Washington Outlook

New Affordable Housing Program Helps Albany Residents

Albany (NY) Mayor Gerald Jennings has undertaken a unique initiative by which he hopes to strengthen and stabilize Albany neighborhoods. The mayor wants to increase the rate of homeownership from its current level of 38% to be more in line with the national level of 67%. However, efforts to meet this challenge comes at time when the cost of affordable housing is rising, especially in urban areas like Albany.

Recent research conducted by the U.S. Department of Housing and Urban Development has shown that the rising cost of housing is putting the dream of homeownership out of the reach of many lower and middle-income families in cities, who are finding it more and more difficult to afford to buy their own homes. Many of these families are having great difficulty in accumulating the amounts needed for a down payment on their new home and finding the additional money to pay for the costs associated with purchasing a new home.

On June 19, Mayor Jennings announced the formation of a new public/private partnership with the Mortgage Bankers Association of America (MBA), two of the MBA"s mortgage lenders who have a strong presence in the City, Fleet Bank and HSBC Bank USA, and Fannie Mae, the nation's largest source of financing for home mortgages. This new partnership created a one million-dollar loan fund that will assist first-time homebuyers in the City of Albany with down payment and closing costs.

Mayor Jennings hailed the new program as "a great investment for the people of America"s cities and for the citizen's of Albany. The City's partnership with the MBA and Fannie Mae will provide tremendous resources to Albany home buyers who need low-interest loans to finance the down payment and/or closing costs on a new home purchased in the city. Individuals who previously were unable to purchase a home because of limited financial resources, will now have a real chance at homeownership."

To obtain the financing necessary to create a $ 1 million loan fund, the City of Albany teamed up with the MBA and two of its member lenders, Fleet Bank and HSBC Bank USA to utilize Fannie Mae"s Down Payment Assistance Investment Note (DPAIN). The City invested $100,000, and both Fleet Bank and HSBC Bank USA provided $75,000 of investment for a total of $250,000. Fannie Mae then matched the city and its mortgage lender partners" investment on a 4:1 basis, contributing $750,000 to establish this new loan fund for first-time homebuyers in Albany.

The unique feature of this partnership in Albany is that for the first time, a city worked with a private organization, the MBA and its two member private lenders, to provide an additional amount of collateral for the Fannie Mae note. As a result, the city was able to more than double the amount of funds leveraged from this Fannie Mae sponsored program than it would have otherwise been able to attain if it just worked with Fannie Mae alone.

Through this partnership, financial assistance will now be made available to hundreds of potential home buyers. It is expected that this home mortgage program will serve 250 first-time homebuyers in Albany.

The assistance will be provided in the form of loans between $2000 and $5000. This money will be used by the home buyer to assist with down payment or closing costs when they obtain a first mortgage under a state or local government homebuyer"s assistance program, or through conventional mortgage financing for the purchase of a home in the City of Albany.

"This new loan program will enable hundreds of New York Families to afford to buy a home, giving them added security and stability in their own homes while helping to strengthen the economic vitality of the City of Albany," said Christopher J. Sumner, president of the MBA. "By helping more families to achieve the "American dream" of homeownership, this well-financed program will help expand their economic opportunity and give them the sense of pride in homeownership."

The "Albany Home Store"

Individuals of all income levels who purchase a home within the City of Albany are eligible to receive assistance from the Albany DPAIN Partnership. A homebuyer will be able to access funding from the DPAIN Partnership by going to the "Albany Home Store" which is scheduled to open in October. The Home Store will provide a one-stop location for comprehensive counseling and services to assist individuals in becoming successful homebuyers in the city. It will also offer a variety of city and community partners products and Internet resources detailing programs available to individuals attempting to purchase a home in the city.

Fannie Mae"s DPAIN is a product that is offered to state or local governments or housing finance agencies. It is a collaterialized note purchased directly from a housing finance agency, or a state or local government agency. Proceeds of the note are used to fund secured second mortgages that finance part of a borrower"s down payment or closing costs in conjunction with obtaining a first mortgage under a state or local government home buyer assistance program. This product provides an alternative financing method for state and local governments and housing finance agencies to expand the supply of funds for down payment and closing cost assistance.

This new public/private partnership has attracted much attention from the city's residents. The Albany Community Development Agency, who will operate the "Albany Home Store", has compiled a list of more than 150 interested applicants for this program. The Albany Times Union in an editorial that appeared on June 26, 2000 has also recognized the program as a "national model." In addition, MBA president Christopher J. Sumner, in testimony this summer before the House Banking and Financial Services Committee, spoke about this innovative partnership that MBA undertook with the City of Albany as a model that the MBA was interested in pursuing with other cities all across America.

For further information, contact Frank Nemith at 518-434-5237 or see their website at: www.albanyny.org.

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