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PD&R, U.S. Department of Housing and Urban Development - Office of Policy Development and Research

Colorado Department of Human Services: Moving the Disabled Into Homeownership

While the homeownership rates are at record highs across the country, disabled individuals and families - who are frequently low-income - rarely experience the dream of homeownership. Through a partnership between HUD, the Colorado Supportive Housing and Homeless Programs Division (SHHP), and the Colorado Housing and Finance Authority (CHFA), disabled families in Colorado now have more homeownership opportunities than ever before.

In January 2000 with HUD's authorization, the SHHP began a pilot program to begin a one-year, statewide Section 8 homeownership demonstration program for persons with disabilities. The program allows a person or family who is receiving HUD Section 8 assistance from SHHP, to use their Section 8 towards the purchase of a home. Since the program's inception, SHHP and its partners have helped to move 27 families from rental situations to homeownership.

How the Program Works: Partnership

The partnership between SHHP, HUD, and the Colorado Housing and Finance Authority (CHFA) is the backbone of the program.

The first step was getting the green light from HUD which came in April 1999 when HUD issued a proposed rule allowing Section 8 vouchers to be used for homeownership.

Then, as the administering agency of the HUD Section 8 program in Colorado, SHHP began working with its 70 local service providers across the state to make the Section 8 homeownership program a reality. These local coordinators are now tasked with making flexible housing and case management services available after a Section 8 participant purchases a home. These services often include individual case management, counseling, budget assistance, health and employment assistance. Certified counseling agencies also provide mandatory pre- and post-purchase counseling to homebuyers.

CHFA provides the critical financing piece of this equation through the development of HomeAccess, a new loan program that provides financing to very low-income people with mental and physical disabilities who cannot qualify for existing home loan products. Through HomeAccess, CHFA provides below-market rate loans and soft-second mortgages for downpayment assistance. CHFA also buys and services loans originated by four other lenders, streamlining the process for SHHP by requiring them to work with only one loan servicer.

The Colorado Housing Assistance Corporation (CHAC) also provides downpayment assistance and has provided such assistance to 13 out of 27 SHHP Section 8 homeowners.

SHHP and its partners also use a variety of post-purchase counseling strategies to reinforce important financial management messages to their clients. These tools included monthly post card tips sent to participants' homes, a "Homeowner Celebration" calendar, and a refrigerator magnet with "Ten Tips Now That You're A Homeowner." SHHP also has Memorandums of Understanding with over 65 service agencies, including mental health centers, and centers for the developmentally and physically disabled, that play a significant role in referring potential homeowners to SHHP.

What a Family Must Do to Qualify

For a disabled household to pursue homeownership through the Section 8 Homeownership Program, the family must:

  • Have a Section 8 certificate or voucher issued by SHHP.
  • Have received rental assistance for one year.
  • Be a participant of the Section 8 program in good standing.
  • Meet the HUD definition of first-time homebuyer (the participant has not had ownership interest in a home in the past three years).
  • Sign a statement of Homeowner Obligations.
  • Complete pre-purchase homeowner counseling classes before entering into a sales contract.
  • Provide a cash downpayment of $750 or 5 percent of assets, whichever is greater.
  • Provide the lender and real estate professionals with all pertinent documentation.

How the Program Evolved

SHHP has been helping the disabled and special needs population in Colorado to find affordable housing since the late 1970s, but until 1993, the organization focused solely on rental assisted housing programs.

In 1993, SHHP and CHAC applied together for HUD Homeownership of Single Family Homes (HOPE 3) program funds to provide homeownership opportunities for people with disabilities. Although the HOPE 3 program only lasted seven years, the program assisted approximately 50 individuals and families with mental disabilities to buy their own homes. With the end of the HOPE 3 program, SHHP began to search for another means to serve the disabled population, recognizing that the population with disabilities or special needs was one group that still faced limited access to homeownership.

As HOPE 3 was ending in the late 1990s, SHHP developed a task force to explore opportunities for its consumers. This task force - Homeownership Education and Resource Opportunities (HERO) Alliance - includes lenders, non-profit agencies, city, state and federal officials, real estate professionals, and other housing providers.

The task force not only laid the groundwork for the Section 8 Homeownership program but has also provided a venue for the discussions and innovations that have kept the program going. They meet monthly to investigate new ways to offer educational and financial assistance to people with serious permanent disabling conditions in buying their own homes.

Success of the Program

The support of CHFA has played a large role in the success of the Section 8 homeownership program. Before the housing finance authority agreed to service the loans, individual lenders were reluctant to lend in a system where they would have to take two payments, one from the family and one from SHHP. Lenders were much more willing to lend once CHFA agreed to service the loans.

Finding innovative solutions to challenges, according to Sam DeSiato, Program Coordinator in the Supportive Housing and Homeless Programs Division, is one of the keys to implementing a good program, and the support that partners have given in that capacity has been invaluable.

The Colorado Section 8 Homeownership program has already helped to move 11 people with developmental disabilities, two people with physical disabilities, and 14 people with mental illness into homeownership, totaling 27 new homeowners. An additional 31 people are currently in the process of finding a home through the program. The average annual income of these new homeowners is $10,603 (28 percent of the state's median income) while the average cost of the home is $105,725. There have been zero loan defaults since the first closing in June 2000.

Disabled households have a strong desire to own their own homes for reasons that resonate with most first-time homebuyers: rent stability, privacy, asset building, and a sense of autonomy. In helping a population that is struggling to achieve a rate of homeownership comparable to the rest of the nation, SHHP is doing both Colorado and the entire country a great service.

Profile of a Typical Financial Package
  • Single-person household with a gross income of $8,015 (17% of AMI)
  • Cost of home: $105,051
  • Homebuyer's Monthly Payment: $140.00
  • SHHP Monthly Payment: $206.00
  • First Mortgage from CHFA: $10,000
  • Second Mortgage from CHFA: $10,000

For more information, contact: Sam DeSiato, Program Coordinator, Colorado Department of Human Services, Supportive Housing and Homeless Programs Division, (303) 866-7356, Sam.Desiato@state.co.us

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