Housing affordability initiatives launched this spring

May 17, 2024 2:55 PM

Family Home Moving in: Happy and Excited Young Korean Couple Enter Newly Purchased Apartment. Beautiful Family Happily Embracing. Modern Home Ready for Decorations. Mortgage Loan, Investment Concept

Initiatives that aimed to reduce costs involved with purchasing a home were a key portion of the White House's activities both before and after President Biden's State of the Union speech earlier this spring.

But creating affordable housing access has long been a focus of the mortgage lending community, albeit mandated for depositories as part of the Community Reinvestment Act.

For example, prior to gaining notoriety for contributing to the excesses that created the Great Financial Crisis, Countrywide Financial and its CEO Angelo Mozilo were known as being the largest boosters of affordable housing programs.

In 1999, he announced a $30 billion increase in the company's five-year commitment to serve low-income and minority borrowers, to a total of $80 billion. The first year of the commitment, Countrywide originated $20 billion of these loans.

Here are some of the latest items, both government announcements as well as from within the industry, aimed to aid people who need assistance buying a home:

HUD to update affordable housing program

On May 15, the Department of Housing and Urban Development announced it would be putting out proposed rulemaking to modernize the Home Investment Partnership Program.

Part of the plan is to strengthen the use of this program for homeownership activities.

Through the Home program, states and other local government entities can receive flexible block grants to provide homebuyers with down payment assistance and closing costs as well as build new housing to own or rent and rehabilitate existing properties.

An April 29 letter signed by a coalition of housing groups, including the Mortgage Bankers Association, the National Association of Realtors and the American Land Title Association supported a bill introduced in both houses in Congress which would reauthorize the Home Investment Partnerships Program, increase the authorized funding level for the program to $5 billion and make several needed program improvements.

Arrive Home offers program for those that can't get a mortgage

Arrive Home, which works with lenders to provide down payment assistance and alternative credit solutions, rolled out the Earned Equity Program.

It is for consumers who are unable to qualify for a traditional mortgage. They enter into a long-term purchase contract with monthly payments controlled by an automatically renewing 10-year lease agreement, with the intention of eventually buying or assuming the property.

"The Earned Equity Program has the potential to help a large segment of consumers who are responsible and want to own a home, but lack credit solutions in today's financing industry that can help make this dream a reality," said Arrive Home CEO Matt Pettit in a press release.

Arrive Home is seeing interest from its correspondent lending partners, added Tai Christensen, president. "This program is a major step forward for Arrive Home in our efforts to facilitate responsible homeownership, broadening our offerings beyond down payment assistance and solidifying our position as a leader in affordable housing solutions."

Shared appreciation second from Click n' Close

Click n' Close, an Addison, Texas-based mortgage lender, expanded its down payment assistance offerings to include a shared-appreciation product.

"While existing homeowners have benefitted tremendously from skyrocketing home equity, that same trend has put buyers at a tremendous disadvantage," said Click n' Close CEO Jeff Bode in a press release. "By combining our proprietary DPA programs with a shared appreciation option, we're not only helping buyers get into a home more easily but also reap the benefit of homeownership from day one."

The product takes a first-lien Federal Housing Administration or U.S. Department of Agriculture loan, combines it with repayable DPA second lien in exchange for the borrower offering up to 40% of the home's appreciation during the first five years.

After the five-year period expires, the increase in value is added to the second lien and amortized over the remaining loan term.

Click n' Close is offering the product through its retail and wholesale channels.

Guaranteed Rate goes to school

Guaranteed Rate announced the second phase of its Community Engagement Initiative; the original program included the Language Access Program and the First Black Leadership Symposium.

The Chicago-based company is starting RateUniversity, which promotes financial education and culture in both English and Spanish.

This second phase also highlights Guaranteed Rate's GTM (Go to Market) plan; comprehensive, multimedia brand awareness campaigns; and ongoing recruitment from low and moderate-income markets.

Guaranteed Rate gave statistics that showed since 2019, the diversity in its sales force has grown to 23% from 16%, with a net headcount increase to 379 from 176.

In the same time period, its total funded loans from those communities increased to 29.6% from 12%.

"We have made significant strides in opening up home lending and ownership for underserved communities, but our work is far from finished," said Camilo Escalante, executive director of diverse segments, in a press release. "Traditional lending practices have overlooked Black and Latino communities, as well as low- to moderate-income areas. Our program blazes new trails with dedicated focus, specific budgets and targeted partnerships in these communities.

Chase eases affordability with temporary boost in closing guarantee

Chase Home Lending is boosting several tools to ease the affordability crunch, including temporarily boosting its on-time closing guarantee to $20,000, the company said.

The promotion runs until July 27.

"Current market dynamics have impacted the affordability of homeownership for many Americans, and at the same time, competition has only increased," said Sean Grzebin, head of consumer originations for Chase Home Lending, in a press release. "We're focused on the things we can control in this environment and that's supporting our customers all the way home."

The announcement also stresses the $96 million in Chase Homebuyer Grant funds it had provided to more than 29,000 customers since 2020. The company also points out the education resources available.

"Homebuyers don't always realize what's negotiable and what may differ from lender to lender," said Grzebin. "Being informed can help save you money in the long run."