Starting June 14. nineteen lenders in Connecticut plan to offer $50 million worth of below-market-rate mortgages that will be bought and pooled by Freddie Mac and then sold to the state's pension fund.
The 1993 edition of the State Treasurer's Affordable Residential mortgage plan, or STAR, adds to a $100 million program called CHAMP that also is designed to help low- and moderate-income families.
With STAR, people can buy a home with as little as a 5% down payment. provided they meet credit requirements and earn enough to meet a monthly mortgage payment. "In some cases, the interest rate on 30-year financing is up to three-eighths of a percentage point below the market rate at the time of the mortgage application." Freddie Mac said.
STAR offerings also were made in 1991 and 1992. lending $160 million and resulting in more than 1,200 residential mortgages.
All 19 lenders are banks and thrifts or, in one case, a mortgage company affiliated with a bank. The STAR program is being coordinated in part by People's Bank, which is one of the 19 participants.
STAR involves mortgages for owner-occupied housing of one to four units, be they single-family homes or condominiums. Loans will be issued for primary residences only. No construction loans are allowed, but newly built homes will be eligible if they have a certificate of occupancy at the time of sale.
CHAMP--the Connecticut Homebuyers Affordable Mortgage Program--blends $100 million worth of public and private funding from 37 Connecticut banks. It provides 30-year, fixed-rate loans with no points for up to 75% of a home's cost.