LAWRENCE COUNTY Program assists home buyers

The assistance with initial costs is through the Lawrence County Family Center.
By LAURE CIOFFI
VINDICATOR NEW CASTLE BUREAU
NEW CASTLE, Pa. -- Gabe Cilli and Lou Perrotta were seeing far too many home buyers come to their law offices for real estate closings without enough money for down payments and closing costs.
"We were finding that people were qualified and able to make their mortgage payments, but didn't have the money saved for the other costs," Cilli said.
The two attorneys started looking for a solution and ended up creating Funds to Close -- a program they patented that helps home buyers get the needed money and home sellers get some tax benefits.
Funds to Close is similar to other home-gifting programs, but one difference is it has teamed up with the nonprofit Lawrence County Family Center, a social service agency dedicated to serving families and finding housing for people with low to moderate incomes, Cilli said.
The family center, which is operating under the acronym LCFC for this program, is the conduit between the buyer and seller. Because of its nonprofit status, the center can offer possible tax benefits to those who participate.
Seller gives to LCFC
Cilli explained that a home seller agrees to make a gift of so much of the value of the home to LCFC. LCFC keeps 5 percent for its costs and puts the rest in a pool dedicated to helping home buyers.
The person buying the home is given a gift from that pool in the same amount that the seller made, minus the 5 percent kept by LCFC. That money is used for the buyer's closing or down-payment costs.
There are no income guidelines for buyers, and houses selling for up to $230,000 can be part of the program, said Brian Welsh, family center director.
The only requirement is that the home must be the buyer's primary residence, he said.
Welsh said the program was attractive to the family center because it fits with the group's mission of helping people find affordable housing and provides some income for the agency to continue this and other programs.
The family center is a registered, nonprofit agency in Pennsylvania and Ohio and can operate the program in both states. Welsh said the center has applied for nonprofit status in New York, Maryland, West Virginia and New Jersey and hopes to eventually make the program national.
Moving away from grants
By administering Funds to Close, the family center hopes to become less dependent on grants to fund its other programs, Welsh said.
"This is true entrepreneurship. It's an opportunity [for the family center] to become self-supportive, and it follows our mission of keeping families and communities safe," Welsh said. "Homeowners tend to be less tolerant of drug dealers. They tend not to tolerate large crowds gathering in streets and they tend to pay their taxes."
He added that no tax dollars are used by Funds to Close, but some other gifting programs do use tax dollars.
There are no costs to the buyer, and the seller's only expenses are the lessened profit they receive from the sale. Funds to Close, which is owned by Cilli and Perrotta, makes its money from a $50 fee charged to real estate agents who use the program.
Cilli said the real estate agent is the most likely person to initiate a Funds to Close deal.
Likes the program
New Castle Realtor Mel Booher, who is vice president of District 7 of the Pennsylvania Association of Realtors, said he's excited about the program because about 80 percent of his buyers don't have the closing or down-payment costs. He has used it in one sale.
"It gives the buyer a break and it gives the seller a break," he said.
Jeffrey Staph of Castle Realty in New Castle said he's also working on a sale using Funds to Close and has found that buyers and sellers like the program's concept.
"The seller might take a little less than anticipated for their house, but they end up getting a tax credit," he said.
Booher and Staph agree that the program mostly appeals to sellers who need a quick sale or whose house has been up for sale for a long time.
Bank has signed on
First Merit Bank in New Castle is the first financial institution to sign onto the program. Welsh and Cilli said they are talking to other regional and national banks about it as well as the Federal National Mortgage Association or Fannie Mae, the nation's largest supplier of home mortgage funds, and the Federal Home Loan Mortgage Corp., also called Freddie Mac, which is a federally chartered corporation that buys home mortgages and sells them to investors.
Anita McKeever, mortgage account executive at First Merit, said the bank is able to use the program for Federal Housing Administration loans and government-backed loans supported by the U.S. Department of Veterans Affairs. The bank also can use Funds to Close in loans the bank keeps in its own portfolio and doesn't sell to other lenders.
If the program is approved by Fannie Mae and Freddie Mac, it will be eligible for all types of loans through First Merit, she said.
McKeever, like Booher, said she often sees people who want to buy homes but have no money for closing and down-payment costs. This program eases that problem and helps the community, she said.
"It's nice because [some of] the money goes to the family center, which helps Lawrence County," she added.
cioffi@vindy.com