CHICAGO -- A loan program aimed at helping moderate-income homebuyers purchase "fixer-upper" homes was unveiled last week at the Mortgage Bankers Association of America's annual convention here.
In addition to giving affordable housing a boost, the program will help revitalize neighborhoods and preserve housing stock, the program sponsors said.
The program provides a single loan to purchase and repair a home. The Federal National Mortgage Association, or Fannie Mae, a major buyer of home loans in the secondary mortgage market, is teaming up with GE Capital Mortgage Insurance Cos., a major issuer of mortgage insurance. Fannie Mae has agreed to purchase the loans from lenders while GE will provide mortgage insurance.
Typically, a buyer must get a short-term construction loan to do repairs and a long-term loan for the purchase. A single loan covering both purchase and repairs saves the buyer several thousands of dollars in loan and closing costs.
"We think this program will extend homeownership to many families who haven't been able to purchase a home," said Martin D. Levine, Fannie Mae vice president for low- and moderate-income housing.
The loan is expected to be available nationwide early next year.
Features of the Fannie Mae/GE loan program:
* Will be available to purchasers with household incomes of no more than 115 percent of an area's median income.
* Will allow the financing of both the home purchase and repairs of up to 30 percent of the after-repair appraised value of the house.
* Will make available loans of up to 95 percent of the home's value after repairs.
Prospective buyers must complete a 13-session course, developed by GE and taught by lenders participating in the program. The course includes such things as budgeting money and home maintenance.