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MICHIGAN NATIONAL BANK AND FANNIE MAE JOIN IN $5 MILLION AFFORDABLE HOUSING PARTNERSHIP; PLAN OFFERS LOWER DOWN PAYMENTS

 GRAND RAPIDS, Mich., July 28 /PRNewswire/ -- More than 120 families are expected to benefit from a $5 million affordable housing partnership announced today by Michigan National Bank (MNB) and the Federal National Mortgage Association (Fannie Mae) (NYSE: FNM).
 Fannie Mae will purchase up to $5 million in mortgages under Michigan National Bank's Purchase Opportunity Program (POP) for first- time home buyers, and the Community Rehabilitation Opportunity Program (CROP), for first-time buyers of homes in need of substantial rehabilitation. By agreeing to purchase the loans, Fannie Mae helps Michigan National offer the mortgages at substantially lower interest rates. The current rate would be 7-3/8 percent for a 30-year fixed rate mortgage. Down payments under both programs are as low as 5 percent.
 "This partnership with Michigan National Bank will allow more Michigan families to enjoy the benefits of homeownership," said John R. Hayes, senior vice president of Fannie Mae's Chicago-based Midwestern regional office.
 "We think the ideal candidate for this program is someone who has been renting up to this point, has good credit and stable income, but has not been able to save the necessary cash to close on a home purchase," said Jeff Wenzel, Manager of Special Programs at Michigan National Bank. "Many people tell us that they can handle a $500-$600 rent payment, but want to enjoy the advantages of homeownership," he added.
 Both programs provide a fixed rate first mortgage of up to $50,000 with a 30-year amortization. Under the POP structure, Michigan National Bank separately finances the closing costs, tax escrow and a repair contingency fund with a fully amortizing 60-month second mortgage that carries a 6 percent interest rate. Any balance at the end of the loan term will be used to reduce the first loan, thereby increasing the borrower's equity.
 Under the CROP option, the lender will originate a mortgage covering 95 percent of the purchase price plus rehabilitation costs, or 95 percent of the appraised value of the home, whichever is less. The bank also will make a second mortgage to cover closing costs, escrow and prepaid items. A contingency fund for repairs is not needed because of the substantial rehabilitation of homes under the program.
 Both programs allow lenders to use more flexible standards to document the 5 percent down payment than traditional mortgage plans. Home buyer education is required for both programs.
 For many people, the savings in initial costs can be substantial. Michigan National Bank estimates that a conventional 30-year fixed rate mortgage on a typical $50,000 home would require a down payment of $7,627.87 (based on a $47,500 mortgage, 7.625 percent current interest rate and 7.887 percent APR). But the same house purchased with a POP mortgage would require a down payment of $2,500, saving the home buyer $5,172.87 in initial costs.
 The programs are available at Michigan National Bank branches throughout the state. Michigan National Bank is the principal subsidiary of Michigan National Corporation (NASDAQ-NMS: MNCO), a diversified financial services corporation with total assets of $10.5 billion. MNB has 190 branches throughout Michigan.
 Fannie Mae doesn't lend money directly to consumers; instead, the company makes mortgage funds available through lenders such as mortgage companies, banks, thrifts, and others.
 Fannie Mae is a congressionally chartered, shareholder-owned company, and is the nation's largest source of funds for home mortgages.
 -0- 7/28/93
 /CONTACT: Ronald Laurent of Fannie Mae, 312-368-6000, or Jeff Wenzel of Michigan National Corp., 313-350-6443/
 (FNM MNCO)


CO: Michigan National Bank; Fannie Mae ST: Michigan IN: FIN SU:

TW -- DC008 -- 6677 07/28/93 09:50 EDT
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Publication:PR Newswire
Date:Jul 28, 1993
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