Feds sweetening incentive for first-time homebuyers

Attempting to whet renters’ appetite for homes, the federal government recently sweetened the incent
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Attempting to whet renters’ appetite for homes, the federal government recently sweetened the incentives of a homeownership program for first-time buyers, who are increasingly walking into local banks and credit unions.

The Federal Home Loan Bank of New York in February raised the maximum grant amount homebuyers can receive under its First Home Club. The program helps people save for houses by providing matching funds that can go toward down payments and closing costs.

The bank, a congressionally-charted wholesale bank that serves 293 community lenders, raised its First Home Club contribution to $4 dollars for every $1 deposited into a dedicated savings account up to $7,500. The savings match ratio used to be $3-to-$1 up to $5,000.

Bank officials in December approved the increase to counter the housing market’s high prices, which have outpaced many renters’ wages. Area lenders said the sweetened incentives slightly boosted participation in the program during the March enrollment period, though a greater windfall is anticipated this summer.

“In March, there was a mini surge,” said Albert DeSalvo, a community reinvestment officer for M&T Bank.

In the Capital Region and Hudson Valley last March, M&T Bank recruited a dozen people into the First Home Club, compared to zero a year earlier. The Buffalo-based bank has 33 customers signed into the program in the Capital Region and a total of 120, said bank spokeswoman Jean Hill.

Since M&T Bank joined the program six years ago, 135 bank customers completed the program and closed on a home. People can start saving for a home at any time under the First Home Club, but banks can only enroll them in the program during March, July and October.

The State Employees Federal Credit Union in March netted 10 new people for its First Home Club program called the Mortgage Match Program. That kicked the Albany credit union’s enrollment in the program up to 35, compared to 20 a year earlier, said SEFCU spokesman John DeCelle.

HSBC Mortgage Corp. last year had 597 people enrolled in its First Home Club sponsored by the FHLBNY, making it the third-largest program lender in throughout the Federal Home Loan Bank system. The Buffalo-based lender last year saw its program enrollment jump 41 percent from 2006, and it anticipates even stronger growth in 2008. Statistics for this year were not available.

“We expect additional interest with credit tightening,” said Peter King, an affordable housing officer with the Federal Home Loan Bank of New York.

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