Savings program helps Brookline residents with housing

Whitman is one of two low-income Brookline residents who this year were able to buy condos for themselves and their children through an Individual Development Account program. The Brookline Community Foundation invited Compass Working Capital to open the program in 2008.

“This is cutting edge philanthropy for breaking the cycle of poverty,” said Sara Dassel , program director for the foundation.

The program provides financial education and matching funds for qualified low-income people who save funds for education, home-ownership or a small business.

Fifteen Brookline residents signed up, and the foundation granted $25,000 for the two year program, said Dassel. The state and other foundations provided another $40,000 , said Sherry Riva , executive director of Compass. Participants got $3 for every $1 they invested up to $5,400 , she said.

Whitman's condo was sold at market rate but she was given a subsidy through the town's Homebuyer Assistance Program.

The purchases were financed with strictly vetted mortgages and soft-second mortgages through Boston Private Bank, Riva said. The financing meant their cash contribution had to cover closing costs and about 3 percent of the price. But their combined condo fees and mortgage payments, are much lower than their previous Brookline rents said Riva.

“The real story is that there is a sustainable path to low-income family homeownership,” Riva said. She said that nationally, of some 1,200 Individual Development Account-holders who bought homes, only four had foreclosed in the recent credit crisis. One reason is that the banks that make these loans are “very highly regulated, unlike the subprime mortgage market.”

Bullock agreed.

“The economic literacy education is as important, if not more, than receiving subsidies,” she said. The savings program “allowed lenders to see stability and thoughtfulness going forward.”

In Brookline about 9 percent of families fall below the federal poverty rate, Bullock said. The Community Foundation will begin funding another round of development accounts in December 2010 , according to Dassel.