U.S. boosts housing aid to Baltimore

April 19, 1994|By Lorraine Mirabella | Lorraine Mirabella,Sun Staff Writer

In a bid to boost homeownership in Baltimore, the Federal National Mortgage Association will provide low- to moderate-income families with $750 million in mortgage loans over the next five years to buy homes in the city.

The HouseBaltimore program, unveiled yesterday by state and local officials, represents $100 million more than Fannie Mae made available here in the last five years.

The increase means "a great shot in the arm for the city in terms of expanding affordable housing opportunities," Mayor Kurt L. Schmoke said, adding the program should help prevent neighborhoods in transition from becoming dominated by absentee landlords as older homeowners die off.

Fewer than half of the city's families own homes, compared with 64 percent nationally.

Chairman James A. Johnson said Fannie Mae will work through local lenders to make 10,000 loans over the five-year period. Fannie Mae makes mortgage funds available by guaranteeing that it will buy the loans from lenders on the secondary market, and sets more flexible requirements for borrowers.

Fannie Mae also will counsel homebuyers and invest in multifamily housing.

To work with local lenders and decentralize an operation handled now by five regional offices, Fannie Mae will open a partnership office in Baltimore this summer, the first of 25 to operate nationwide.

Market-rate mortgages of up to $203,150 will be available to all city homebuyers and require a 5 percent down payment. Buyers with annual incomes of up to $47,200 could qualify for a mortgage with a down payment of as little as 3 percent of their own money and the remaining 2 percent from a family gift, a grant or an unsecured loan from a nonprofit or city agency.

Fannie Mae loans allow buyers to spend higher-than-usual percentages of their income on housing expenses and makes allowances for people with non- traditional credit histories.

Officials expect most of the mortgages to be made in low- andmoderate-income neighborhoods.

In the past, the secondary mortgage market has largely ignored the needs of buyers in the inner cities, said Baltimore Housing Commissioner Daniel P. Henson.

"It's the 1990s version of redlining," Mr. Henson said. "The criteria have not been set up to serve low- and moderate-income buyers."

Besides increasing its loans, Fannie Mae plans to make equity investments of $20 million in apartment projects for families who earn no more than $28,320. The Fannie Mae Foundation also will offer grants of $50,000 per year for three years to the Baltimore Housing Roundtable to educate buyers.

The counseling component will help buyers who might lack the confidence to purchase a home, said Vito Simone, of Tenant Buyers, a developer that purchases and rehabilitates vacant homes.

"The biggest barrier is a mindset," Mr. Simone said. "So many people just don't believe it's possible. They've given up on the dream of homeownership."

The Baltimore program is part of a Fannie Mae initiative announced last month to increase the number of home loans it buys in disadvantaged areas from $850 billion to $1 trillion over the next six years. Mr. Jones yesterday also promised more flexible reviews of buyers' credit histories to allow more people to qualify for loans.

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