WHITTIER — Homeowners unable to obtain earthquake recovery loans from the Small Business Administration are turning to City Hall for help in increasing numbers, officials said last week.
About 300 homeowners have sought city-subsidized loans at the rate of about 10 new applicants each day, said Bill Lewis, Whittier's manager of building rehabilitation and code enforcement.
"We have contractors coming in here saying, 'I've put a lien on people's houses because they haven't gotten the money from the SBA,' " Lewis said. "It's really a hardship on these people."
So far, the city has used one relief fund to give 56 grants--totaling $110,000--to local merchants, while freeing $361,000 in federal money for loans and grants to homeowners. That money has been used to subsidize 10 loans and make one grant to a needy senior citizen.
Late last year, the City Council decided that the business community should be the sole recipient of $331,000 in private and public funds donated to the Whittier Earthquake Disaster Relief Fund. More than 100 business owners sought the grants, and 53 applications are pending, said Linda Creed of the city's Transit Department. Whittier merchants have until Feb. 26 to apply for grants of up to $5,000.
The City Council also transfered $361,000 in federal Community Development Block Grant money to an earthquake relief program for homeowner loans and grants for senior citizens and the handicapped. The city has issued only one grant, $3,300 to a senior citizen for home repairs, Lewis said.
Lewis said that the city can help more people through financing low-interest and no-interest loans than through smaller grants of only a few thousand dollars, since the average earthquake repair cost in Whittier is running around $20,000.
"We could give grants to 50 people and that's all our money would count for," Lewis said.
City Secures Loans
The city itself does not loan the money, but secures a loan from a commercial lender at the market rate of 12% and buys down the interest rate so the homeowner gets the money at a maximum of 5%. On a 30-year loan of $20,000 at 5%, Lewis said the monthly payment is $151.
For those who cannot afford that payment, the city also offers loans at rates lower than 5% and deferred loans that do not have to be paid until the property changes ownership.
To qualify for the loans under the earthquake program, homeowners usually must prove they have exhausted all federal aid options. But Whittier also has $278,000 in a home improvement loan program that does not require application for federal earthquake aid as a prerequisite.
Homeowners who do not qualify under the city or federal loan programs can apply for a state-backed loan through a program approved by the Legislature in November. The state has allotted Whittier $525,000 under that program, which is expected to start taking applications within two weeks, Lewis said.