MassHousing, which has enjoyed an increase in business since creating a business development team and adding new products to its menu, is located at 1 Beacon St. in Boston.
After it saw its partnerships and number of loans shrinking in recent months, the state’s leading provider of affordable housing decided to revamp its image and product lines. Since creating a business development team and adding new products to its menu, MassHousing is seeing an influx of new partnerships with lenders and more closed loans.
MassHousing, based at 1 Beacon St. in Boston, is a wholesale lender providing affordable housing financing in the Bay State. It has long had one mission in particular.
“We want to expand homeownership for low- and moderate-income buyers,” said Peter Milewksi, director of the Mortgage Insurance Fund at MassHousing. “We rely heavily on partnerships with lenders, Realtors and nonprofit organizations.”
In the past, MassHousing, which has provided more than $8.5 billion in financing for more than 80,000 units of mixed-income rental housing and over 43,000 mortgage loans for first-time homebuyers over 35 years, had three people on the road as customer service representatives. Their job included checking in with lenders to help them with their problems or for training purposes.
“There was really no business development taking place,” Milewski said.
As the number of partnerships and loans shrank, the agency decided to be “proactive” and “responsive.”
First, MassHousing broadened its product menu and added Fannie Mae MyCommunity loans. Those loans are intended for low-income first-time homebuyers. Single-family home loans have 100 percent loan-to-value ratios and two-family home loans have 97 percent LTV. There are also a number of underwriting variances included, Milewski said.
MassHousing also introduced a mortgage insurance product called MI Plus, which provides no-cost, job-loss protection coverage through various MassHousing programs. The mortgage insurance protects borrowers because MassHousing makes the principal and interest payments on a homeowner’s mortgage for up to six months in the case of unemployment.
‘A Visibility Issue’
Armed with those new products, MassHousing approached its existing bank and credit union partners, as well as new institutions.
“We are going back to everybody,” Milewski said. “We’re positioning ourselves as a full-service affordable housing partner.”
Although certain communities have a higher concentration of low- to moderate-income buyers, MassHousing doesn’t exclude any communities.
“Most every community has affordable housing issues,” said Milewski.
MassHousing also has increased its ad expenditure and created a consumer awareness campaign.
“We always had a self-image as a government agency,” Milewski said, adding that government agencies tend to be conservative.
However, the conservativeness was not bringing in loans.
“It was a visibility issue,” he said. “Our borrowers were not aware of all the products and services.”
MassHousing also has increased its staff. Milewski said a three-person staff was inadequate for the goals the agency set and a staff totaling seven people was assembled. Much of the staff has more than 20 years of mortgage and affordable housing industry experience, and several are multilingual.
“We are making ourselves a lot more dynamic,” Milewski said.
And lenders are responding. Savers Bank in Southbridge became a MassHousing-approved lender in May and officials at the bank have said the partnership has helped them grant more affordable loans.
Melissa Eagles, assistant vice president of mortgage lending at Savers Bank, said at the beginning of 2005, the bank identified a problem.
“We were lacking in affordable products,” Eagles said.
After researching different programs, the bank contacted MassHousing. Savers since has been using the agency’s MassAdvantage products, which allows a down payment of 3 percent and has an interest rate that is below what conventional lenders offer. The agency’s mortgage insurance also has been a popular product for the bank.
“It’s a great tool Â… where the customer gets something out of it,” Eagles said.
Before partnering with MassHousing, Savers Bank was using the secondary market.
“We had been offering secondary-market affordable products,” noted Eagles, who added that those products ultimately became too costly for customers.
Since the partnership with MassHousing began in May, Savers Bank has received more than $2 million in loan applications and closed more than $1 million using MassHousing products. Eagles said the agency also has been helpful offering coaching, support and guidance.
“They’ve made the process painless,” said Eagles.
With the business development team in place, there has been steady growth in the number of lenders showing interest in MassHousing products and utilizing its staff.
“We need to translate that into homeownership opportunities,” Milewski said.
In the last several months, MassHousing has approved lenders such as Merrimack Valley Federal Credit Union in North Andover, Marblehead Savings Bank, Melrose Cooperative Bank and, most recently, Springfield Mass Municipal Employees Credit Union.
To qualify for a MassHousing MassAdvantage loan, a one- to two-person household in Springfield can earn up to $74,400 and buy a single-family home or condominium for up to $237,500. In addition to single-family homes and condominiums, eligible homebuyers can use a MassHousing MassAdvantage loan to buy a two-family home for up to $269,779 and three- and four-family homes for up to $326,084.
Meanwhile, a one-to-two-person household in Melrose can earn up to $82,600 and buy a single-family home or condominium for up to $381,999. Eligible homebuyers also can use a MassHousing MassAdvantage loan to buy a two-family home for up to $488,975 and three- and four-family homes for up to $591,028.
Milewksi said he expects more banks to partner with MassHousing because many institutions have a renewed interest in affordable housing and community reinvestment now that the refinance boom has ended. For MassHousing, now there is an opportunity to reintroduce itself.
“If people know what we do,” Milewski said, “the products will sell themselves.”
While MassHousing allows the lender to decide which products are suitable to offer their customers, the agency is making an effort to recognize lenders’ needs.
“We make sure we’re listening to them,” said Milewksi.
Right now, the core product – a 30-year fixed loan with a focus on affordable housing underwriting and a below-market rate – is the most popular. The MI Plus and Fannie Mae products are also popular among lenders.
“We’re trying to provide safe alternatives [to subprime loans],” Milewski said.
