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WHEDA to Begin Lending Again

The ""Wisconsin Housing and Economic Development Authority"":http://www.wheda.com/root/ (WHEDA), an independent state authority that works with lenders to provide low-cost financing for housing and small business development, announced Friday that with the help of ""Fannie Mae"":http://www.fanniemae.com/kb/index?page=home, it has re-entered the affordable home loan market after more than a year of not funding single family loans.

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""WHEDA is back, and we're ready to do business,"" said Antonio Riley, WHEDA executive director. ""We want to regain our position as the state's affordable housing leader, and we are ready to do our part to reinvigorate the housing market in Wisconsin.""

As a Housing Finance Agency (HFA), WHEDA issued tax-exempt mortgage revenue bonds (MRBs) to fund investments in single-family mortgages. However, like many other HFAs, WHEDA was forced to suspend its home loan program due to significant disruptions in the capital markets, where its bonds are bought and sold. The turmoil in the capital markets produced higher mortgage rates and made it impossible for WHEDA to offer low-cost home loans.

While investor interest in tax-exempt MRBs has rebounded, it wasn't enough to enable WHEDA to resume normal lending activity. WHEDA's re-entry to the market is due in large part to the U.S. Treasury's announcement that, through Fannie Mae and Freddie Mac, it will invest in the long-term portion of MRBs issued by HFAs. In addition, Treasury's decision to buy $325 million of the HFA's long-term bonds in 2010 is providing WHEDA the lower-cost cash it needs to fund its investment in single-family mortgages. As a result, WHEDA will once again be able to make affordable home loans.

""The world was very different in October 2008 when we were forced to shut down our program,"" Riley said. ""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.""

The WHEDA Fannie Mae Advantage, available beginning March 1, 2010, aims to help more low- and moderate-income Wisconsin families become homeowners with very little cash out of pocket. This new offering is based on Affordable Advantage, a product developed by Fannie Mae exclusively for HFAs as part of an agreement between Fannie Mae and the National Council of State Housing Agencies, the trade association that represents state HFAs.

""WHEDA is the first HFA nationwide to become a participating member of the agreement and offer the new Fannie Mae Affordable Advantage product,"" said Carl Riedy, VP of the public entities channel at Fannie Mae.

Through this new product, WHEDA will offer a low-cost, 30-year fixed interest rate to borrowers for as little as $1,000 cash out of pocket, and borrowers with excellent credit are eligible for 100 percent financing. The product includes reduced mortgage fees and job loss payment protection, which covers up to six months of mortgage payments in the event of an involuntary job loss. In addition, the WHEDA Fannie Mae Advantage can be paired with the home buyer tax credit.

Existing participating WHEDA lenders will have access to the WHEDA Fannie Mae Advantage. Because the loans will be funded with the proceeds of tax-exempt MRBs, all borrowers must be first-time buyers and meet income and purchase price limits.

""We're realistic that credit is tighter to get these days,"" Riley said. ""We know that we won't be able to serve necessarily the same folks as in the past, but we think Fannie Mae's Affordable Advantage product is going to be the right tool the state needs to get people into safe, affordable homeownership.""

About Author: Brittany Dunn

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