West Chicago dangles housing incentive

Using a state incentive program that once helped West Chicago keep businesses in town, the city is now hoping to put it to use in luring new residents.

The city council voted Monday to give the Illinois Housing Development Authority borrowing ability over its nearly $2.3 million worth of state-offered, tax-exempt bonds to offer mortgages to first-time home buyers.

The bond sales can help finance a variety of economic stimulus programs, but Mayor Mike Kwasman said he wanted to be "proactive" with the housing market in its current state.

"We want to prevent a vacant housing market," he said.

Local real estate experts said West Chicago is in no worse shape than other DuPage County municipalities and lauded the plan.

"It's a great program," said Becky Vander Veen, an agent with Wheaton-based Realty Executives Premiere. "Anytime the government loosens funds for these kinds of programs it does help."

The program will be run by the state agency through partnerships with West Chicago banks.

"There is no fiscal responsibility to the community," said Roger Morsch, the housing development authority's director of business and product development, "though they get all the benefits of the program."

The program works by offering qualified first-time home buyers mortgages with grants equal to 4.25 percent of the purchase price, city officials said. They hope to begin offering the program within the next two weeks.

A portion of the grant goes to pay off the lender for originating the loan, Morsch said. That's about 1.25 percent of the purchase price.

The remaining 3 percent is used as a down payment on the property that must be within the city limits of West Chicago.

The mortgage may come with a slightly higher interest rate, though.

About 20 municipalities are participating in the same kind of program throughout the state, Morsch said.

Aurora offers a similar program, but it's not managed by the state agency. City Finance Director Brian Caputo said other municipalities utilize the city's program as well.

Since its inception in 1997, the Aurora home buyer program has helped secure more than 1,300 mortgages, he said.