mortgages.

In some cases, buyers drew additional assistance from a second agency, the D.C. Housing Authority, which offset costs by providing equity in homes it had owned or developed. In 2008, for example, half of about 65 buyers who purchased houses priced at $300,000 or more received equity ranging from $35,000 to $360,000, records show.

Kiesha Smith, a school bus driver and mother of two, bought a $318,000 house in Southeast in 2008 with a $150,000 first mortgage from a bank, a $77,000 second mortgage from the city and $81,000 in equity assistance from the Housing Authority. She also received $10,000 from a city home-loan fund earmarked for government employees. Smith’s monthly payment on her first mortgage is about $800.

“I would never have been able to afford a $318,000 house,” she said. “It’s a beautiful program.”

Still, Thorpe said the city is evaluating the loan program and “looking to make enhancements.” Recommendations are expected by March.

The percentage of buyers behind on the city’s loans is 18 percent, Thorpe said. That compares to a 5.9 percent default rate in the D.C. region overall, according to CoreLogic, a real estate research firm. The city does not track how many of its buyers are behind on their first mortgages.

The current foreclosure rate in the loan program is 1.8 percent. But the District only counts homes lost to foreclosure. In comparison, the region’s foreclosure rate is 2.2 percent but captures a much broader group of homeowners anywhere in the process of foreclosure.

Thorpe said the city tries to help troubled homeowners restructure payments.

Dick Harbin, a loan officer who specializes in loans for first-time homeowners, said ensuring that buyers can sustain mortgage payments is critical. He said buyers who earn $61,000 — the median household income in the District — can generally afford a house priced at about $240,000, but only if they have minimal debt, good credit and a small household.

Most buyers who participate in the loan program are low income, defined as between $51,751 and $82,800 for a household of four, or very low-income, who earn less, according to city data.

“There has to be a level of advocacy and responsibility from all parties to make sure that on this first home, you are not going from the frying pan to the fryer,” said Harbin, of Monarch Mortgage in Greenbelt.

Out-of-range homes

Some of the funding for the city’s loans comes from HUD’s HOME Investment Partnerships Program and Community Development Block Grant program. Both programs have drawn increased scrutiny in recent months, with HUD facing questions about its oversight of federal money once it leaves Washington.

HUD officials said that they expect federal money to pay for “modest housing” and that local housing agencies must consider how much house a low-income buyer can afford. In a December 2010 audit requested by HUD, the agency’s inspector general criticized the District for subsidizing higher-priced homes.

“Using federal funds to help qualified lower-income families to buy their first home is an important way to stabilize neighborhoods, but these families have to be good candidates for home ownership,” said HUD spokesman Brian Sullivan. “It’s not enough to simply get these families into homes. Local jurisdictions should make certain those they help can sustain their mortgages.”

Officials at other area housing agencies say they carefully monitor the purchase price of subsidized houses. In 2010, buyers in Montgomery County paid an average of about $200,000. In Arlington County, the average price was $260,000. In Alexandria, it was $150,000.

“We want to make sure their payment will be sustainable,” said Shane Cochran, division chief of Alexandria’s Office of Housing.

The average home price for a subsidized buyer in the District as of late 2009 was about $230,000, but the program is far bigger than those in neighboring jurisdictions. Alexandria assisted 37 buyers and Montgomery 148 in 2010. Arlington has assisted 22 buyers since 2009.

The District in 2010 provided loans to 362 buyers. Records show the city ramped up its push to put low-income families into homes around 2006, as housing prices increased.

It temporarily bumped the maximum assistance level from $40,000 to $77,000. The number of loans increased, from 278 in 2006 to 513 in 2007.

On work sheets in loans files, officials noted such things as buyers’ income, debts and employment history, and sent buyers eligibility notices that estimated an affordable purchase price. But buyers often purchased more expensive houses, records show.

Thorpe said that the eligibility amount was “only an estimate” and that the banks that provided first mortgages determine affordability.

Erika White, a loan underwriter at the Urban League, said the group’s estimates are conservative. “We won’t approve a contract if it’s out of their range,” she said.

White said that in some cases, buyers’ incomes increase between when the estimate is prepared and when they decide to buy a house. She added that some buyers receive grants to reduce costs. Neither city nor Urban League officials could say how often or how much grant money has been provided.

