Mortgage programs make home ownership easier
A three-year mortgage program sponsored by Fannie Mae to provide below-market mortgage rates for home buyers with credit difficulties was launched in the Pittsburgh region Tuesday by a Michigan-based company.
Meanwhile, the Bush administration announced a program that could supply an average $5,000 to low-income families toward a home purchase. U.S. Housing and Urban Development Secretary Mel Martinez unveiled the $200 million federal program during a teleconference from Washington.
Dave Bowers, senior vice president of Detroit-based Flagstar, said it will offer rates as much as 2 percentage points lower than alternative financing rates as part of its $30 million Timely Payments Rewards/Expanded Approval program in the six-county region.
Alternative financing rates - often entailing predatory lending - have usually been several points higher than the market rate, now about 7 percent for a 30-year fixed-rate mortgage.
The program also offers to reduce the rate by as much as 1 percentage point if the borrower makes 24 consecutive months of timely payments and meets certain other conditions. If a payment is late during the first 24 months, the homeowner can start a second 24-month period to get the discount.
"We believe this will increase opportunities for homeownership throughout the region and assist borrowers who have been overlooked, underserved and overcharged," said Howard Slaughter, director of the Pittsburgh office of Fannie Mae, the nation's largest source of mortgage financing.
Flagstar agents include: in Allegheny County, Peoples Mortgage Services; in Westmoreland, Professional Mortgage Services; in Washington, All Home Mortgage; in Butler, Eagle Mortgage Associates; in Beaver, Great Lakes Financial; and in Fayette, Online Loan Rep.
First-time home buyers with low incomes also will get help from HUD.
The agency's "American Dream Downpayment" program would provide grants to low-income families for down-payments or closing costs, Martinez said. He expects about 40,000 families nationwide, whose income is 80 percent of the median income for their area, to benefit.
For six-county Pittsburgh, where the median income is $45,500, families with incomes of up to $36,400 would be eligible. The program goes into effect in July.