More than one million "working families" will be able to join the ranks of home owners under a new program that allows them to use their rental assistance to purchase houses.

Beginning next month, persons receiving rental assistance vouchers under the federal Section 8 program can use the vouchers to buy a new home, an existing house or shares in a cooperative.

A dozen families have already purchased houses using their vouchers during the program's pilot phase.

"Home ownership is the best way to build strong, vital neighborhoods," said Sec. Andrew Cuomo of the Department of Housing and Urban Development, who announced the new venture at a speech in New York at Columbia University.

"This program makes good sense. If a person can pay a mortgage for the same amount or less than they could pay for rent, why not help them?" Ironically, the idea is part of House-passed legislation sponsored by Rep. Rick Lazio, R-N.Y., who is running for the Senate against Hillary Clinton. Sec. Cuomo, of course, is part of Clinton's husband's administration.

The program will be administered by the nation's 27,000 public housing agencies, which will determine eligibility and enforce the rules. HUD recently awarded 60,000 new rental vouchers to some 500 PHAs that may be used for the new ownership program.

Vouchers may be used to make the monthly payments for 15 years if the mortgage is 20 years or longer, and up to 10 years if the loan is of shorter duration.

The voucher amount will be the same as what the family would receive in rental assistance. But to increase their buying power, local and state community development block grant funds or other subsidies can be used in conjunction with the program.

If a family sells or refinances during the program's initial 10 years, a portion of the home's equity must be returned to their local PHA. If a family defaults on the mortgage while in the program, they still may be eligible for rental aid, but the ownership plan no longer will be an option.

To qualify, a family must not only be eligible for Sec. 8 vouchers but also must be first-time buyers. No family member can have been an owner for at least three years prior to receiving ownership assistance, and no one may have an interest in another home while receiving aid.

Also, the family must have an annual household income of at least $10,300. Welfare income will be counted toward the minium for elderly and disabled buyers but no one else.

Except for the elderly or disabled, the family also must have at least one adult member who has been employed full-time for a year.

Prior to receiving the government's support, the family is required to attend counseling sessions to obtain a better understanding of all that ownership entails, including financing, maintenance, money management and fair housing laws. Families may also be required to participate in post-purchase counseling as well. But there will be no charge for any session.

Participants will be responsible for choosing their own lenders. But the housing authority may review the lender's qualifications and its loan terms before approving assistance, and may reject the application if either the lender or the loan doesn't meet its standards.

In addition, two inspections will be required; one by the PHA to insure that the house meets certain standards, and the other by an independent, certified home inspector, selected and paid for by the buyer, to identify any repairs that may be necessary.

Published: September 18, 2000

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.