Nine months after implementing a pilot program to make home ownership a reality to Arizona residents who earn less than 60% of the areas median income, First Interstate Bank of Arizona has made 104 loans averaging $42,000 each and sold the package to Fannie Mae.
Now the $6 billion bank will offer another financing alternative for borrowers under this program Home to Own that will increase their ability to build equity over a short time. For just a few dollars more a month, this new 80/20 option, which the bank plans to unveil in December, will allow borrowers to realize a 30% equity based on the original sale price at the end of 10 years.
Were seasoning mortgages for a couple of years in the bank community development corporation, said John Salgado, vice president of community development at First Interstate.
Beginning in December, the Arizona Multibank Community Development Corp. will start purchasing the programs second mortgages. The Arizona Multibank plans to hold the second-mortgage pool for a couple of years and then resell them to other local banks, Salgado said.
First Interstate unveiled its Home to Own program in July 1993 and began taking loan applications in September 1993. The program is a $10 million pilot that was created by an affordable housing alliance composed of community and civic leaders, and First State officials. The program is modeled after an affordable housing program that First Interstate has operated since 1989.
The alliance decided to model Home to Own after First Interstates portfolio program because it hoped to build on the banks success and provide an opportunity for home ownership to Arizona families who had never owned a home before. But, Salgado added, putting Home to Own together was complicated especially because of the number of participants and the significance of getting the secondary market involved. It was not an easy thing to do, he said.
Indeed, it took a true spirit of community cooperation and trust in order for the program to gel. The process began in April 1992 when CEO William S. Randall and Salgado sponsored a community forum on housing to discuss impediments to affordable housing, identify specific problems, and derive realistic solutions. This affordable housing alliance then decided to approach Fannie to consider implementing a program under its affordable housing agreement with the National Council of La Raza. NCLR is the largest Hispanic-based constituency group in the country and is also involved in community development activities throughout the Southwest. For more information on First Interstates Home to Own program, call John Salgado, (602) 528-6990.