Some buyers also receive additional assistance from the Housing Authority, which provides equity in houses, then secures the investment with a note.

But some of those buyers are also struggling.

Sharon Mitchell bought a $399,000 house in 2008, drawn to the new Southeast development. Even with a $77,000 second mortgage from the city and $84,000 in equity from the Housing Authority, Mitchell’s payment on her $251,000 first mortgage is $1,600. When the city’s second mortgage becomes due in about a year, Mitchell will have to pay an additional $160 a month, records show.

Before she bought the house, Mitchell had been paying $900 a month in rent. Loan officials had estimated she could afford a house priced up to $178,000, records show.

“They called it an affordable home,” said Mitchell, a federal employee. “I’m scraping by every month.”

Dena Michaelson, a spokeswoman for the Housing Authority, said she knows of only two foreclosures among hundreds of buyers assisted by the authority over the years. “We are careful that we don’t set up low-income buyers to fail,” she said in a written statement.

Thorpe, with the Department of Housing and Community Development, did not comment on specific cases of struggling homeowners, citing privacy.

“During the underwriting process, HPAP loans are thoroughly reviewed to ensure that the loans . . . meet accepted underwriting practices, including affordability guidelines,” Thorpe said. “However, if the buyer assumes additional debt responsibility or if the buyer’s income changes after the home is purchased, that can affect the affordability.”

The pattern concerns D.C. Council member Jim Graham (D-Ward 1), who said he has long questioned whether the city does enough to ensure that low-income families can sustain their homes, especially in condominiums with rising fees.

“The program is definitely well-intentioned,” he said, “but if you put someone in a situation that they can’t afford, what have you accomplished?”

Buying and selling

Real estate records show that among those who have been involved in the loan program is Jack Spicer, a longtime developer involved in a sweeping 1980s real estate scheme where straw buyers would purchase properties in the District at inflated prices using fraudulent appraisals. HUD backed the loans and ultimately lost millions of dollars. Spicer cooperated with prosecutors during the investigation and served four months in a halfway house.

More recently, he was one of several developers who sold distressed apartment complexes in Southeast to a government-subsidized nonprofit group that later declared bankruptcy; the deal was detailed in a Post investigation in May about troubled HUD-funded construction projects.

Records show that Spicer and his companies sold six houses to city-subsidized buyers for far more than he had paid.

Thorpe said the city does not track the identities of sellers and was unaware of transactions involving Spicer. She said the banks that provided first mortgages to buyers would have solicited appraisals to ensure fair market value.

In one case, records show, Spicer bought a property in Northeast for $140,000 and sold it fewer than 18 months later for $322,500. The buyer had received a $6,000 second mortgage from the District, but with a commercial mortgage for more than $300,000, the buyer fell behind and received a foreclosure notice in 2009. The buyer, originally recommended for a house priced up to $275,000, could not be reached for comment.

Spicer sold another house for $290,000, nearly double what he had paid about 14 months earlier.

Buyer Antoinette Harvey bought the house in Southeast in 2008 for her and her 32-year-old son, Ismail, who is partially paralyzed and uses a wheelchair. To offset the purchase price, the District provided a $77,000 second mortgage.

But on her salary from a local nonprofit organization, Harvey said, she can barely pay the bills. She has filed for bankruptcy and said she is struggling to make her mortgage payments.

“Everything just got too expensive,” Harvey said.

Spicer said he pours thousands of dollars into renovations before selling the houses and at times make little or no profit. He said he made no money on the sale to Harvey and less than $20,000 on the house in Northeast that received a notice to foreclose.

He added that he has sold more than 3,000 homes in the District and that he does not solicit city-subsidized buyers.

“If it happens to be an HPAP buyer, then so be it,” he said. “It’s a good program for the homeowner. Honestly, I enjoy making some of these first-time home buyers happy.”

Patricia Commer, a staff assistant for the city, recently purchased a $165,000 house in Northeast from Spicer, in part with a second mortgage from the city. “It was unbelievable,” she said. “I never thought I would qualify to buy a house any time soon.”

Washington Post researcher Jennifer Jenkins, former staff writer Jonathan Mummolo and former researcher Meg Smith contributed to this report.