Seeking to provide more Americans with access to affordable homeownership, the CBC Mortgage Agency has launched an innovative program for buyers who have the income and credit history to purchase a home but lack sufficient funds for a down payment.
Known as Rate Advantage, the program is the first of its kind in the lending industry. Complimenting other options available through CBCMA's Chenoa Fund, it expands choices for qualified borrowers pursuing the substantial economic and social benefits of owning a home.
Rate Advantage addresses regulatory concerns raised by other down payment assistance models while enabling borrowers to enjoy significant cost savings.
"Buying a home is a cornerstone of the American Dream, and we have developed this new program to help more credit-worthy buyers make homeownership a reality for themselves and their families," said Richard Ferguson, president of CBCMA. "Rate Advantage is an important tool to help borrowers clear the down payment barrier and achieve homeownership in a responsible, sustainable way."
Under the program, borrowers who meet CBCMA's credit score and debt-to-income requirements can obtain a market rate first mortgage FHA loan coupled with a repayable second mortgage for the down payment. Compared to other methods of providing down payment assistance, the Rate Advantage package results in significant monthly payment savings for borrowers.
CBCMA continues to offer an alternate avenue for qualified buyers, the DPA Edge Program. Under this approach, eligible borrowers can apply for a grant or forgivable second mortgage to cover their 3.5% minimum down payment requirement when purchasing an FHA-insured home.
"Our goal is to provide home buyers with multiple assistance options to increase the likelihood of homeownership success," Ferguson said. "We believe that by helping responsible homebuyers meet the down payment investment required for a mortgage, we can create healthier communities by improving the balance between homeownership and other housing types. That benefits our entire economy."
To help its borrowers sustain homeownership, CBCMA recently entered a partnership with HLP, a Baltimore-based nonprofit, to provide post-purchase outreach and financial education. Under the initiative, a HUD-approved housing counselor gives homeowners targeted financial advice to help them make mortgage payments on time.
Homeownership rates fell precipitously over the last ten years, and the decline was steepest among minority households, millennials and single-parent households. Because of recent lending restrictions, there is a need for programs like Rate Advantage – home financing tools to help buyers who have good credit and a responsible debt burden, but who have been unable to save enough for a down payment.
Along with Rate Advantage, CBCMA has launched a website (CRANoteExchange.com) that allows banks in need of credits under the Community Reinvestment Act to purchase second mortgage notes created under the new program. This site is intended as a portal for all holders of CRA-eligible Notes to create liquidity that will help government better serve communities most in need.
In a related action, CBCMA is inviting members of the National Council of State Housing Agencies to post Notes for sale on its CRANoteExchange.com website. The strategy is designed to enhance the new market of CRA-backed down payment assistance while fortifying state housing programs.
Founded in 2013, CBC Mortgage Agency is a nationally chartered Housing Finance Agency. It is a subsidiary of the Cedar Band Corp., a federally chartered tribal corporation founded by the Utah-based Cedar Band of Paiutes. More information can be found at chenoafund.org.