February 22, 2024
Loans

Cleveland wants to forgive old Afford-a-Home loans


CLEVELAND, Ohio – Cleveland’s Department of Community Development is seeking permission to forgive Afford-a-Home loans that it distributed years ago.

If approved by City Council, eligible borrowers would get up to $10,000 forgiven on outstanding debt.

The move is aimed at fostering generational wealth for low-to-moderate income households, but it’s also intended to ease the bureaucratic burden on the Community Development department, as it emerges from a major staffing reorganization that aims, in part, to provide more customer-friendly housing assistance.

From 2005 to 2011, the city used federal block grants and other funds from the U.S. Department of Housing and Urban Development to distribute 351 Afford-a-Home loans, which ranged from $5,000 to $20,000, and carried a deferred term of 30 years. The loans amounted to a second mortgage, and the program was created to help eligible buyers purchase fully rehabilitated homes, according to a city news release.

The majority of those who received Afford-a-Home loans – 304 recipients – received no more than $10,000, the release said.

Maturity dates on some of the loans extend to 2041, but the city stopped issuing new ones in 2011.

To be eligible for loan forgiveness, property taxes must be paid up, and the city needs proof of ownership and proof that the borrower or one of their descendants is the current occupant. Properties in foreclosure are not eligible.

The city believes it could be forgiving up to $910,000, but that will depend on how many borrowers meet the eligibility requirements.

Community Development Director Alyssa Hernandez said the forgiveness program will have a meaningful impact on those who are relieved of debt. She also said the forgiveness program will cut down on staff time that’s currently spent on individual requests for forgiveness.

If and when City Council approves the program, eligible loan recipients should receive a notification letter from the city.



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