Wisconsin HFA Re-Enters Mortgage Market With Help from Fannie
The Wisconsin Housing and Economic Development Authority (WHEDA) will re-enter the affordable home loan market March 1, 2010 with the help of mortgage giant Fannie Mae (FNM). WHEDA was created in 1972 to offer loans to first-time homebuyers with moderate incomes. It stopped offering the loans in October 2008, because of its inability to raise capital to fund the mortgages. The WHEDA Fannie Mae Advantage is a product developed by the GSE exclusively for Housing Finance Agencies (HFAs). It includes a low-cost, 30-year fixed interest rate for borrowers with as little as $1,000 upfront. The product includes no private mortgage insurance requirement and a job-loss payment protection, which covers six months of mortgage payments if the borrower loses his or her job. According to Carl Riedy, vice president of the public entities channel at Fannie, WHEDA is the first HFA to offer the new product. “The world was very different in October 2008 when we were forced to shut down our program,” said WHEDA executive director Antonio Riley. “Times have changed in the 18 months since we last wrote loans. But we’re confident that the new product we’re offering, the WHEDA Fannie Mae Advantage, is going to meet this new reality as well as the expectations of the marketplace.” HFAs issue mortgage revenue bonds (MRBs) to fund the investments in single-family mortgages. When the capital markets dried up at the end of 2008, so did the bonds and consequently funding for entities such as WHEDA. The turmoil sparked higher mortgage rates, keeping WHEDA from offering the low-cost loans. In September 2009, the US Treasury Department began initial discussions to finalize a program to provide liquidity for the HFAs. And in January 2010, the Treasury, working with the Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA) completed implementing the HFA Initiative. Under the Initiative, the New Issue Bond Program (NIBP) supported new lending from the HFAs, and the Temporary Credit and Liquidity Program (TCLP) delivered relief to the agencies’ financial strains. The Treasury bought $325m of WHEDA’s long-term bonds in 2010, allowing its operations room to relaunch. “Supporting the work of state and local HFAs is critical to the Administration’s broader initiative to stabilize the housing market, which is helping to keep mortgage rates low and mortgage finance flowing for American households across the country,” said Treasury secretary Tim Geithner at the time. Participating WHEDA lenders have access to the new Fannie product. All borrowers must be first-time homebuyers, and they must meet income and purchase-price limits, which vary from county to county. Write to Jon Prior.