JACKSON, Mich.—Michigan Community CU is covering mortgage down payment costs for certain first-time homebuyers, up to $10,000 per borrower.
The credit union this summer introduced a program that leverages the Federal Home Loan Bank of Indianapolis’ Homeownership Opportunities Program (HOP). The offer is backed by $500,000 in HOP grants for in 2014.
“So we could help 50 members just this year,” shared Mortgage Originator Beth Ploof, who said the program will continue next year. “We serve a middle-class market; they are hard-working blue-collar people.”
The $128-million CU late last year began seeing more members stop in for loans who had the ability to cover the monthly mortgage payment, but lacked money for a down payment.
“Whatever the reason, and some of that is surely due to the after-effects of the recession, many members who wanted a home loan just did not have the cash saved,” she said.
The grants are for first-time homebuyers at or below 80% of area median income, and they also cover closing costs. The money does not have to be repaid if the owner remains in the home for at least five years and is current on payments. The money improves eligibility for mortgage financing, as well, added Ploof.
“But you have to have a solid credit score,” she said. “This program is not for low-score borrowers. It’s for credit-worthy borrowers who have good, steady income.”
Ploof explained that the Federal Home Loan Banks do not get involved in underwriting the loans. “They allow the financial institution to make their own decisions. They trust the credit union to be good stewards of the funds.”
With the program still in the implementation phase, and not backed by advertising yet, Ploof said the CU has made one disbursement of $10,000.
When the credit union promotes the offer, Ploof expects it will boost sagging first mortgage business. “We are seeing our mortgage business slow significantly from last year.”
Ploof predicts the program will give a needed boost to the local economy.
“The credit union is thrilled to offer this down payment assistance so more of our members have the opportunity to purchase a home,” she said. “It is a great opportunity for members who otherwise might, at least for now, miss the experience of home ownership.”
-Ray Birch