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MERRILL LYNCH LAUNCHES NEW MORTGAGE FINANCING PROGRAMS IN CALIFORNIA

MERRILL LYNCH LAUNCHES NEW MORTGAGE FINANCING PROGRAMS IN CALIFORNIA
 SAN FRANCISCO, March 26 /PRNewswire/ -- Parent Power(SM), a new mortgage program that gives qualified home buyers the ability to finance 100 percent of the purchase price of their home and eliminates the need for a down payment, was introduced in California today by Merrill Lynch Credit Corporation, the consumer credit and mortgage financing subsidiary of Merrill Lynch & Co., Inc. (NYSE: MER).
 Parent Power is designed for home buyers who may have the income to qualify for a mortgage but have not yet accumulated funds required for the down payment. Under this program, home buyers who qualify may borrow 100 percent of the purchase price with a qualified sponsor guaranteeing the amount normally required as the down payment, but without the need for the sponsor to actually advance any part of the funds.
 "We see this program as a solution to two major needs facing American families today," said Nassos Michas, chairman of private banking for Merrill Lynch & Co., Inc. "The first is to once again make home ownership a realizable part of the American dream for younger potential home buyers. The second is to do this without liquidating the savings and retirement assets of parents, grandparents or other qualified sponsors."
 Along with the Parent Power program, Merrill Lynch is also introducing its Mortgage Portfolio(SM) program, a selection of traditional mortgages, both fixed and variable rate, which will be funded through the secondary market. The expanded line of mortgages will be available to all qualified home buyers in California.
 The Parent Power program is available only with Merrill Lynch's PrimeFirst(R) mortgage. The PrimeFirst mortgage offers first mortgage financing of $100,000 or more, with interest rates as low as prime minus 1/4 percent.
 "One reason Merrill Lynch developed these programs was to help address the continued decline in home ownership, which is now seen as a serious national problem as well as an acute problem in California," said Michael A. Johnston, chairman of Merrill Lynch Credit Corporation. "Parent Power represents a breakthrough in mortgage financing -- and we are very excited about making the program available nationally as soon as possible."
 According to research conducted by the Joint Center for Housing Studies at Harvard University, the home ownership rate for potential first-time home buyers ages 25-34 has decreased more than 17 percent from 1976 to 1990. One significant factor contributing to the decline in home ownership is that the increase in median home values has far outpaced the increase in median incomes. The Harvard study noted that this disparity is most dramatic in specific regions, like Los Angeles, where real house prices soared 127.4 percent and real incomes increased only 5.3 percent.
 "Both the Parent Power and Mortgage Portfolio programs will also help ?buyers take advantage of the favorable interest rate environment," said Johnston. "A further enhancement would be for Congress and the president to consider making the guarantee fee associated with the Parent Power program fully tax deductible."
 Charles A. Humm, senior vice president, Merrill Lynch Credit Corporation, stated that in the past, many home buyers have solved the affordability problem by receiving financial assistance from parents or other relatives. "Parents often give or lend money from their own savings to cover the down payment," added Humm. "This solution, though well-intentioned, can disrupt an investment program and liquidate savings intended for retirement or other needs."
 "With Parent Power, home buyers can achieve the benefits of home ownership without causing family sponsors to liquidate hard-earned savings," according to Humm. "Rather than liquidating the sponsor's assets, Parent Power uses those assets as a basis for the guarantee. Therefore, the assets continue to build for the long-term financial well-being of the sponsor."
 How the Parent Power Program Works
 With Merrill Lynch's new Parent Power program, home buyers do not need a down payment. They obtain a qualified sponsor and apply for a PrimeFirst mortgage based on 100 percent of the purchase price of the home. Merrill Lynch will provide all of the funds, with the only out- of-pocket expense for the home buyer being the normal closing costs associated with the mortgage.
 The qualified sponsor, a parent, grandparent or other relative, does not advance any portion of the purchase price. There is no need to gift or lend funds. Instead, the sponsor guarantees the additional amount of the mortgage that is provided in lieu of the down payment. The guarantee provides that in the event of a default on the home buyer's mortgage, the loss and related expenses, if any, would be applied against the guarantee. Michas stated, "Of course, like any financing program, the Parent Power program involves financial risks and it has specific eligibility requirements for both the sponsor and home buyer."
 The guarantee can be established in either of two ways. First, the guarantee can be established by pledging eligible securities. These investments which are placed in a brokerage account with Merrill Lynch, Pierce, Fenner & Smith, Inc., will continue to work on the sponsor's behalf -- any dividends, interest or capital appreciation will accrue to the benefit of the sponsor.
 Alternatively, the guarantee can also be established with an Equity Access(R) account, a home equity account secured by a mortgage on the primary residence of the sponsor.
 Information for home buyers and sponsors regarding the Parent Power 100 percent financing capability and Mortgage Portfolio programs can be obtained through financial consultants at California offices of Merrill Lynch, Pierce, Fenner & Smith, Inc. or from Merrill Lynch Credit Corporation at 800-854-7154.
 -0- 3/26/92
 /CONTACT: Fred Yager of Merrill Lynch, 212-449-7355, or Dawn Murphy of Berkhemer Kline Golin/Harris, 213-623-4200, for Merrill Lynch/
 (MER) CO: Merrill Lynch & Co. Inc. ST: California IN: FIN SU: PDT


CK-OS -- NY041 -- 1948 03/26/92 12:02 EST
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Date:Mar 26, 1992
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