CitiMortgage Inc. and Fannie Mae said yesterday that they will provide $1.4 billion in affordable mortgage funds over the next five years to increase homeownership among minority, immigrant and low- and moderate-income buyers in the Baltimore and Washington metropolitan regions.
The initiative, announced at a downtown Washington church, is the largest ever made by an individual lender in tandem with Fannie Mae to the two areas.
The $1.4 billion is part of an overall $12 billion, five-year CitiMortgage commitment to provide mortgages geared toward underserved households in six metro areas.
CitiMortgage, a subsidiary of Citigroup, already has allocated $1 billion to the Miami-South Florida region and $2.7 billion to Chicago. Also expected to receive funds are the New York City/Tri-state area; Los Angeles/Orange County market; and the San Francisco Bay area.
Although homeownership is at a record national high of 67.1 percent, and Baltimore's rate is at an all-time high of 54.7 percent, members of minory groups continue to lag in owning a home.
According to the Department of Housing and Urban Development, national homeownership for African-Americans is 48.7 percent and for Hispanics, it is 45.7 percent.
Homeownership among whites is 73.4 percent.
Fannie Mae and Baltimore's Homeownership Institute were unable to provide current data for the Baltimore metropolitan area. However, according to 1990 U.S. Census data, the homeownership rate for whites in the Baltimore area was 71.5 percent, while for minorities it was 40.8 percent.
"There is a significant disparity between those two ethnic groups and that of the nation at large," said Jennifer Iba, director of housing and community development for Fannie Mae. "Both CitiMortgage and Fannie Mae really want to decrease that disparity. So while it appears to be good all around, if you actually take a look at the numbers, you can see that there is still work to be done."
HUD Secretary Andrew M. Cuomo challenged lending institutions in June to push the homeownership rate among Hispanics and African-Americans to more than 50 percent in the next three years.
"Through this Washington, D.C., and Baltimore-area partnership, we will be able to increase our commitment to provide mortgage tools for low- and moderate-income individuals, as well as offer mortgages that encourage neighborhood revitalization ... and provide funds for the renovation of older housing," said Steve Stein, executive vice president of CitiMortgage.
Fannie Mae, a federally chartered financial institution, is the country's largest source of mortgage money. It provides money to lenders by purchasing mortgages, which it then repackages and sells on the secondary markets.
The $1.4 billion initiative by CitiMortgage is part of Fannie Mae's HouseBaltimore program, which is in the second year of a five-year, $4.2 billion investment plan to provide affordable housing to 40,000 families in the Baltimore area.
"We welcome additional mortgage capital being infused into our market. It means there will be more opportunities for families to borrow," said Tom Jaudan, head of the city's Homeownership Institute.
"The impact is going to come from allowing us to target particular groups," said Frank Coakley, director of Fannie Mae's Baltimore Partnership office.
"We have this nice sum of money now and are partnering up with the CitiMortgage people, who have been in the business forever, understand how to do business in the city and with the products that have been modified to target minorities and new immigrants. The impact is going to be substantial."
Among the mortgage products to be promoted are:
Programs that allow working nonpermanent resident immigrants to apply for mortgages by using alternative sources of income from family members and others.
A "working mortgage" that allows borrowers to set up an automatic deduction of the mortgage payment on a weekly or biweekly basis, thus accelerating the build up of equity in the property.
A "timely payments reward" program that helps those with credit problems to secure an above market-rate mortgage, but after making 24 consecutive on-time payments, the interest rate is reduced by 1 percent.
"There are programs that were developed by CitiMortgage that Fannie Mae now buys, which adds to the availability of capital in those markets," said Wilbur McKesson, national director for emerging markets for CitiMortgage. "There are new programs that Fannie is developing that we plan to offer.
"We are joining together to leverage marketing resources. We want to work together on credit issues to see how we can find opportunities to qualify more people. How to better leverage each others' resources to more effectively target the city. ... Baltimore is an important market for us."