MassHousing Blog

Opportunity is Knocking!

With the meltdown in the subprime lending business there is a unique opportunity for MassHousing lenders to reach out to those subprime borrowers who may have qualified for mortgage financing through any one of MassHousing's mortgage programs for low- and moderate-income homebuyers. MassHousing combines products and guidelines that create safe, affordable and sustainable financing options for low- and moderate-income homebuyers purchasing a home or refinancing an existing mortgage. MassHousing's programs reach well beyond the traditional first-time homebuyers and now include financing programs for borrowers moving up to their second or third home, as well as homeowners looking to refinance out of an exotic mortgage loan.

We are surprised by the number of mortgage brokers who are accessing our programs through third party relationships with direct lenders. At the end of October third-party originators outnumbered direct lenders for the first time in MassHousing's history.

Once thought of as only a first-time homebuyer program offered through community banks, MassHousing is much more. Those lenders who recognize the benefits of our programs for their customers may be able to take advantage of a unique opportunity to use those programs to recapture business lost to subprime and predatory lenders. With the flight to quality taking place in the market, opportunity is knocking.

Ten-Year Rule

Word from Washington is that there may still be hope for an issue that seems obscure – but is very important to Housing Finance Agencies across the country.This is the Repeal of the Ten Year Rule.The Ten-Year Rule is a provision that was added to the Mortgage Revenue Bond (MRB) program in 1988.It requires states, beginning ten years after issuing most MRBs, to use homebuyer payments on mortgages financed by those bonds to repurchase the bonds rather than to make new mortgages to additional qualified purchasers.

The effects of the Ten-Year Rule in Massachusetts have been devastating. We estimate that this provision has cost Massachusetts more than $1 billion since 1993. In addition, it is projected that these losses will average close to $72 million each year from 2008 – 2015.

New hope for repeal of the Ten-Year Rule comes from legislation that Congressman Rangel, Chairman of the House Ways and Means Committee, is currently working on for this Congress to modernize the Low Income Housing Tax Credit.

Massachusetts’s own Ways and Means Committee Member, Congressman Richard Neal, has been a long-time lead advocate of the MRB program within the Committee, and also led the successful effort to increase the Bond cap and the modernization efforts several years ago.

We think that Congressman Neal’s support of this issue again would carry great weight with Chairman Rangel, and MassHousing has already written to Congressman Neal asking for his support in this effort.

Glimmers of hope for housing affordability

The Greater Boston Housing Report Card, issued by the Boston Foundation, Northeastern University and CHAPA shows that housing in the Boston area has become only slightly more affordable as home prices have dropped.  Be sure to take a look at the study.  In a Boston Globe article on the same topic, MassHousing's Peter Milewski weighs in as to why the down market is good news for first time homebuyers.  The Globe is covering the slowdown in the mortgage market quite a bit.  Check out this recent Globe article as well for tips on how to deal with an increasing mortgage payment due to an interest rate re-set.  If you are a homeowner struggling with an unaffordable mortgage, call 1-888-995-4673.  You'll get help from the Home Ownership Preservation Foundation or a local foreclosure prevention specialist, and you might end up qualifying for a new, fixed rate refinancing loan from MassHousing.