Independent Bank recently rolled out a new program aimed at ensuring low- and moderate-income individuals can purchase a home and remain homeowners for as long as they’d like.
The bank is partnering with Freddie Mac, a federal home mortgage corporation, to offer customers the opportunity to join the Freddie Mac BorrowSmart program.
The program awards low- and moderate-income individuals up to $2,500 to use toward the down payment or closing costs required to finance their home.
“Our focus in terms of lending and homeownership continues to be driven by the desire to make homes affordable for everybody and this program is really in the spirit of that exact thing,” said Matthew Dhaseleer, vice president, lending sales manager. “In a market today where prices are going up, interest rates are going up, many people may want to own a home but may be discouraged and may feel like it’s not an option for them. So, what this program does, is it helps make money available for moderate- and low-income borrowers to be able to purchase a home that they may not have thought was possible before.”
A low-income community means there is a median family income of less than 50% of the area median income, according to the Federal Reserve, and a moderate-income community means that the median family income is at least 50% but less than 80% of the area median income.
Dhaseleer said Independent Bank currently serves about 40,000 mortgage customers who live in Michigan, Ohio, Florida and North Carolina. Independent Bank loan officers can determine if a prospective borrower is considered to have low or moderate income based on their financial documents and if they qualify for the Freddie Mac BorrowSmart program.
Once they are qualified, borrowers must complete housing counseling through a U.S. Department of Housing and Urban Development-approved counseling provider that is affiliated with the Homeownership Preservation Foundation network.
The pre-purchasing counseling process is performed over the phone.
“A lot of it is just homebuyer education,” Dhaseleer said. “They are going to be talking about the home-buying process, the responsibility of homeownership and managing debt. Anything that a new homeowner might encounter, they’re going to touch on that so that there are no surprises through the home-buying process and after they close on their new home.”
Independent Bank has previously partnered with Freddie Mac through the Freddie Mac MatchUp program. In that program, Freddie Mac would match the savings amounts up to $2,500 of borrowers who were saving to purchase a home.
That program has since ended and now Independent Bank is partnering with Freddie Mac in establishing the Freddie Mac BorrowSmart program for low- and moderate-income individuals. BorrowSmart can be used in conjunction with other Independent Bank home-assistance programs including the My Home Reward program, which could allow eligible home purchase or refinance applicants in low-income neighborhoods to pay zero closing costs.
“It is just an additional effort by Independent Bank to encourage homeownership among some of the more discouraged borrowers at this time in the current market,” Dhaseleer said.