Initiative Includes New Funding for Homeowner Counseling and Education

Governor Eliot Spitzer today announced the $100 million Keep the Dream refinancing program that will offer homeowners with risky mortgages the opportunity to refinance and avoid possible foreclosure.

The new program represents a major initiative of the multi-agency HALT Task Force (Halt Abusive Lending Transactions) that the Governor created in March to address the crisis in the subprime mortgage industry.

Through partnerships with Fannie Mae, mortgage lenders, and mortgage insurance companies, the State of New York Mortgage Agency (SONYMA) will offer at-risk homeowners the ability to refinance their current mortgages with 30-year or 40-year fixed-rate mortgages at competitive interest rates.

Homeownership is crucial to growing our economy throughout New York State, said Governor Spitzer. This innovative program will help address the foreclosure crisis by offering at-risk families mortgages they can afford, so they can keep their homes for years to come.

President and Chief Executive Officer of SONYMA, Priscilla Almodovar, said: Our mission at SONYMA is to help working class families buy their first home and keep their homes. That is why our Keep the Dream program is so important – it will give families in danger of losing their homes the ability to refinance their mortgages and remain as homeowners.

Banking Superintendent and Chair of the HALT Task Force, Richard H. Neiman, said: By creating the HALT Task Force in March, the Governor was able to pull together the talent and resources from a diverse range of state agencies to develop and implement creative solutions to address issues facing consumers. With serious challenges remaining for both consumers and the mortgage industry, I am confident that this team will continue to make significant progress and lead much needed efforts in consumer protection and industry improvements.

Home Counseling and Education

A crucial part of the Keep the Dream refinancing program will require eligible borrowers to complete a homeowner education course with a federally approved not-for-profit organization. Borrowers must also agree to participate in early delinquency intervention counseling should they become delinquent for 30 days or more on their refinanced mortgage.

To promote homeowner counseling, the New York State Division of Housing and Community Renewal (DHCR) will dedicate nearly $400,000 in Urban Homeownership Assistance Program grants to eight non-profit agencies located in cities with more than 60,000 residents. The non-profits will use the funding to offer financial counseling to homeowners, helping them avoid the pitfalls of predatory loans and foreclosure proceedings.

Deborah VanAmerongen, Commissioner of DHCR said: Not all subprime loans are necessarily bad. In some instances, they are a valuable tool for individuals who don’t qualify for a prime loan. Our goal in providing counseling is to help consumers qualify for and obtain the best possible mortgage loan available.

Assemblyman Vito Lopez, chairman of the Assembly Housing Committee who was the sponsor of the homeowner counseling initiative, said: I am proud to partner with the Governor on this innovative project. The money we’ve dedicated will help families facing foreclosure and will go a long way in educating homeowners while also addressing the subprime loan issue all over New York State. I look forward to working on this issue with Governor Spitzer in the future and hope this is only the first step we take in protecting homeowners and their assets.

In addition, SONYMA will make available another $250,000 from its revenues to help finance counseling services for homeowners participating in the Keep the Dream refinancing program.

Marian Zucker, Executive Vice President of SONYMA said: Our goal in requiring counseling is to help homeowners increase their financial literacy and promote sustainable homeownership. We want borrowers to understand the risks and responsibilities of owning a home so they will remain homeowners.

Keep the Dream Refinancing Program

The Keep the Dream refinancing program is designed for borrowers who have adjustable or interest-only mortgages where the interest rate has just increased or will increase in the near future. Eligible borrowers will have to demonstrate that they have experienced a mortgage payment hardship or will experience a hardship in the near future. Borrowers who are less than 60 days behind on their mortgage payments because of a payment increase may also be eligible for the program.

Refinancing loans can be as high as $417,000. Financing will be available for up to 100% of the value of the borrowers property. Proceeds of the mortgage can be used to pay prepayment penalties, closing costs and pay off most second mortgages.

Keep the Dream is targeted for low-, moderate- and middle-income homeowners. Eligible borrowers can have incomes of up to 165% of the area median income in New York City, Long Island and the counties of Dutchess, Orange, Ulster, Westchester, Rockland and Putnam, and up to 125% of the area median income for the remainder of New York State.

