TheMReport — News and strategies for the evolving mortgage marketplace.
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TH E M R EP O RT | 19 COVER STORY special mortgage types. The Fresh Start program is designed to help borrowers who have had a financial hardship such as a short sale. The company's Home Ownership Opportunities programs enables qualified borrowers to receive up to $10,000 for closing costs or a down payment. A state-backed program provides low down payment options for first-time and repeat homebuyers who are purchasing in Michigan. Private Bank Programs S ome private banks have also developed specialized lending programs to fill in gaps not served by big (or other) lenders. For ex- ample, Burke & Herbert Bank, a privately-owned financial institu- tion based in Alexandria, Virginia, is working with developers on land and development loans in the Northern Virginia area. Burke & Herbert also offers jumbo loans enabling consumers to borrow between $417,001 and $625,500, and non-conforming loans. Community banks had largely been out of the jumbo loan market since the financial crisis, but some are re-entering this area, according to Booker. Though no one expects the big lenders to become less influential in the mortgage market any time soon, despite the examples of Citi and PNC simplifying their ap - proach to product offerings, there will continue to be areas for re- gional and community lenders to shine with specialized programs to meet the specialized needs of their customers. PHIL BRITT started covering mortgages and other financial services matters for a suburban Chicago newspaper in the mid-1980s before joining Savings Institutions Magazine in 1992. When the publication moved his offices to Washington, D.C., in 1993, he started his own editorial services firm and continued to cover mortgages, other financial services subjects, and technology for a variety of websites and publications. Additionally, the local lenders benefit from "relationship lending" models, he says. "The lending officers are at the family's soccer games and football games, it's not just a big bank box in the sky." Booker says with the additional relationships, borrowers also tend to work harder to keep loans in good standing than they might with a lender with whom they have no other relationship. "These small banks use their own judge - ments in making portfolio loans." For example, Booker says Buffalo, New York-based M&T Bank is working with new home builders to help with construction and redevelopment loans in its immediate area and neighboring counties. M&T works with the State of New York Mortgage Agency (SONYMA) to offer competitive interest rate loans for first-time home buyers purchasing a home in need of improvement. Down payment assistance is also avail - able, and borrowers are required to meet certain income and purchase price limits. Among other mortgage programs the bank offers are loans for families who want to build in Arizona, Colorado, Delaware, the District of Columbia, Maryland, New Jersey, New York, Oregon, Pennsylvania, Virginia, Washington, West Virginia, or Utah. The construction and redevel - opment loan program offers: • Two-close construction financing for one-unit primary residences • Loan amounts up to $1.5 million • End loan financing for up to 95 percent LTV • Interest-only payments during construction • Construction terms up to 360 days Several other banks also work closely with state agencies to offer specialized financing to fill certain unfilled niches. For example, Androscroggin Bank offers Maine State Housing, Land and Constructions Loans. Perhaps the most compelling type of mortgage for many of the financial institution's borrow - ers are the Wealth Builder Home Loans, which help homeowners build equity more quickly by using upfront money to buy down the interest rate, and shorten the term of the loan. The 15- and 20-year mortgage loans are for new purchases, with the 15-year also available for refi - nancings. Both loans offer sharply lower interest rates the first seven years to help borrowers build equity more quickly. Among the loans' other features are a LTV of up to 103 percent; no down payment other than points (which can be financed) paid to reduce the initial rate; no private mortgage insurance; greater un - derwriting flexibility and options other than current government loan programs and availability for first-time and repeat buyers. Grand Rapids, Michigan-based Northpointe Bank offers several "The lending officers are at the family's soccer games and football games, it's not just a big bank box in the sky." —Thomas Booker III, Managing Director, The Collingwood Group