2/21/2008
CHARLESTON, W.Va. -- Gov. Joe Manchin today asked the West Virginia Housing Development Fund directors to put together a stimulus plan that would encourage more first-time homebuyers in West Virginia and help to prevent the housing slump here that has plagued the overall U.S. economy the last several months.
The governor said that although West Virginia hasn't suffered the same dramatic drop in housing values and increased foreclosures as have many areas across the country, state officials must take action now to ensure that the state's growing economy isn't slowed as creditors clamp down on mortgage lending and adjustable rate mortgage rates swell.
"Fortunately, for West Virginia, our housing market didn't suffer the same level of over-inflated values for homes and sub-prime mortgage financing that has put our national economy into a tailspin," Manchin said. "But at the same time, we need to give the industry a boost, an incentive plan, to encourage more West Virginians to buy homes through affordable mortgages, and to help those residents who've gotten into a bad situation with mortgages they can no longer afford because of skyrocketing adjustable rates."
Joe Hatfield, executive director of the Housing Development Fund, said the mortgage industry is under extreme pressure and more conservative lending requirements are decreasing the number of eligible borrowers. Fewer borrowers means fewer home sales, which can lead to a slowed state economy. With one of the highest percentages of home ownership in the country, housing has been a significant part of West Virginia's growth the last few years, he said.
"The governor asked us to put together a housing stimulus package to help new purchasers get stable loans at excellent rates, and to help families with sub-prime mortgages get refinanced into a low-interest program. We believe the Fund can play a strong role in helping West Virginia families we want to get more West Virginians into their own homes and do what we can to keep existing homeowners in risky mortgages from losing their homes."
The Housing Development Fund board of directors today approved a plan that provides the following:
- $20 million in Mortgage Revenue Bond funds at 4.99 percent interest for 30-year mortgages. This money would be used for families buying homes for the first time and for other qualified homebuyers.
- Increase the Closing Cost Assistance Program to $5 million to provide loans of as much as $5,000 to cover the larger cash contributions needed from families buying a home.
- Encourage use of 97 percent and 100 percent financing provided by federal loan guarantee programs.
- $350,000 in matching funds for the Affordable Housing Trust Fund for borrower assistance programs.
- Homebuyer counseling for families with existing sub-prime loans to avoid foreclosure.
Manchin said this is not a bailout and it does not put the Housing Development fund or state in a bad financial situation. The loans would be guaranteed either by private mortgage insurers or through federal loan guarantee programs.
"This will help those families to get out of adjustable rates that they can't afford, and keep them out of foreclosure," Hatfield said. "For those families who are in sub-prime loans with rates now too high for them to afford, we'll work with counseling agencies across the state to see if there's any way to mitigate foreclosures."
"We needed to take quick action to stabilize our affordable housing market and to ensure that our mortgage industry in West Virginia remains healthy. As the governor said, our state's overall economy would be affected if we didn't do something to prevent what has happened on a national scale."
Loans through this program are available immediately. For more information or for assistance, residents may visit one of the Housing Development Fund's participating lenders, or call the Fund at 1-800-933-9843 or visit www.wvhdf.com.
Contact Information
Joe Hatfield
304-345-6475