by Peter Bodley
Managing editor

A new housing program is being launched by the city of Coon Rapids with money from the Coon Rapids Mortgage Assistance Foundation (CRMAF).

The foundation has allocated $300,000 to the ReGenerations Down Payment Assistance Loan Fund.

The Coon Rapids City Council has embraced the program, which is intended to increase home ownership and encourage reinvestment in neighborhoods by providing down payment dollars for the purchase of single-family homes in need of rehabilitation or renovation.

Those homes can either be a single-family detached residence or a two-family structure being converted to a single-family unit.

Money made available through the program must be used in tandem with a Federal Housing Administration (FHA) Section 203(k) mortgage.

The Section 203(k) program is the principal program for the purchase and repair of single-family properties operated by the U.S. Department of Housing and Urban Development (HUD), of which the FHA is a part, according  to Cheryl Bennett, Coon Rapids housing and zoning coordinator.

Guidelines for the program include:

• Funds are reserved for down payment assistance only with a maximum amount of $6,000.

• Funds are provided in the form of a second mortgage forgivable over a 10-year period. No payments are required and there’s no interest unless the loan is repaid within the first three years after closing.

• Down payment assistance will only be approved in conjunction with a primary 203(k) mortgage to purchase a single-family detached home that will be rehabilitated or renovated in a project costing not less than $10,000.

• A property inspection is required to determine code deficiencies, which must be addressed in the rehabilitation process.

• Rehabilitation and renovation must be completed by a state licensed contractor and work must be finished within six months of the loan closing.

• The borrower must live at the home as their principal homesteaded residence.

• First-time homebuyers will have to take and complete a homeownership education class.

• There is no income limit for receiving down payment assistance through the program.

• There is no maximum purchase price or property value limit.

• Total mortgage debt on the property cannot exceed the Section 203(k) limit, which is the lesser of the following: the as-is value or purchase price of the property, whichever is less, plus the estimated rehabilitation costs or 110 percent of the after-improved appraised value of the property.

A mortgage assumption policy is being developed for future council approval, according to Bennett.

In addition to allocating $300,000 in seed money for the program, the foundation board also directed that $2,500 be set aside to market the program with additional marketing dollars to be approved by the foundation’s board of directors.

Staff will work with Section 203(k) lenders and the North Metro Realtors Association to publicize the new program, Bennett said.

“This is a new exciting program,” said Mayor Tim Howe, who is one of two council members (the other is Scott Schulte) who serve on the foundation board.

According to Donna Naeve, foundation board member, the idea for the program came from Jim Stanton, foundation vice president, and is patterned after a similar program that was introduced in the city of Columbia Heights, which focuses on foreclosed homes.

The Coon Rapids ReGenerations program will not be limited to foreclosed homes, but to any single-family home that required renovation or rehabilitation, Naeve said.

“This program will help people buying homes in some disrepair,” he said.

The $300,000 approved by the foundation board is a starting point, Naeve said.

“The board will be open to additional funding as the program goes forward,” she said.

“The program will benefit the housing stock in Coon Rapids.”

Four other housing programs have been in operation by the city since 2005 with funding from the mortgage assistance foundation.

They are the home improvement incentive loan fund, home rehabilitation assistance program loan fund, two-family home rehabilitation program loan fund and emergency home repair program loan fund.

The Coon Rapids Mortgage Assistance Foundation was established in 1979 to allow the city to issue low interest housing bonds to boost new housing construction at a time of high interest rates.

The $45 million housing revenue bond issue, of which $12.2 million was refunded in 1994 to take advantage of lower interest rates, was paid off in March 2003.

Mortgage payments from homeowners who benefited from the bond issue paid off the bonds.

It is from the mortgage payments and the interest on those payments that the mortgage assistance foundation has funded the housing programs.

Peter Bodley is at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it