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ACORN AND FANNIE MAE TO LAUNCH EXPERIMENTAL 11-CITY LOW-INCOME HOMEOWNERSHIP PILOT PLAN; GE MORTGAGE COMMITS TO INSURE LOANS

 WASHINGTON, Feb. 25 /PRNewswire/ -- ACORN, the community organization; Federal National Mortgage Association (Fannie Mae) (NYSE: FNM), the nation's largest source of mortgage funds; and GE Capital Mortgage Insurance Corporation, the nation's largest mortgage insurer; today announced the one-year test of a $55 million, 11-city, experimental lending plan designed to increase homeownership opportunities for people with lower incomes or non-traditional credit histories.
 The pilot, which experiments with lending requirements even more flexible than those of the popular Community Home Buyer's Program (generally serving families with incomes in the $25,000 to $40,000 range), will reach home buyers with incomes in the $15,000 to $30,000 range. The experiment allows borrowers to contribute as little as 3 percent or $1,000 (whichever is less) of their own funds towards the down payment on mortgages for owner-occupied, single- family homes (and a very limited number of owner-occupied 2- to 3-family homes). A total of 5 percent down payment is required, but the additional funds may come from other sources such as church, employer, nonprofit, or government.
 Applicants will first receive in-depth counseling by ACORN on the home-buying process, on credit issues, and on qualifying for a mortgage. Those who have gone through the counseling will then be referred to participating local lenders who will consider allowing a borrower's income and down payment funds to come from non-traditional sources. Borrowers without established credit histories also will be considered on the basis of rent and utility payments.
 The pilot, proposed by ACORN and developed with Fannie Mae and GE Capital, will be limited to borrowers with incomes generally at or below 60 to 80 percent of their area's median in Austin, Texas; Chicago; Dallas-Ft. Worth; Houston; Milwaukee; Minneapolis-St. Paul; New York; Philadelphia; Phoenix; St. Louis, and Washington, D.C. Fannie Mae has agreed to purchase the nearly 1,000 mortgages made by local lenders who are participating in the pilot program. GE Capital has agreed to provide the required mortgage insurance; other mortgage insurers are expected to join the program over time.
 "Fannie Mae's extensive affordable housing effort, which has served more than 125,000 households over the past two years, is the result of working closely with more than 1,100 partners around the country, including community based housing groups. The housing finance system benefits from proposals such as ACORN's, which continue to create new opportunities for people whose housing needs are still unmet including those with very modest incomes, non- traditional sources of funds, or no formal credit histories," said Franklin D. Raines, Fannie Mae's vice chairman.
 "This ACORN/Fannie Mae pilot is a major blow against the redlining of minority and low- and moderate-income urban neighborhoods," added Maude Hurd, president of ACORN. "With ACORN counseling the home buyers, with local lenders writing the loans, with Fannie Mae buying the loans from lenders, and with GE Capital insuring the loans, our communities can't lose."
 "We are committed to helping people with small down payments buy homes they are willing and able to afford," said Gregory T. Barmore, president and chief executive officer of GE Capital Mortgage Corporation. "The program we are announcing today will help hundreds of low-income families buy homes whose housing needs have previously been unmet."
 Under the pilot program, Fannie Mae and GE Capital will consider the following exceptions to their underwriting guidelines:
 -- Fannie Mae recognizes that non-traditional methods of savings exist in ethnic cultures. Working with ACORN and lenders, Fannie Mae will consider these savings methods as part of the credit history.
 -- Income from child support, which is not court ordered, may be considered with acceptable documentation, including canceled checks, money order receipts and bank statements.
 -- For home buyers moving from public assistance to employment, Fannie Mae will allow lenders to use flexibility when considering the minimum employment period. Also, Fannie Mae considers public assistance as a source of income.
 -- Down payments of less than 3 percent, but no less than $1,000, are combined as a part of a public or non-profit program (churches, unions, HUD programs, and employers) to enhance affordability if the borrower does not have sufficient funds from his/her own resources to make the 3 percent down payment.
 -- Two- and three-unit buildings, where the buyer lives in one of the units, will be permitted with down payments as low as 5 percent in St. Louis, Chicago, New York and Washington, D.C.
 -- Lower income home buyers without easy access to banks and thrifts will be able to save funds at home if the funds can be documented.
 -- To benefit older urban neighborhoods, loans will be approved for the program by the appraised value and/or sales price of the property; the number of vacant houses on the block will not make a loan ineligible for the pilot.
 -- Buyers who have had credit problems in the past due to unemployment, illness, or divorce can become eligible for a loan if they have 1) paid off their bank debts or are on payment plans, 2) have at least one year of good credit and 3) have gone through ACORN counseling.
 The pilot will be available to home buyers in May. Interested home buyers in the 11 pilot cities should contact their local ACORN office for more information.
 ACORN is a community organization of 100,000 low- and moderate- income families in 27 states, which organizes around economic and community issues. ACORN stands for the Association of Community Organizations for Reform Now.
 GE Capital Mortgage Corporation, based in Raleigh, N.C., is a network of affiliated real estate finance businesses. GE Capital, its parent company, is a wholly-owned subsidiary of General Electric Company (NYSE: GE), and is a diversified financial services company with assets exceeding $92 billion. Headquartered in Stamford, Conn., GE Capital's activities include equipment management, mid-market financing, specialized financing, speciality insurance, and consumer services. GE is a diversified manufacturing, technology, and services company with operations worldwide .
 Fannie Mae, the USA's Housing Partner, is a congressionally chartered, shareholder-owned company and the nation's largest investor in home mortgages.
 An initial list of lenders who will be participating in the pilot is listed.
 Initial Participating Lenders
 Fannie Mae/ACORN Initiative
 FBS Mortgage Corporation (First Bank System)
 Minneapolis
 Marquette Bancshares, Inc.
 Minneapolis
 Metropolitan Federal Bank, FSB
 Minneapolis
 Continental Bank
 Philadelphia
 Fidelity Bank
 Philadelphia
 Mellon Bank/PSFS
 Philadelphia
 PNC Bank (formerly Provident Bank)
 Philadelphia
 Chemical Bank New York
 New York
 Bank of New York
 New York
 National Westminister USA
 New York
 Chase Community Development Corporation
 New York
 Magna Bank
 St. Louis
 Texas Commerce Bank
 Dallas-Ft. Worth, Houston
 NationsBank
 Dallas, Houston, Washington, D.C.
 -0- 2/25/93
 /CONTACT: Bruce Dorpalen of ACORN, 215-236-1220; Tom Marder of Fannie Mae, 202-752-7608; or Jeannette Bernay of GE Capital, 919-846-4321/
 (GE FNM)


CO: Association of Community Organizations for Reform Now; Federal
 National Mortgage Association; GE Capital ST: District of Columbia IN: FIN SU:


IH-MH -- DC018 -- 0559 02/25/93 16:34 EST
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