Take a county population that is about 80 percent low and moderate income, add home sellers who sometimes wait up to three years for a buyer, and the result is a stagnant housing market. That was the scenario in tiny Florence County until the State Bank of Florence stepped in with its no-down-payment home loan program.
Only Florence County residents who are first-time home buyers with an excellent credit rating are eligible. In addition, applicants must purchase an existing home, and mobile homes do not qualify.
The bank has committed $500,000 to the program, and with the average value of a home in Florence County running about $25,000, that money will go a long way, says Warren Sibley, the bank's executive vice president and chief loan officer.
The bank charges the usual costs associated with a home purchase. "If they can't come up with the $500 or so to cover the closing costs, they're not going to meet their monthly payments," Sibley says. The bank also charges about one-half percent more than the posted mortgage rate for the no-down-payment loans, but holds that rate for three years before it balloons.
While the loan program was originally launched to answer the housing needs of the community, Sibley says it also serves as one way to satisfy the bank's CRA (Community Reinvestment Act) obligations. At the same time the loan program is ensuring long-term customers for the bank, Sibley says. Since last November the bank has made seven loans.
What may work in Florence County, though, may not work elsewhere. Located in the northeastern corner of the state, the county has a population of 4,500, and Sibley says the bank knows everyone. "One reason why this program will work is that we know who's going to pay and who isn't," he says.
—Kathy Cobb
