Arizona Department of Housing relaunching Pathway to Purchase Program this summer
The Arizona Department of Housing will partner this summer with the Arizona Industrial Development Authority (AzIDA) and the Pima Co/Tucson Industrial Development Authorities (Pima Co/Tucson IDAs) to launch one last round of Pathway to Purchase (P2P) Down Payment Assistance (DPA). DPA will be available in 26 specific zip codes located in 12 communities in Arizona. P2P assistance will provide 10 percent of the purchase price (or up to $20,000) towards the down payment in the purchase of a home, and the IDAs will provide the mortgages. The PimaCo/Tucson IDAs will offer mortgages within Pima County, and the AzIDA will provide mortgages statewide. Mortgages offered by the IDAs are 30-year, fixed rate mortgages at going interest rates. The Department expects to make at least $15 million available for DPA.
Lenders who previously participated in the P2P program through the AzIDAs mortgage product will be required to complete a Mortgage Loan Origination Agreement Addendum in order to participate in the relaunch. Participating lenders will be listed on the Department’s website.
Funding for the DPA comes from the federal Hardest Hit Fund (HHF), a resource available to the State through the U.S. Department of the Treasury (Treasury).The select zip codes were required to meet at least four out of five real estate market distress factors, in order to qualify for the use of the HHF. The State’s HHF is authorized to make commitments for DPA as well as the Department’s foreclosure assistance program, Save Our Home AZ, through December 31, 2020.
To date, the P2P program has provided more than $70 million in DPA to aid 4,338 homeowners attain a new home in one of 17 communities that met the criteria for HHF use during its first round. The initial launch of the program in 2017 was so successful, that all available funding was utilized quickly, requiring that the Department suspend the program until the Department could obtain approval from Treasury to utilize additional funding for DPA. In order to make additional funding available, the Department converted some of its administrative budget for program use.
Besides aiding homebuyers in attaining homeownership, the program’s primary aim was, and is, to stimulate the recovery of the real estate markets in distressed zip codes. After the initial launch of P2P, so much improvement was realized in the originally eligible markets that the majority of those areas are no longer eligible for consideration for program assistance. The median purchase price of homes assisted through P2P had been $168,000, assisting homebuyers with a median credit score of 712 and a median debt to income (DTI) rate of 23 percent. More than half of the homebuyers assisted had median annual incomes of $50,000 or less.
Current data shows that the 26 zip codes where assistance will become available this summer are lagging behind the rest of the state when it comes to several key measurements, including changes in sales prices compared to one year ago, REO and short sale rates, percentage of properties with negative equity, and the number of foreclosures.
Once a launch date has been selected, additional information will be posted on the Department’s website at azhousing.gov.
||Eligible Zip Codes
||85042, 85016, 85017, 85051, 85041
||85730, 85706, 85747, 85712, 85710, 85711, 85713, 85746
||85364, 85365, 85367
A portion of the fee income generated by the IDAs through the sale of their mortgage products is being directed to the Department for use in other housing programs that will assist Arizona’s most vulnerable populations with housing needs.
Questions or comments concerning the P2P assistance should be directed to Reginald Givens, Assistant Deputy Director/Operations, at 602-771-1007 or [email protected].