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Wells Fargo & Co. says it will fund up to $4 million in homebuyer downpayment assistance grants in New Orleans. (AP Photo/CX Matiash, File)

By Katherine Sayre, NOLA.com | The Times-Picayune 

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on January 07, 2014 at 5:45 AM, updated January 07, 2014 at 1:04 PM

Hundreds of New Orleans residents saving to buy a house could qualify for a $15,000 grant for a down payment under a program being launched by mortgage lender Wells Fargo and Mayor Mitch Landrieu’s administration.

Wells Fargo said it will fund a total of $4 million for grants in New Orleans, part of a nationwide home ownership program it has implemented in more than 20 cities. In New Orleans, the money covers $15,000 down payment grants to more than 200 low-income and middle-income families.

Landrieu and officials with Wells Fargo and nonprofit housing development groups NeighborWorks America and Hope Enterprise Corp. are expected to formally announce the initiative outside a for-sale house in Gentilly on Tuesday (Jan. 7) afternoon.

The initiative, called NeighborhoodLIFT, will be rolled out in partnership with the Landrieu administration’s ongoing soft-second mortgage program, which offers forgivable loans for low-income families to cover the gap between the cost of a house and the maximum amount a buyer can borrow from the bank.

In total, Wells Fargo said it has committed $5.15 million to New Orleans, which also includes $500,000 for a separate housing-related initiative in the city. The details of that program have yet to be announced. The funding will be used “to help further stabilization efforts in New Orleans neighborhoods,” the company said in a news release.

Hugh Rowden, Wells Fargo Home Mortgage community outreach manager for the Southeast, said for first-time homebuyers, one of the biggest hurdles to overcome is saving enough for the down payment.

“This is a great opportunity to build on the recovery of New Orleans,” Rowden said. “We think the time is right.”

Grant recipients must qualify for a first mortgage on the property and commit to living there for five years. Buyers who are using a U.S. Housing and Urban Development-insured purchase renovation loan to buy blighted or vacant properties in need of repair can also qualify for the down payment assistance grants.

To qualify, grant applicants must have annual incomes below 120 percent of the New Orleans area median income, depending on family size. For a family of four, that cap would be $70,550. An eight-hour homebuyer education class through Hope Enterprise Corp. or another federally approved counseling agency is also required to be eligible.

Prospective homebuyers interested in seeking a grant can attend a program event being held Jan. 31 and Feb. 1 from 10 a.m. to 7 p.m. at the New Orleans Morial Convention Center, 900 Convention Center Blvd.

According to recent data, home prices have been on the rise in the New Orleans area. The average price of a home sold during the first half of 2013 in New Orleans was $327,488, a 6 percent increase from the previous year and a third higher than pre-Hurricane Katrina average prices, according to a report for the New Orleans Metropolitan Association of Realtors.

The city’s $52.3 million soft-second mortgage program, paid for through a statewide Hurricane Katrina recovery fund, was launched in October 2011. So far, 500 buyers have closed on their loans with another 50 loans in the pipeline, city officials said Monday. About $30 million of the funds have been committed.

The second mortgages, valued at up to $65,000 to families with limited incomes, are partially forgiven after five years and completely forgiven after 10 years if the buyer is still living in the house.

Brian Lawlor, the city’s director of housing policy and community development, said the city and Wells Fargo programs are separate but push for the same goal — expanding the pool of local eligible homebuyers. As demand from buyers goes up, Lawlor said, more damaged properties will be renovated and put back onto the market.

“The net result will be for both Wells Fargo and the city to serve many more families,” Lawlor said.