Santa Ana OKs Home-Buyer Plan to Aid Graduates

In an effort to bring role models back to the city’s troubled neighborhoods, the City Council has approved a program to assist residents who have four-year college degrees in buying their first home.

Councilman Ted R. Moreno said he devised the loans as a way to stem the city’s brain drain, and encourage college-educated residents to give back to the community.

“I was looking for incentives to try to keep the kids here. A lot of the kids I went to high school with moved out of the city when they got a four- year degree,” said Moreno, who was elected to the council in November, 1992, at age 25.

“I guess they thought, ‘Now I’m educated. I deserve a better life.’ But we need to try to keep those people here,” he said.

Council members unanimously approved the Student Assisted Mortgage Program during Tuesday night’s meeting.

The program will provide a maximum $30,000 loan toward a home and a possible incentive for students to finish high school and make it through four years of college, said Patricia C. Whitaker, the Community Development Agency’s housing manager.

“When you’re struggling through those four years and saying, ‘Is it really worth it?’ Well, $30,000 toward your first home. . . . That might make it worth it,” she said.

Moreno and Whitaker said they do not know of any other similar program nationwide.

To qualify, borrowers must have lived in Santa Ana when they were in high school, fall within a certain income level, meet normal loan requirements and pay a minimum 5% down payment on the home. The city then pays up to $30,000.

Interest on the loan does not start to accrue until the sixth year, and if Santa Ana’s college-educated residents stick around for a decade, 50% of the loan will be forgiven in the 11th year, Whitaker said.

“They go to the Tustins, the Irvines and the Oranges, and kids here need those role models,” Whitaker said.

The city plans to send out notices about the program in upcoming water bills, and begin registering high school seniors this year who plan to go to college and express an interest, she said. Colleges in the area also will be notified of the program.

Whitaker said $300,000 should be available for the program annually, enough for about 10 loans.

The program represents a “long-run solution to try to stabilize Santa Ana with college-educated residents,” Moreno said.

“I want to see more of the children who grew up here and know the problems come back and work on those problems,” he said. “The best role model, for a young Hispanic kid, is someone who’s gone off to college and got educated.”

Organizers said the program may offer Santa Ana’s youth much-needed inspiration.

“Now we can start promoting it to the kids, saying: ‘Listen, your city is here to look after you. We’re here to help you out to buy your first house,’ ” Moreno said. “That’s the toughest American dream that can come true.”

Community activist John Raya said he considered the program “a good gesture,” but said other measures should be taken to ensure that Santa Ana offers a healthy business climate to young entrepreneurs.

“It’s easy for people who were going to stay here anyway to take advantage of it, but those who have a broader vision of where they’re going, is this compelling enough for them to stay?” he said.

He approached the program with guarded skepticism, saying that few young professionals fresh from college would have enough income to qualify for home loans. “Ultimately people stay in a place because they believe it’s a good place to be, they believe their concerns are being responded to,” Raya said. “I don’t know if trying to buy that level of faith is something you can do with a first-time home-buyer program.”

Whitaker said her staff took a closer look at the recipients of another home-buying assistance program, the Community Development Agency’s general Mortgage Assistance Program, and found that most were not college educated.

“That’s fine. These are the people we should be helping, but we weren’t getting those people who are upward bound, who were going into professional careers, who we need to go into our schools and talk to our kids,” she said.

That program is for low-income residents, but they do not have to be first-time home buyers.

The council also authorized implementation of a third home-buyer program--this one for first-time buyers--using federal funds received in 1992. That money must be allocated by June of this year, Whitaker said.

The city’s Housing Department will begin accepting applications for that program--which is open to the general public, not just college-educated residents--on March 5 at 500 W. Santa Ana Blvd., she said.

City officials had to adapt the Mortgage Assistance Program in order to use the $500,000 in available federal funds, which require applicants to meet a stricter income standard and be first-time buyers to qualify, she said. Another $500,000 will come out of redevelopment funds.

About $1.1 million more in federal funds will be allocated by June for residents to bring their homes up to code, and for a joint project with Civic Center Barrio, a low-income housing group, Whitaker said.