These income ceilings will range from $58,120 in Allegany County to $82,870 in Albany County to $93,720 in New York City to $158,560 in Rockland County. Lenders in New York State will begin to offer SONYMA’s Keep the Dream mortgages starting September 4, 2007.

Creation of Keep the Dream was made possible through extensive public-private collaboration with several SONYMA partners. Fannie Mae, a federally chartered company, will issue mortgage backed securities that will be secured by these mortgages. Fannie Mae’s $100 million contribution is also an important part of the solution to the subprime problem.

SONYMA has also secured the participation of private mortgage insurance companies who will provide insurance for mortgages originated under the program. And SONYMA Mortgage Insurance Fund (MIF) has agreed to provide mortgage pool insurance on all the mortgages originated under the program.

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• SONYMA Now Provides Federal Recapture Tax Reimbursement to Borrowers

Households who finance the purchase of their home with a mortgage provided by SONYMA are, in rare cases, required to pay what is known as the Federal recapture tax. However, Governor Spitzer recently signed a law that now allows SONYMA to reimburse its borrowers who become liable for the tax after they sell their home. Any borrower who closes a SONYMA mortgage on or after July 17, 2007, will be able to obtain this reimbursement.

Under the federal recapture tax, if a home purchased with a SONYMA mortgage is sold within nine years-and the owner’s income has significantly increased and the value of the home has increased during that period-then the owner could be liable for the federal recapture tax.

In reality, very few SONYMA borrowers are required to pay the tax. However, the threat of that tax liability often deters potential homebuyers from seeking a SONYMA loan, which offers significantly lower monthly charges than a conventional mortgage.

SONYMA created the Federal Recapture Tax Reimbursement program because the tax often causes undue concern among potential borrowers as they consider whether to buy their first home with a mortgage provided by SONYMA. While few SONYMA borrowers ever have to pay the recapture tax, the reimbursement program will put borrowers at ease knowing they will be reimbursed if they have any tax liability.

The Federal recapture tax applies to certain homeowners because Federal law provides that homeowners who receive a loan financed with the sale of tax exempt mortgage revenue bonds (like a SONYMA loan) may be required, in limited circumstances, to repay a portion of their gain upon sale or transfer of their home.

The objective of the tax is to enable the federal government to collect, or recapture, an amount based on the difference between what the borrower paid in interest on the loan financed through tax-exempt bonds and what the borrower would have paid if a market rate mortgage had been obtained.

However, the tax is ONLY due if a home is sold within 9 years of purchase, the borrower’s household income has increased (in most cases, the income must increase substantially) and the value of the home increases.

For more detailed information about the federal recapture tax, borrowers are advised to consult a tax advisor. SONYMA does not provide individual tax advice.

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Downstate Purchase Price Limits Increased For SONYMA Mortgage Loans

NEW YORK, New York – New York State has just taken several major steps to make below-market interest rate mortgages offered by the State of New York Mortgage Agency (SONYMA) more attractive.

SONYMA announced that purchase price limits have been increased for homes purchased downstate with SONYMA mortgages.

Although the federal government sets purchase price limits for our first-time homeowner programs, we are permitted to use more accurate and comprehensive local information to set higher limits, and we have done so, said Priscilla Almodovar, President and Chief Executive Officer of SONYMA. With these new limits, a first-time home buyer downstate will be able to choose from a wider range of existing and new homes, which means more low- and moderate-income families will be eligible for our mortgages.

New Purchase Price Limits

Despite SONYMA’s favorable terms, the high cost of housing in the downstate area has often meant that otherwise eligible home buyers were unable to seek SONYMA financing. Following an extensive study of home purchase price data in the metropolitan area, SONYMA determined that it could increase the maximum purchase price above the ceilings set by the Internal Revenue Service for downstate homes.

The higher purchase price limits will apply to homes purchased in New York City, Long Island and Westchester, Rockland and Putnam counties. Buyers of one-family homes, condominiums and cooperatives will be eligible.

