First Guaranty Mortgage will participate in the Homeowner’s Assurance Program, an action plan designed to reverse the impact of the mortgage crisis in low-income communities nationwide.
Created by the National Association of Real Estate Brokers, the program provides capital for the purchase of nonperforming loans and real estate-owned properties throughout 25 markets throughout the nation. The intent is to keep families in their homes through loan loss mitigation or sell the properties to other low-income families.
First Guaranty will pre-qualify borrowers who want to purchase a house via the program. The bank will begin work in Atlanta, Houston, Los Angeles, Baltimore and Miami, and then expand to the 20 other market HAP operates in.
James Cromartie, who is heading the program for First Guaranty, said the bank is the preferred lender on all new mortgages originated through the program for homebuyers referred by NAREB. First Guaranty will provide financing options, such as 203k renovation lending, to facilitate the REO sales.
The move by First Guaranty is another step to diversify its mortgage business. In August, the wholesale and retail lender put all of its related products into a one-stop shop it calls Correspondent’s Edge. The niche-focused product line includes manufactured housing loans and rehabilitation loans such as a Department of Housing and Urban Development 203k or Fannie Mae HomePath loan.
"Correspondent’s Edge should provide (correspondent lenders) with additional tools and offerings, and widen the market for many of the newer correspondents making the transition from third-party originator to correspondent lender," Andrew Peters, FGMC senior vice president, said at the time.
Fannie Mae offers some 203k loans under its HomePath program, as well as other forms of financing. First Guaranty hopes to compete with larger lenders in that area.
First Guaranty, APD Solutions and Home Depot (HD) unveiled a "Rebuild the Dream" initiative in May to accelerate the resale of REOs and help rebuild the housing stock by reducing time to sell these properties while boosting prices on homes that otherwise might be marketed in a state of disrepair.
The goal of HAP is to engage 10,000 to 20,000 families in 2012, First Guaranty's Cromartie said. HAP's fund holds about $1.2 billion for the purchase nonperforming loan and REO properties.
In August, NAREB began working with Wall Street investors to buoy minority communities impacted by America's foreclosure crisis. HAP organizers are set on spending $200 million per quarter.
“HAP is a promising and practical approach to a national nightmare,” Cromartie said. "We cannot wait to go into these communities and start making a difference."