CHFA (Colorado Housing and Finance Authority) announced new home finance products, as well as expanded partnerships and financial operations today. The organization, which was established in 1973 by the Colorado State Legislature to finance affordable housing and small business, said the changes are part of its efforts to weather the unprecedented changes in the economy.
"I think it is safe to say nearly everyone has been impacted by the economic downturn. Just as families and businesses are reevaluating how they operate, so is CHFA. These adjustments are designed to position CHFA to manage an unchartered environment," said Milroy A. Alexander, CHFA executive director and CEO.
CHFA's new home finance products, the CHFA HomeOpener and CHFA HomeOpener Plus, are available to both first time and non-first time homebuyers. Key for buyers is the availability of down payment and closing cost assistance through CHFA. Recent changes in federal legislation have greatly restricted the permitted types of down payment assistance, which has been ia struggle for buyers wanting to enter the housing market. Because of its unique status as "an instrumentality of government," CHFA is one of the few remaining resources offering down payment assistance, which is in strong demand.
CHFA has implemented a new requirement for a minimum credit score of 580, and maximum debt-to-income ratio of 45 percent on manually underwritten loans to qualify. CHFA notes these new requirements are designed to ensure CHFA is keeping pace with current lending standards, and not inadvertantly attracting subprime lenders or borrowers to its products.
'The reality is that lenders are looking very closely at all of their borrowers. CHFA has always done this by requiring our loans to be fully documented. These new requirements allow us to continue our practice of sound due-dilligence," noted Alexander. "Also, if a borrower is not in a position to buy a home today, it is in their best interests to take some time to improve their credit and budget situation, and re-enter the market when the time is better for their long-term financial stability."
What isn't changing about CHFA's home finance products? The HomeOpener and HomeOpener Plus offer 30-year fixed interest rates. CHFA has always provided its customers with a fixed interest rate to offer borrowers payment stability. CHFA will continue its requirement for customers to complete a homebuyer education course as a condition of qualification. The classes are free and offered both in person and online. CHFA also will continue its practice of servicing all of its own loans in-house. Additionally, CHFA will continue to require borrowers to bring a minimum of $1,000 to the table as good faith money towards the purchase of their home.
CHFA has established a new partnership with Ginnie Mae for its HomeOpener and HomeOpener Plus lending products. As in the past, CHFA will purchase the loans made by their lender partners, but instead of holding the loan on their books, CHFA will sell the asset as a Ginnie Mae security. CHFA will retain the servicing of the loan, ensuring CHFA customers experience no difference in customer service. CHFA has been rated by the U.S. Department of Housing and Urban Development (HUD) as a Tier One Loan Servicer.
"CHFA is always looking to acquire capital at the most affordable rate possible so we can pass those savings along to our customers. Our new partnership with Ginnie Mae offers CHFA an alternative to the municipal bond market. We will issue more bonds as the bond market thaws, but working with Ginnie Mae gives us a new tool in our toolbox so we can provide customers with the most competitive interest rates possible," said Alexander.
Also new for CHFA, was the Authority's first single family Mortgage Revenue Bond issuance since June 2008. CHFA issued $90 million in fixed rate, single family Mortgage Revenue Bonds (MRBs) on March 4, 2009. This issue is one of only four housing bond issues in the nation since the first of the year. Demand for CHFA bonds was strong, with a total of $218.9 million in orders received. CHFA attributes the positive response to pent-up demand for housing bonds, and to the strength and stability of CHFA. All of the bonds are rated AAA by Standard and Poor's and Moody's. $28 million, or 31 percent of the bonds were sold to Colorado retail investors. Prior to the bond market's freezing and economic collapse in the fall of 2008, CHAF had traditionally issued housing bonds every quarter. However, market conditions had prevented CHFA from moving forward until now.
"Businesses cannot pretend the economic environment hasn't changed," said Alexander. "Taking this time out to re-position is the prudent, and the right thing to do for Colorado and our customers. CHFA will continue to explore even more partnerships and roll out other new products in all of our lending divisions - home, multifamily, and small business finance, as the year progresses."
CHFA HomeOpener and HomeOpener Plus are available through CHFA's statewide network of participating lenders. Visit www.chfainfo.com to find a CHFA lender in your area, or call CHFA's Denver office at 800.877.2432 or West Slope office at 800.877.8450.
About CHFA (Colorado Housing and Finance Authority)
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