Despite the gloom and doom of the news these days, it should be a great time to buy a home. After all, interest rates are low and home prices are down.
First-time homebuyers are poised to take advantage of this situation. These buyers are needed now more than ever, because they are good candidates to purchase foreclosed homes, of which we have a surplus. They are the ones with the greatest potential to stabilize the market.
Unfortunately, in the wake of the collapse of the subprime lending industry, many conventional lenders overreacted. They tightened their underwriting standards so much that many first-time buyers, especially those with modest incomes, can no longer qualify for a loan. MassHousing’s mission is to provide loans to low- and moderate-income homebuyers, and our underwriting standards, while prudent, are more flexible than most lenders. It’s a solution for many would-be homeowners, as long as we have capital to fund our loans. Fortunately, MAR has been immensely helpful in assisting in securing these needed funds.
To raise capital, MassHousing sells a particular type of bond on Wall Street called a mortgage revenue bond. Unlike typical state bonds that are used to build roads or bridges or the like, these are taxexempt “private activity bonds,” which means they’re used to raise money to lend to private parties (homebuyers), but for a public purpose (affordable homeownership).
The volume of bonds that MassHousing can sell in a year is determined by the Governor’s administration. We must compete every year for a limited pool of these private activity bonds, along with other agencies that use similar bonds to fund their missions, like providing affordable student loans and low-cost economic development loans for businesses.
At a recent hearing at the State House, MAR CEO Robert Authier advocated vigorously for MassHousing to receive considerable bonding authority to make loans to first-time, lowerincome homebuyers. It was the continuation of a partnership that grows stronger every year, much like the recent joint effort by both organizations on “Opportunity Knocks,” a series of homebuyer fairs and coordinated open houses all across Massachusetts. These fairs helped to remind potential buyers that it is a good time to buy a home, with the help of a trustworthy REALTOR® and a safe, predictable low-cost loan from MassHousing.
REALTORS® are often the most influential people when it comes time for a homebuyer to find a lender. In this new era of responsible lending, and with the housing market hanging precariously in the balance, it is more important than ever that REALTORS® give their clients information that will help secure them a loan that the borrower can truly afford for the long term and that will result in a sustainable homeownership experience.
Thanks to the extraordinary efforts of CEO Robert Authier, President Gary Rogers, immediate past President Susan Renfrew, and the members of MAR, referrals made to homebuyers are increasingly for MassHousing loans.