Wells Fargo &Co. will offer $8.2 million in down payment assistance grants this month to almost 550 homebuyers in Chicago and 28 suburbs, the bank said Wednesday.
The bank's CityLIFT program, announced at a press conference with officials from the Illinois Attorney General's office and the Justice Department, is one aspect of a national fair-lending settlement announced with Wells Fargo in July. That settlement resolved allegations that the bank's African-American and Hispanic borrowers were allegedly steered into high-cost, subprime mortgages.
The Chicago market is one of seven markets that will receive the down payment assistance program, an effort similar to the NeighborhoodLIFT program funded by Wells Fargo's foundation. The difference this time is that it is not the foundation funding the effort but Wells Fargo itself.
Grants will be awarded to eligible homebuyers Oct.26-27 during an event at McCormick Place.
"This is a rare opportunity and it is one prospective homeowners should look into," said Illinois Attorney General Lisa Madigan.
To qualify for the $15,000, which is forgivable after five years, prospective homebuyers must have income equal to or less than 120 percent of the area's median income; that translates to gross income of $72,800 for a family of two and $90,950 for a family of four. They also must be pre-approved for a mortgage.
However, that pre-approval letter does not need to come from Wells Fargo. Consumers who are pre-approved by other recognized lenders, and even obtain mortgages from those lenders, can receive the grants so long as they meet the other eligibility criteria, according to Jon Campbell, a Wells Fargo executive vice president. Mortgage brokers cannot be used.
"We wanted to be sure it wasn't just a program for people that get their mortgages from Wells Fargo," he said.
Participants do not need to be first-time homebuyers but must undergo eight hours of financial counseling before a purchase closes. The grants are restricted for use on owner-occupied homes, but that can include two-to-flour flat buildings.
"We hope it can give a little jump-start to the market here," said Ed Jacob, executive director of Neighborhood Housing Services of Chicago, Inc., which will screen people for the program and provide the required counseling. "This recovery has been uneven. To the extent that this can be a tool in the recovery of some neighborhoods, it's a good thing."
Homes can be purchased anywhere within the city of Chicago as well as suburbs hard-hit by the housing crisis. With a few exceptions, most of the communities chosen for the program are in the south suburbs. They include Bedford Park, Blue Island, Calumet City, Chicago Heights, Clearing, Country Club Hills, Dolton, Glenwood, Harvey, Hazel Crest, Homewood, Lansing, Markham, Matteson, Oak Lawn, Park Forest, Richton Park, Riverdale, South Holland, Clearing, Forest View, Stickney, Ford Heights, Lynwood, South Chicago Heights, and Sauk Village. Berwyn, Cicero, Bellwood and Maywood properties also are included. Woodstock Institute data was used to help select the areas hardest- hit by the housing crisis.
"We took a lot of time to identify the neighborhoods we thought would benefit from this program," said Thomas Perez, a Justice Department assistant attorney general.
During the two-day event at McCormick Place, prospective homebuyers who meet the eligibility criteria will receive a commitment letter, reserving their $15,000 grant. The consumer then has 60 days to find a home and sign a purchase contract on it. Otherwise, the grant money goes back into the pool.
Wells Fargo will work with real estate agents in the different communities so consumers can take virtual tours of properties during the event, as well as board buses to tour homes in different communities. "It's education, it's pre-approval and it's helping them actually consider what kind of properties are available," Campbell said. "The combination makes this an important program."
Early registration for the event, which will be from 10 a.m to 7 p.m., is encouraged. More information is available at wellsfargo.com/citylift or at 1-866-802-0456.
Last month, the CityLIFT program was conducted in Philadelphia as part of the Justice settlement, and all $10 million of the funds were committed during the two-day event. However, there typically is some fallout among participants, Campbell said.
As of late August, the bank's NeighborhoodLIFT program had led to the sale of 263 homes in 11 housing markets, with another 244 home purchases in the pipeline.
In July 2009, the Illinois attorney general's office filed a suit against Wells Fargo for its minority lending practices and last October, a Cook County Circuit Court judge denied Wells Fargo's motion to dismiss the state's case, allowing it to move forward. That case was resolved with the Justice Department $175-million-plus national settlement, the second-largest fair-housing settlement in history, following December's $335 million agreement that settled similar allegations against Countrywide Financial Corp., a subsidiary of Bank of America.
Perez and Madigan said the process of contacting borrowers who may be due compensation from the two settlements would begin soon.
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