WASHINGTON -- The Federal Home Loan Bank of New York is starting a program to help low-income families buy their first homes while helping lenders meet Community Reinvestment Act requirements.

The First Home Club plan would channel part of the bank system's Affordable Housing Program subsidy to individual homebuyers by contributing up to $5,000 to match their savings toward a down payment and closing costs.

"Many families live in markets where affordable housing is available," said Alfred A. Dellibovi, president of the New York Home Loan Bank. "Their problem is they don't have the down payment." The New York bank has 265 member institutions in New Jersey, New York, Puerto Rico, and the U.S. Virgin Islands.

Counseling Required

To participate, a low-income family that did not qualify for a home mortgage under standard underwriting guidelines could join its local lender's First Home Club if it belongs to the New York Home Loan Bank system.

As part of the program, the lender would require the would-be borrowers to attend a counseling program to prepare them for home ownership.

Meeting CRA Requirements

The program would encourage the family to regularly deposit savings into a Home Club account for at least nine months. After they had saved at least one-third of the down payment and closing costs necessary to buy the house, the bank system would match their savings three-to-one, up to $5,000.

The local bank system member institutions would lend them the rest of the money they need to buy a home, and the institution would earn credit toward its CRA requirements for participating in the program, Mr. Dellibovi said.

Member banks and thrifts would be out the nominal costs of running the program, and perhaps advertising it. The cash grant for borrowers would be paid for through the system's existing Affordable Housing Program subsidy.

Consumer groups praised the plan, and the bank system's regulator, the Federal Housing Finance Board, gave the concept preliminary support.

Help with Up-Front Costs

Chris Lewis, director of Banking and Housing Policy for the Consumer Federation of America said: "This initiative would help low-income consumers overcome the greatest hurdle to home ownership, and that is the great up-front costs of owning a home."

Sylvia C. Martinez, the finance board's director of housing finance, said the board is reviewing a draft of the proposal. "The concept of supporting first-time home buyers is one the finance board is very supportive of," Ms. Martinez said. "Depending on how this program is structured, we think it could be very, very helpful."

Mr. Dellibovi said the First Home Club program would benefit member institutions as well as low-income borrowers. "We are going to help them position themselves in their local market," Mr. Dellibovi said.

Membership Grows

Separately, the finance board held its regular monthly meeting Tuesday, and reported that the Bank system's total membership had grown to 4,667 at the end of March. The system comprises 2,145 thrifts, 2,442 commercial banks, 61 credit unions, and 19 insurance companies.

The system had $179 billion in total assets and $167 billion in liabilities. At the end of March, the system had $99 billion in outstanding advances, or loans to member institutions.

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