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SHAWMUT NATIONAL OFFERS NEW MORTGAGE TO MEET THE NEEDS OF LOW- AND MODERATE-INCOME HOMEBUYERS; PARTNERSHIP OPENS NEW OPPORTUNITIES

 HARTFORD, Conn., and BOSTON, June 28 /PRNewswire/ -- Shawmut National Corporation (NYSE: SNC) today introduced a new mortgage product that puts homeownership within the grasp of many low- and moderate- income individuals who don't meet traditional underwriting guidelines.
 Robert W. Brady, executive vice president of Shawmut Mortgage Co., said, "This new mortgage product, the first of its kind in the nation, offers new and innovative underwriting standards to meet the needs of low- and moderate-income homebuyers. It will open the door of homeownership to creditworthy individuals who don't meet the traditional criteria for mortgages."
 As of July 1, Shawmut Mortgage Co., a unit of Shawmut National, will commit $25 million toward these mortgages in Massachusetts, Connecticut, Rhode Island and New Hampshire.
 The Federal National Mortgage Association, or Fannie Mae, will guarantee these Shawmut mortgages. In addition, Shawmut and PMI Mortgage Insurance Co. have agreed to co-insure these mortgages under a newly-designed risk-sharing arrangement. Shawmut is the only lender participating in this pilot program. If the mortgage proves successful, Fannie Mae and PMI could make similar agreements with other lenders.


Among the mortgage's innovative features are:
 -- Low downpayments. Buyers can obtain a mortgage on one- to
 three-family homes and condominiums with as little as 2.5
 percent of the purchase price from their own funds. The
 remainder of the 5 percent minimum downpayment can be gift or
 a grant. Normally, the full downpayment must come from the
 borrower's funds.
 -- Emphasis on income stability rather than employment stability.
 Consideration will be given to people in occupations where
 employment changes are common as well as to income from part-time
 jobs.
 -- Credit history. Individuals with limited or no credit history
 can submit rent receipts, utility bills, etc., to demonstrate
 creditworthiness. Credit is reviewed on a case-by-case basis.
 Fannie Mae guidelines previously did not allow for this much
 discretion in granting credit.
 -- Liberal income ratios. Up to 33 percent of a borrower's income
 can go toward housing expenses, and up to 38 percent of income is
 allowed for total debts on purchases of single-family homes and
 condos. The standard ratios typically are 28 percent and 36
 percent, respectively.
 -- Reserve waived. No reserve for principal, interest, taxes and
 insurance is required for single-family homes and condos.
 Normally, a two-month reserve is required.
 -- Consideration given for non-bank savings. Less emphasis is
 placed on personal savings held by a bank or thrift as the source
 of a downpayment. Informal savings networks, common among
 certain ethnic groups, will be considered.
 -- Lump-sum deposits acceptable. Lump-sum deposits, such as a
 settlement from an insurance claim, will be considered as an
 acceptable source of a downpayment.
 -- Co-borrowers. There is no limit on the number of co-borrowers
 residing in the property, provided every co-borrower signs the
 mortgage and note and provided local zoning regulations are
 followed.
 These standards represent a sharp departure from the normal industry practice. The mortgage industry has been asked by various consumer groups to be more flexible in its application of underwriting guidelines to low- and moderate-income borrowers.
 Brady said, "We have listened, and we are responding. This mortgage gets at the central question in making a mortgage: Do these borrowers have the ability and desire to repay debt?"
 The new mortgage grew out of Shawmut's review of the most common reasons for mortgage denials. Shawmut also studied the performance of mortgages that did not meet those guidelines but that Shawmut had made as part of its efforts to meet the legitimate credit needs of low- and moderate-income borrowers. Shawmut concluded that certain standards could be relaxed on a case-by-case basis. Shawmut then approached Fannie Mae and PMI with a proposal to create insurance coverage and a secondary market for these mortgages.
 Gene Campion, vice president and general manager of PMI, said, "This product is just one example of PMI's commitment to working with our partners in the mortgage industry to find meaningful, long-term solutions for issues faced by low- to moderate-income families trying to obtain homeownership."
 Kenneth J. Bacon, senior vice president of Fannie Mae's Northeast regional Office, said, "This transaction represents the type of creativity in affordable housing that is possible through creative partnerships such as this one."
 The risk-sharing arrangement developed by PMI and Shawmut is new to the mortgage business. PMI, Shawmut, and Fannie Mae will all guarantee the performance of this portfolio. PMI Mortgage Insurance Co. is a San Francisco-based private insurer of residential mortgages. Established in 1972, PMI is a subsidiary of Allstate Insurance Co. and is licensed to conduct business in all 50 states and the District of Columbia. The company is rated AAA by Standard & Poor's Corp. and Fitch Investors Service Inc. It is the third largest mortgage insurer in the U.S. with $53.9 billion of mortgage insurance in force as of year-end 1992.
 Fannie Mae, the U.S.A.'s housing partner, is a congressionally chartered, shareholder-owned company and the nation's largest investor in home mortgages.
 Shawmut National is a banking company with $25 billion in assets and dual headquarters in Hartford, Conn., and Boston. Its Shawmut Mortgage Co. unit is the largest originator of residential mortgages in New England. The corporation serves the financial needs of consumers, business, and institutions through a network of 300 branches in Massachusetts, Connecticut and Rhode Island.
 -0- 6/28/93
 /CONTACT: Robert L. Guenther for Shawmut, 203-240-1267; Kris Hanaman for PMI, 415-291-6336; Tom Marder for Fannie Mae, 202-752-7608/
 (SNC)


CO: Shawmut National Corporation ST: Massachusetts, Connecticut IN: FIN SU:

CM -- NE004 -- 6161 06/28/93 10:39 EDT
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Date:Jun 28, 1993
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