More House 4 Less A Maryland Homeownership Tool

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More House 4 LessA Maryland Homeownership Tool
An affordable/workforce homeownership initiative
of the Maryland Department of Housing and
Community Developments (DHCD) Maryland Mortgage
Program
Stephen D. Silver, Chief Financial Officer ABA
Forum on Affordable Housing and Community
Development Workshop C Homeownership Tools May
26, 2006
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Contents

• Introduction to Maryland DHCD
• Homeownership Landscape in Maryland
• Maryland Mortgage Program (MMP)
• Maryland Homeownership Challenge
• More House 4 Less (MH4L) Meets the Challenge
• Who MH4L Can Serve
• MH4L Results
• Ongoing Homeownership Opportunities

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Introduction to Maryland DHCD
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DHCD Mission

• The Department of Housing and Community
  Development is dedicated to improving the quality
  of life in Maryland by working with its partners
  to revitalize communities and expand
  homeownership and affordable housing opportunities

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DHCD in Maryland

• DHCD is a cabinet-level state agency, authorized
  to issue tax-exempt revenue bonds and administer
  federal low income housing tax credits (LIHTC) in
  support of its housing and community development
  mission
• Victor L. Hoskins was appointed in 2003 by
  Governor Robert L. Ehrlich, Jr. to be Secretary
  of DHCD
• DHCD enjoys the strong support of both the
  Governor and the state legislature capital
  budget for housing and revitalization for FY 2007
  is 69.5 million

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Overview of CDA as a Revenue Bond Issuer

• The Community Development Administration (CDA) is
  the agency within DHCD that is authorized to
  issue tax-exempt Mortgage Revenue Bonds (MRB)
• CDA manages both single family and multifamily
  housing revenue bond programs
• Investors purchase CDA bonds at lower interest
  rates because the interest income is tax free
• CDA uses bond proceeds to fund loans at lower
  interest rates to eligible homebuyers under
  DHCDs Maryland Mortgage Program (MMP) the
  States single family homeownership program

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Overview of MMP Loan Origination

• CDA is NOT a direct lender
• CDA partners with well-known banks who become
  participating lenders
• Participating lenders originate CDA-eligible
  loans in addition to their own loan activity
• CDA eligibility requirements are dictated by
  federal tax-exempt rules that include
• house price limits,
• household income limits, and
• first-time home buyer requirements
• CDA pays lenders up to a 2 fee

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Homeownership Landscape in Maryland
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Homeownership Landscapein Maryland

• 2005 Homeownership Rate 71.2
• Up from 67.4 in 2000
• Ranking improved from 29th to 25th
• 2000 Minority Homeownership Rate 52.1
• Up from 45.2 in 1990
• Ranking improved from 31st to 14th
• Grew 2.4 times faster than national average

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Maryland Mortgage Program (MMP)
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Maryland Homeownership Challenge

• Incomes not keeping pace with rising home prices
  low income and workforce households feeling
  squeeze
• Median home prices up 102 from 2000 to 2005
• Median household incomes up only 12 over same
  period

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More House 4 Less (MH4L) Meets the Challenge

• DHCD needed to create and promote a new
  homeownership initiative to better serve
  workforce/affordable housing needs in response to
  this challenging housing market
• More House 4 Less (MH4L) was launched by Lt. Gov.
  Michael S. Steele in 2003 to re-invigorate the
  Maryland Mortgage Program (MMP) and meet the
  challenge

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MH4L Meets the Challenge

• The MH4L mortgage initiative expanded housing
  affordability by offering
• Below market, fixed interest rates with various
  point options
• New mortgage products (interest-only and
  longer-term mortgages)
• Enhanced closing cost assistance
• MH4L streamlined and improved processes,
  eliminating unnecessary policies to ensure all
  eligible Marylanders could use MH4L
• MH4L expanded marketing and outreach

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MH4L Meets the Challenge Maintained
Affordability with Various Interest Rate/Point
Options

• Recent offerings of affordable interest
  rate/point combinations available for the 30-year
  and 35-year (5-year I/O) mortgages

• Availability of below market rates are maintained
  by
• Issuance of tax-exempt bonds (including the use
  of variable-rate bonds)
• Managing bond issuance process to ensure mortgage
  funds are always available
• Efficiently managing the entire mortgage
  origination and servicing process

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MH4L Meets the Challenge New Mortgage Products

• Increased flexibility for borrowers by expanding
  from 1 product to 15
• Raised loan-to-value ratios to 100 and more by
  partnering with private mortgage insurers
• Increased borrower purchasing power by over 15
  by adding new mortgage products
• 40-year amortizing mortgage
• 35-year interest-only mortgage

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MH4L Meets the Challenge New Mortgage Products

• Enhanced affordability without sacrificing
  predictability to allow a more affordable home
  purchase
• Longer Amortizing Mortgages 40-year
• Fixed rate for life of mortgage
• Predictable payments that do not change
• Interest-only Mortgages 35-year (first 5 years
  interest only)
• Fixed rate for life of mortgage
• Long 30-year amortizing term
• Predictable payments for life of mortgage

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MH4L Meets the Challenge New Mortgage Products
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MH4L Meets the Challenge New Mortgage Products
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MH4L Meets the Challenge Enhanced Closing Cost
Assistance

• Downpayment and Settlement Expense Program
  (DSELP)
• Maryland Mortgage Program Plus (MMP Plus)
• House Keys 4 Employees (HK4E)

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MH4L Meets the Challenge Enhanced Closing Cost
Assistance

• Closing cost assistance can be used to
• Assist with settlement costs
• Pay for points to buy down the rate
• Provide for a down payment

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Who MH4L Can Serve

• DHCD can serve
• First-time homebuyers (exceptions for
  designated target areas)
• Incomes up to 125,020 (varies by
  location and household size)
• Home purchases up to 525,091 (varies by
  location)

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Who MH4L Can Serve Income and Purchase Price
Eligibility Washington, DC Metro Area
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Who MH4L Can Serve Income and Purchase Price
Eligibility Baltimore Metro Area
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MH4L Results (January 2003 thru April 30, 2006)

• Total loans 3,659
• Total loan amount 436,784,349

• Average loan amount 119,373
• Average home purchase price 121,706

• Average household income 45,356
• 54 Minority Borrowers
• 94 First-time Homebuyers

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MH4L Results

• Reservation Activity (January 1 thru April 30,
  2006)

• of Loans Reserved 1,342
• of Loans Reserved 253,547,633
• Average Loan Amount 188,933

• Loans - Conventional 59.24
• Interest-only Loans 27.65

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Ongoing Homeownership Opportunities

• Ongoing Opportunities
• Meet the dream of homeownership for new and
  existing homeowners
• Meet the challenge of rising house prices and/or
  interest rates with innovative and flexible
  mortgage solutions
• Maintain the lowest possible mortgage rates by
  utilizing creative financing techniques
• Ensure Marylanders are aware of and understand
  the benefits of MH4L

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Ongoing Homeownership Opportunities

• Future plans to meet opportunities
• More interest-only, fixed-rate mortgage products
• More downpayment options
• Acquisition/Rehabilitation program
• Refinance program to help homeowners with exotic
  mortgages
• No mortgage insurance product

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DHCD Contacts

• Community Development Administration
• Tonna Phelps, Director
• Single Family Programs
• 100 Community Place
• Crownsville, Maryland 21032
• Telephone [phone]
• Web sites
• www.mdhousing.org
• www.morehouse4less.org