Freddie Mac to Aid Storm Victims Through Low Cost Mortgages
As the impact of storms from their hurricane season is still being felt, residents of Mississippi can at least take comfort in assistance from Freddie Mac. The mortgage investor recently announced the availability of $40 million in low cost mortgages intended to promote homeownership and recovery efforts throughout Mississippi’s Hurricane Katrina disaster areas.
Specifically, Freddie Mac is purchasing $40 million of Mississippi Home Corporation (MHC) bonds that will be used to finance mortgages with a 5.61 percent interest rate for an estimated 350 borrowers. The company is buying the bonds at a price that will enable MHC to make available an additional $1.2 million to cover three points of down payment or closing cost assistance, which works out to an estimated $3,000 per borrower.
This sort of help should contribute to the veracity of the previously reported forecast of a rebounding housing market in the area.
Giving thanks to Freddie Mac
Governor Haley Barbour said: “Mississippi is grateful to Freddie Mac and Mississippi Home Corporation for this welcome injection of affordable mortgage credit to help the victims of Hurricane Katrina rebuild their lives and livelihoods. I congratulate them and thank them for their hard work and commitment to finance the restoration of so many Mississippi homes and neighborhoods.”
The mortgages, which can be used to repair or purchase homes in federally designated storm disaster areas, are available on a first-come, first-serve basis.
“Because we are buying these tax-exempt mortgage bonds for our investment portfolio,” said Patricia Cook, Freddie Mac’s executive vice president of Investments and Capital Management, “we can safely price them so their rate is a quarter point below market.”
This announcement also marked the first installment on Freddie Mac’s commitment to fund up to $1 billion in below-market rate mortgages for storm recovery in Mississippi and Louisiana. The hope is that a real estate boom could continue in areas hit strongly by Hurricane Katrina.
In an effort to help more borrowers caught in the 2005 storms, MHC is waiving its usual first-time homebuyer requirement and raising its cap on home repair loans from $15,000 to $150,000 under special provisions in the 2005 Katrina Emergency Tax Act. To be eligible for the new mortgages, borrowers can earn no more than 140 percent of their area median income.
“Energizing Mississippi’s housing market is more important than ever,” said Dianne Bolen, MHC’s Executive Director as she reflected on the recent destruction of hurricanes Katrina and Rita. “The financial support of Freddie Mac, along with the support of Governor Barbour, helps reassure the citizens of the Gulf Coast that some sense of normalcy is within reach,.”
This certainly isn’t the first - or last - time Freddie Mac has offered assistance to those in need. Earlier in the year, the company helped to finance a construction project in Gainesville in an effort to boost the affordability in that sector’s market.
