In November, Wells Fargo hosted a festive event at the Sacramento Convention Center, where it promised more than 400 would-be homebuyers $15,000 each in down payment assistance.
The caveat: Recipients of the NeighborhoodLIFT money had to close on a house in 60 days or their reserved funds would go up for grabs.
The 60 days was up earlier this week, and only eight buyers who received the grants have closed on houses, according to Wells Fargo. About 30 are in contract and will get another month to use the down payment assistance, said NeighborWorks, the nonprofit group administering the grants.
So what happened?
Sacramento's housing market – where homes are in such short supply that experts are warning of a crisis – thwarted the best intentions of Wells Fargo and NeighborWorks, officials with both organizations said.
But one buyer who didn't find a house in time said the rules of the assistance made it harder to get a mortgage.
"I'm not the only one who felt hoodwinked," said Traci Howard-Richards, a single mother of two who was promised a $15,000 grant in November.
The assistance is restricted to area residents of moderate income, considered up to $91,300 for a family of four.
The types of houses they can afford are also those most in demand by investors looking for rental properties and willing to pay cash.
"We have those cash buyers out there purchasing up properties before customers can get to them," said Kimberly Smith-Moore, vice president at Wells Fargo and head of the NeighborhoodLIFT program.
She said officials with the nationwide program had seen similar outcomes in distressed markets like Sacramento's, including Phoenix and Florida.
In other locations, the 60-day deadline had produced better results. Its intention, Smith-Moore said, is to impart a sense of "urgency to the customer to get out there, get a Realtor and purchase a property."
The timing over the holidays – when even fewer homes were up for sale and buyers had other obligations – didn't help, said Pam Canada, CEO of NeighborWorks.
"If it was a good, solid 60 days it would have been doable," she said.
"If it was a year ago (when inventory was much greater) they would have found a house much quicker."
NeighborWorks is sending out letters this week letting grant recipients know their time is up.
That doesn't mean the $5 million allocated by Wells Fargo to Sacramento is going away. It's now available to new applicants.
Those who already received the grants can reapply but won't receive priority.
"They're not taking the money back," Canada said. "We have it available until it's gone."
From now on, though, applicants will need to identify a house and sign a purchase agreement before they can apply for the money, Wells Fargo said.
Such assurances and explanations haven't stopped Howard-Richards from feeling cheated by the loss of funds.
She took the day off from her job and traveled to the convention center, financial documents in hand, for a shot at home ownership.
Then, like others, she found buying a house in her price range of $150,000 to $180,000 was nearly impossible, especially in a 60-day period that included Thanksgiving, Christmas and New Year's.
Her task was made more difficult by the terms of the assistance, which is technically a forgivable, zero-interest loan rather than a grant. Because it is a loan, some lenders will not allow it to be used for a down payment.
Howard-Richards, like many first-time buyers, sought to use an FHA loan. But FHA will allow the Wells Fargo money to be used to help only with closing costs or to reduce principal, not for the required down payment.
"I just wish Wells Fargo would have been more careful with their marketing of this product as it is not a true down payment assistance program," Howard-Richards wrote in an email.
The program also requires recipients to buy houses within the city limits of Sacramento, where the number of homes for sale is at a low point that real estate experts call troubling and unprecedented.
The Sacramento Association of Realtors reported last week that there were 1,273 active listings in December, down 57 percent from December 2011.
The figure represents less than a month of inventory – meaning it would take about that time to sell all the houses now on the market. A four-to-six-month supply is considered healthy.
Anything less is deemed a sellers' market. Less than a month of inventory is nearly unheard of, and real estate website Redfin warned this week that Sacramento faces a "major inventory crisis" in 2013 unless listings increase.
"Normally at this time of year, we start to see an uptick in listings, but compared with the first two weeks of 2012, inventory is down literally everywhere we measure it," said Redfin spokeswoman Christin Camacho.
Howard-Richards found out the hard way that finding a home she could afford was virtually impossible when she had to compete with cash buyers for a limited number of listings.
"My agent and I have written seven or eight offers," she said. "All have been beaten out by cash."
Canada said she understands the frustration of buyers and encourages them to keep trying.
NeighborWorks agents can help find homes, and buyers should try to look at houses that are part of programs that give owner occupants first dibs, she said.
They include Fannie Mae's HomePath program and Freddie Mac's HomeSteps program, both of which allow homebuyers time to bid on foreclosures without competition from investors.
For now, millions of dollars in assistance remains available through NeighborWorks, Canada said.
"Don't despair," she said. "When you find a property, you come back to us, and you can still qualify."