True Stories: Hybrid, eNote and RON Implementation

Join expert panelists that will discuss the status of federal legislation, trends in digital adoption and how best to prepare your organization for the next generation of lending processes.

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Guaranteed Rate offers 1% down mortgage program through homebuyer grant with Chicago

No first-time homebuyer requirement

Guaranteed Rate announced a partnership with the City of Chicago and Chicago Infrastructure Trust to help bring more Chicago residents into homeownership through a new 1% down payment loan.

"Mayor Emanuel remains focused on his goal of building a stronger, more durable city economy that gives every hardworking Chicagoan a chance to participate," said Leslie Darling, Executive Director of the Chicago Infrastructure Trust. "Through our partnership with Guaranteed Rate, this Program will strengthen our neighborhoods by providing working- and middle-class Chicago home buyers with the financial support they need for down payments and closing costs."

The Chicago Home Buyer Assistance Program, which went in effect nearly three weeks ago, offers up to 7% of the final loan amount as a forgivable grant.

American Financial Network, Home Trust Mortgage, Pacor Mortgage Corp. and Wintrust Mortgage are also approved lenders for Chicago’s new program. 

According to the announcement, the Chicago Home Buyer Assistance Program allows buyers to have an annualized income up to $133,000, regardless of family size, for conventional loans.

The program requires the borrower to contribute the lesser of 1% of the home purchase price or $1,000.

In addition, borrowers must purchase a home within the city limits. Single-family homes, condominiums, town houses and up to four-unit multi-family buildings are eligible. Borrowers can have a FICO score as low as 640, and there’s no first-time buyer requirement.

Those using the Chicago Home Buyer Assistance Program have to purchase a home or condo in Chicago and must occupy the home as their primary residence.

The fine print also requires program participants to reside in the purchased property for at least five years before selling or refinancing.

In the situation that they don’t wait five years and sell or refinance before that time, the homeowner will have to pay back a prorated amount of the grant. After five years of on time mortgage payments, the grant is completely forgiven.

Freddie Mac will then purchase the loans through it Home Possible Advantage for Housing Finance Agency’s program.

Kasey Marty, executive vice president of secondary marketing with Guaranteed Rate, explained in an interview with HousingWire that while Guaranteed Rate is licensed in all 50 states, it was founded in the city of Chicago and is the largest originator in the city.

He noted that program has been in the works with the city, and while Guaranteed Rate is the first city-approved lender/servicer to start offering it, there are two other lenders who were recently approved to start offering the program as well. 

Since the program was launched two and a half weeks ago, they’ve seen more than 100 pre-approval applications come through.

"Guaranteed Rate was founded in Chicago and remains headquartered here today," said Victor Ciardelli, CEO of Guaranteed Rate. "We are very grateful for the opportunity to partner with the City of Chicago and the Chicago Infrastructure Trust to help our fellow Chicagoans more easily refinance or purchase their homes."

Guaranteed Rate is unique since it is partnering with the city to start originating these loans, but it isn’t the only lender walking into the low down payment space.  

Quicken Loans quietly began offering a 1% down mortgage last year unbeknownst to many in the market.

Interestingly enough, the program is also a partnership with Freddie Mac, which was announced in October 2015.

Meanwhile, Bank of AmericaWells FargoJPMorgan Chase, and many other major lenders grabbed headlines with 3% down loan programs earlier this year. 

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