Lorain Council OKs review, potential forgiveness of old home repair loans

LORAIN — Some homeowners with decades-old loans from the city may have all or part of their outstanding loan forgiven by the city. City Council approved a provision allowing the safety/service director to review and forgive certain loans dating from the early 1990s to mid-2010s from an old home repair program. The provision passed 8-1 on Monday; Josh Thornsberry, D-8th Ward, was the sole dissenting vote. Beth Henley, D-1st Ward, and Angel Arroyo, D-6th Ward, were absent. The proposed forgiveness program has been up for discussion in the city for months. The loans originated from the U.S. Department of Housing and Urban Development's HOME Investment Partnership Program funds allocated to the city. Those federal funds were used to help low-income homeowners unable to obtain conventional loans upgrade or repair their properties over the years. Borrowers were issued a principal loan amount that was often split into two repayment categories: an amount that was immediately repayable and a deferred amount that would come due when the property sold or transferred, with both portions accruing interest. There are three subsets of loans Safety/Service Director Rey Carrion will review now that the ordinance has passed: outstanding loans were the original borrowers are deceased; loans where only the deferred portion remains; and loans where there are still outstanding deferred and repayable portions. In total, 40 borrowers may receive some relief for their loans or the interest due. For the 15 properties where the original borrowers are deceased, the city may forgive the entirity of the outstanding loan — a total of $431,832. For the nine borrowers who have finished paying the immediately repayable amount, the city may forgive the interest accrued on the deferred loans while still collecting the remaining principal when those properties sell. Forgiving the interest on those loans would be about $80,000; about $145,000 would be repaid by the borrowers when the homes transfer. The last group of 16 borrowers with outstanding deferred and repayable debt may see a total of $77,800 in interest forgiven on both portions of their loans. Those borrowers would continue to make payments on the principal amount and the city would collect on the deferred portion — without interest — when those properties transfer. Carrion, alongside staff from Building, Housing and Planning, will review each loan to determine if it will be forgiven by the city, per the ordinance passed by Council on Monday. The suggestion to forgive outstanding interest on the loans whose borrowers are still alive, and the remaining loans for deceased borrowers could see about $590,254 forgiven by the city. The city restarted its HOME repair program about three years ago. Under the new program, qualified borrowers may receive a 10-year, zero percent interest loan for up to $75,000 with all or a portion of the loan forgivable depending on the borrower's income. If a borrower dies in the new program, the outstanding loan is forgiven. Contact Carissa Woytach at (440) 329-7245 or cwoytach@chroniclet.com.