Agency recognized for innovative Purchase and Rehabilitation loan program for Massachusetts homebuyers and the execution and expansion of new loan program for the owners of multifamily housing through the Federal Financing Bank.
The National Council of State Housing Agencies (NCSHA) recently presented MassHousing with two awards for program excellence at the NCSHA's annual conference in Miami.
MassHousing was honored in the Homeownership category of Home Improvement and Rehabilitation for the Agency's Purchase and Rehabilitation Program, which is the only formal mortgage program in Massachusetts that provides financing for both the acquisition and repair of neglected properties suffering from deferred maintenance.
MassHousing finances up to 97% of the purchase price of a home plus the cost of rehab. The cost of renovations is limited to 50% of the "As-Completed" appraised value of the property.
MassHousing's Purchase and Rehab mortgages are concentrated in the state's Gateway Cities, legislatively defined by populations with incomes below the state median, and education levels below the state average.
MassHousing is the first lender in the country to be approved by Fannie Mae to originate its "Home Style" loan program which allows MassHousing to provide purchase and rehab loans as well as refinance rehab loans for both "move-up" buyers and homeowners
Over the past six years the MassHousing Purchase and Rehabilitation Program has helped nearly 350 families purchase and repair homes in "at-risk" neighborhoods with $60 million in overall financing. The program has succeeded with the support of local municipalities and community conscious non-profit organizations and MassHousing-approved lenders.
"The MassHousing Purchase and Rehabilitation Program not only helps qualified homebuyers buy homes in need of repair but it helps stabilize neighborhoods by reviving blighted and abandoned properties," said MassHousing Executive Director Tim Sullivan. "This award from NCSHA also highlights the commitment of our municipal, non-profit and lending partners who work closely with us to provide homeownership opportunities for low- and moderate-income homebuyers who are being underserved in the traditional mortgage market."
MassHousing was also honored in the Rental Housing Category for Preservation and Rehabilitation for the Agency's work to implement the Federal Financing Bank (FFB) Risk Sharing Initiative.
The FFB program resulted from a partnership established in 2015 with the FFB, an instrumentality of U.S. Department of the Treasury, the U.S. Department of Housing and Urban Development (HUD), and state Housing Finance Agencies (HFAs) including MassHousing.
Under the program, the FFB purchases a 100% participation interest in the HFA's risk sharing loan, which enables HFAs to provide lower interest rates on loans to owners of subsidized rental housing, giving them new incentives to refinance, make capital improvements and lock in long-term affordability for lower income residents. These lower interest rates are typically in the low to mid-3% range.
MassHousing closed the second FFB transaction in the country but the first in which there were simultaneous closings on the HFA borrower loan and FFB participation. In connection with that closing, MassHousing worked with HUD and FFB to standardize program agreements and financing documentation that made future loan closings simultaneously for taxable, permanent financing and eliminated HFAs having to fund borrower loans in advance of FFB's purchase payment.
In February 2016, MassHousing made a first-in-the-nation expansion of the FFB program to include the use of Low-Income Housing Tax Credits (LIHTC). The LIHTC transaction – along with $58 million in MassHousing financing - resulted in the long-term extension of affordability and major property improvements for low-income families living at the 230-unit Wood Ridge Homes in North Andover.
Since the start of the FFB Risk Sharing Initiative, MassHousing has closed approximately $240 million in financing for 12 housing communities with a total of 1,908 units. The Agency anticipates closing four additional FFB loans totaling approximately $120 million in financing for 761 housing units by the end of 2016.
Through May 2016, five other HFAs have closed $335 million in FFB financing for 21 housing communities and those five HFAs and two others are working to close an additional $215 million in FFB financing for 17 more housing communities.
"The FFB program, along with other newly developed loan products, has allowed us to offer financing for multifamily housing with lower interest rates in a highly competitive market without using valuable Private Activity Volume Cap or other public subsidies," said Sullivan. "This has resulted in our preserving and renovating hundreds of affordable apartments around Massachusetts for working families, individuals and senior citizens. It's an honor to be recognized on the national level and reinforces our commitment to meeting the challenges in the changing ways affordable housing is being financed."