A rapid rise in foreclosure filings in the Brockton area has inspired a partnership of credit unions, banks and non-profit lenders to help borrowers in danger of foreclosure restructure their loans with more affordable, fixed rates.
The $1.3-billion HarborOne CU, the $303-million Crescent CU and the $48-million Uniti Credit Union are among those using My Community Mortgage, a conventional mortgage product developed by Fannie Mae and financed by the Massachusetts Housing Finance Agency (MassHousing).
"We think this will serve as a blueprint for other types of initiatives statewide," said Peter S. Milewski, manager of business development at MassHousing. Milewski said the loan option is safe and comes with financial flexibility that includes loan-to-value ratios up to 100%, flexible income sources and approvals even for borrowers with lower credit score histories.
How The Product Works
The MyCommunity Mortgage product offers qualifying members-those who can show a good credit history through traditional or non-traditional means-30-year fixed loan with rates starting at 6.75%. Other benefits include low or no down payment requirements, long-term fixed interest rates, lower-cost mortgage insurance premiums and mortgage payment protection insurance options.
Leo MacNeil, SVP of Marketing at HarborOne CU, said the product was originally intended for first-time homebuyers, but members of the partnership also saw benefits for consumers with adjustable rate, piggy-back or 80/20 mortgages who are having trouble making higher monthly payments.
Lenders access the loan funds from MassHousing, a quasi-public, state agency that provides affordable home for lower income residents in Massachusetts. Fannie Mae, a private, shareholder-owned company then purchases the loans from MassHousing.
MyCommunity Mortgage does come with restrictions. For example, interest rates vary depending on the homebuyer's individual circumstances, including down payment amount and points paid at closing. Household income limits may also apply, depending on property location.
MacNeil said the partnership recently held a seminar for about 70 area lenders to introduce the product and plans to launch a campaign this week to make consumers aware of it. Members of the Massachusetts Division of Banking, Federal Deposit of Insurance and Federal Reserve of Boston also attended.
"There is a lot of concern about foreclosures by the media right now," MacNeil said. "It's not just isolated to Brockton or Massachusetts. We wanted to make ours and other communities aware of this opportunity to get the wolf away from the door."
Inundated With Calls
Since front page articles in the local press about the state of foreclosures and the MyCommunity Mortgage product have appeared, MassHousing said it has been inundated with calls from people wanting assistance, he said.
Brockton Interfaith Community, whose leaders approached the financial community in the early1990s to form a partnership to aid the struggling community, will distribute the fliers during church and other faith-related services.
"The partnership, by the way, is a collaboration of rivals in an intensely competitive mortgage market," MacNeil said. "But, after 14 years, we're still together."
He said the reason is that everyone involved has the same goal-to make the community a better place to live by offering such products as this one.
