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GOVERNOR BAYH ANNOUNCES AFFORDABLE HOMEOWNERSHIP INITIATIVE

 GOVERNOR BAYH ANNOUNCES AFFORDABLE HOMEOWNERSHIP INITIATIVE
 INDIANAPOLIS, March 12 /PRNewswire/ -- Gov. Evan Bayh and Lt. Go.? Frank O'Bannon today encouraged Indiana lenders to join in the state's new "Affordable Homeownership Initiative," a multi-million dollar effort to help thousands of moderate- and low-income Hoosier citizens buy homes in rural and urban areas.
 The Indiana Housing Finance Authority (IHFA) has created a public/private partnership with mortgage lenders, the Farmers Home Administration, and the Federal National Mortgage Association (Fannie Mae) (NYSE: FNM). Fannie Mae will invest in the state's initiative, which offers home buyers three different ways to reduce homeownership costs: up to $2,000 in annual federal tax savings; 0 to 5 percent down payments; and flexible qualifying standards.
 "We are here today to promote a partnership that will improve the quality of life for Indiana's working families by lowering the down payment and monthly payment costs associated with homeownership," Bayh said.
 Under the plan, home buyers may be eligible to receive the Indiana Homeownership Tax Credit, also known as the federal Mortgage Credit Certificate (MCC), on mortgages issued through Fannie Mae's Community Home Buyer's Program or mortgages issued through the Farmers Home Administration's (FmHA) Guaranteed Rural Housing Loan Program. IHFA's board of directors has elected to allocate $60 million worth of tax credit certificates in 1992. An additional $50 million may become available later in the year, increasing the total allocation to $110 million.
 Fannie Mae, the nation's largest investor in home mortgages, will buy the mortgages issued under the initiative from participating local lending institutions, including those mortgages backed by the Guaranteed Rural Housing Loan Program offered by FmHA.
 "Fannie Mae is committed to purchasing $100 million in mortgages issued under the Affordable Housing Initiative in 1992. We are pleased to be working with Governor Bayh, Lt. Gov. O'Bannon, IHFA, FmHA and local lenders in this effort to help make housing more affordable in Indiana," said Jack Hayes, senior vice president of Fannie Mae's 10-state Midwestern regional office, which is based in Chicago.
 "Entrepreneurial leaders use existing resources in an innovative, effective manner," said O'Bannon, who chairs the IHFA board. "By joining forces with Fannie Mae, FmHA and private lending institutions across Indiana, we are building communities through partnerships."
 The Homeownership Tax Credit is valuable because:
 -- Qualified buyers of single-family, owner-occupied properties, including condominiums and townhouses, pay lower federal income taxes for as long as they hold the mortgage (up to 30 years). Tax credit amounts range from 20 percent to 35 percent of the interest paid on a mortgage, up to a maximum credit of $2,000 each year. Although the program is targeted to first-time home buyers, this requirement is waived in 30 federally targeted counties and portions of eight metropolitan areas throughout Indiana.
 The tax credits may be combined with mortgages issued by local lenders who are participating in Fannie Mae's Community Home Buyer's Program, which was designed to give borrowers with good credit an opportunity to purchase a home with more flexible qualifying standards than a traditional home loan.
 -- Borrowers may put down as little as 5 percent of the home's purchase price.
 -- Those borrowers earning up to 115 percent of the area's median income may put down 3 percent of their own funds. The other 2 percent may be a gift from a family member or unsecured loan from a non-profit organization.
 -- Borrowers can spend up to 33 percent of their income on housing costs and 38 percent of their income on overall obligations. Traditional underwriting standards limit these to 28 and 36 percent, respectively.
 Home buyers in rural Indiana also may qualify for mortgages under FmHA's Guaranteed Rural Housing Loan Program, which is targeted to help low- and moderate-income families finance up to 100 -percent of their mortgage loans. FmHA has $8.3 million available in Indiana for this program in 1992.
 -- Borrowers may qualify for a mortgage using up to 29 percent of their gross monthly income for housing expenses and up to 41 percent of their gross monthly income for total debt expenses, rather than conventional loan ratios of 28 percent and 36 percent.
 Consumers must first contact a participating lender to apply for a loan under these programs. A list of lenders and details on the initiative are available by calling 1-800-7-FANNIE or writing to: Fannie Mae, Indiana Affordable Homeownership Initiative, 3900 Wisconsin Ave. N.W., Washington, D.C., 20016.
 IHFA is a self-supporting, quasi-governmental agency whose mission is to increase the availability of safe, decent and affordable housing throughout Indiana. Fannie Mae, the USA's Housing Partner, is a congressionally chartered, shareholder-owned corporation and the nation's largest investor in home mortgages. FmHA is an agency of the U.S. Department of Agriculture that operates federal loan programs to strengthen family farms, finance new and improved rural housing, develop community facilities, and maintain and create rural employment.
 Fannie Mae's participation in the Indiana Affordable Homownership Initiative is part of the company's commitment to invest $10 billion in low- and moderate-income and special needs housing by 1993.
 NOTE: Lenders interested in participating in this initiative should contact Cathy Garrett at IHFA at 317-232-3559 or 800-872-0371.
 -0- 3/12/92
 /CONTACT: Ira G. Peppercorn, executive director, 317-232-7777, or Steve Pockrass, communications director, 317-232-7781, both of the Indiana Housing Finance Authority; or Janice Daue of Fannie Mae, 202-752-3421/
 (FNM) CO: Fannie Mae; Indiana Housing Finance Authority ST: Indiana IN: SU:


SB-MH -- DC021 -- 7472 03/12/92 14:38 EST
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