making it easier for the disabled to own homes

[Guest guest]

July 25, 2004 Los Angeles Times

Making it easier for the disabled to own homes

By Lew Sichelman, Special to The Times

WASHINGTON — Vietnam veteran White, disabled and unable to work

since the war, never thought he'd own a home. Neither did

Porter, who was born with cerebral palsy.

But now they too are homeowners, thanks to a program from Fannie Mae

that allows disabled people to count the public benefits they receive in

qualifying for a mortgage.

Besides the income they generate on their own, people with disabilities

or those who live with a disabled family member can use their disability

insurance benefits, survivor benefits and supplemental Social Security

benefits to obtain the necessary financing to either buy a home or

renovate the one they're already in.

Even a portion of the " boarder income " paid through medical waiver funds

to cover the room and board of live-in aides is permissible.

" We've gone above and beyond what are considered normal sources of

income to items we have never specified as acceptable in the past, " said

Gould, vice president for community lending at the giant financial

institution.

As a major player in the secondary mortgage market, Fannie Mae doesn't

make loans directly to consumers. But it does buy the loans originated

by many of the nation's local lenders.

By agreeing to buy all sorts of loans for all sorts of borrowers, the

company broadens the market exponentially. Many lenders won't make a

mortgage unless they know they can sell it, either as soon as they fund

it or sometime down the road.

For Fannie Mae, people with disabilities are another target market in

the company's efforts to reach borrowers with unique financing needs.

But to many of the 49.7 million people with some type of long-lasting

condition or disability, it's a godsend.

" Homeownership is not the only answer, " Gould said of the housing needs

of the disabled. " But at least now it's an option. "

Until January, Fannie Mae's HomeChoice initiative was experimental and

available from lenders in only a handful of locations. But it has been

mainstreamed, meaning that lenders doing business with the company can

use far more flexible income and credit guidelines to qualify disabled

borrowers or borrowers with a family member who is disabled.

The trouble is that not many lenders are on board yet. " We're still

trying to position lenders to see this market and enter into it as a

regular part of their business, " Gould said.

Fannie Mae also is reaching out to disabled people who often have no

experience with or understanding of the home-buying process and trying

to put them together with proponents of affordable housing.

" One of our biggest barriers is the disconnect between these two

communities, " Gould said. " It begins with not having enough information

to understand the opportunities, and part of the work we are doing is

opening those doors too. "

Eligible borrowers include any low- or moderate-income person defined as

disabled by the Americans With Disabilities Act or as handicapped by the

Fair Housing Act. And that's a lot of people, according to the Census

Bureau.

At last count, nearly one in five people age 5 or older has some type of

long-term disability. One in every eight Americans between 16 and 64 has

a condition that affects his or her ability to work.

HomeChoice participants cannot have incomes greater than 115% of the

median for their particular area, or 140% in high-cost areas. But they

need only $500 of their own money for a down payment. The balance can

come from gifts, grants or even subordinate financing, as can the amount

necessary to cover closing costs.

In addition, borrowers can have debt-to-income ratios as high as 50%.

But best of all, they can use their public benefits as income to

qualify.

Arlene , who has cerebral palsy, qualified for a mortgage on

her first home by combining the income she earned from her part-time job

in the packaging department of the Bakersfield Assn. for Retarded

Citizens with $10,000 each in down payment assistance from the

California Department of Developmental Services (DDS) and the Federal

Home Loan Bank.

DDS and Kern County Affordable Housing Resources also gave the

$6,000 she needed to renovate the two-bedroom house.

To find a lender who works with disabled borrowers, call (800) 7FANNIE.

A word of caution: Because of credit issues, it often takes longer than

normal to process an application by someone with a disability, so start

early.