The new purchase price limits increase the ceiling for existing homes to $467,000 from the current $429,610-an 8.7% increase. For newly built homes, the limit will increase to $460,300 from the current $429,610-an increase of 7.14%. Even higher purchase limits will apply for homes located in target areas, which are generally defined as economically disadvantaged areas.

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Measure Will Reimburse Borrowers for Federal Recapture Tax

NEW YORK, New York – Priscilla Almodovar, President and Chief Executive Officer of the State of New York Mortgage Agency (SONYMA), today commended the State Legislature for passing a bill that will greatly enhance the attractiveness of SONYMA mortgages and boost the agency’s efforts to market its mortgages to low- and moderate-income first-time homebuyers.

The measure will allow SONYMA to reimburse borrowers required to pay the federal recapture tax, which SONYMA borrowers may be liable for subject to certain conditions such as time of sale, sale price and the income of the borrower.

Governor Spitzer is expected to sign the legislation into law.

This bill is part of our efforts to improve the marketability of SONYMA mortgages. The recapture tax causes undue concern and worry in what can already be an overwhelming process for many working families buying their first home, Ms. Almodovar said. What we at SONYMA and other housing agencies throughout the country have found is that few borrowers will ever be liable for the tax.

Nevertheless, the stigma is there and it discourages buyers from considering our product. Combined with simplifying our underwriting process and offering new and more flexible mortgages, this legislation will allow SONYMA to give potential applicants peace of mind when applying for our mortgages.

The bill was sponsored by Assemblyman Vito Lopez (D- Brooklyn) and Senator John Bonacic (R/I/C-Mount Hope).Assemblyman Lopez said, I’m proud to have sponsored this legislation to enhance affordable home ownership opportunities.

I will continue to work to make the dream of home ownership possible for all residents of New York State.Senator John J. Bonacic stated, Anytime there is an opportunity to eliminate the impact of a tax that penalizes first time home buyers, we should act on it. This legislation, which I was pleased to sponsor, will not only reimburse borrowers required to pay the federal recapture tax, it will also make SONYMA mortgages more desirable to working families looking to purchase their first home. The federal recapture tax has been a major obstacle to marketing SONYMA mortgages.

Under the tax, if a home purchased with a SONYMA mortgage is sold within nine years-and the owners income has significantly increased and the value of the home has increased during that period, then the owner could be liable for the federal recapture tax.

In reality, very few SONYMA borrowers are required to pay the tax. However, the threat of that tax liability often deters potential home buyers from seeking a SONYMA loan, which can significantly reduce a homeowners monthly carrying charges.

Under the legislation approved by the Legislature, SONYMA would be authorized to reimburse its borrowers should they be held liable for the federal recapture tax after sale of their home. Because the tax is assessed so infrequently and because SONYMA is a self-supporting agency, SONYMA estimates that the bill would have no fiscal impact on the state.

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The State of New York Mortgage Agency (SONYMA) and the New York State Division of Veterans’ Affairs announced the details of the Homes for Veterans Program that will help New York’s military veterans achieve the dream of homeownership.

“The Homes for Veterans Program is a substantial way for New York State to thank those New Yorkers who have served their state and their country,” said New York State Division of Veterans’ Affairs Director George P. Basher. “This is an unprecedented opportunity for New York veterans to achieve the American Dream. The Division of Veterans’ Affairs is proud to be a part of this program.”

Eligible veterans purchasing a home through the Homes for Veterans Program will receive below market mortgages with fixed interest rates as low as 4.875% to buy their first home or a new home. These rates are 0.5% lower than those available through SONYMA’s standard below-market low interest rate mortgages, and are substantially lower than the conventional interest rates available through regular banking channels and through national home loan guaranty programs for veterans. Eligible veterans, their spouses or coborrowers do not have to be first time homebuyers in order to qualify for this program, but will have to satisfy SONYMA’s income and home purchase price limits as well as other requirements.

The Homes for Veterans Program is the most affordable homeownership program SONYMA offers. In just the first year of homeownership, the average veteran could save approximately $4,000 when compared to SONYMA’s already below market low interest rate mortgage.

Veterans eligible for the Homes for Veterans Program can also take advantage of other SONYMA mortgage products, including SONYMA’s Closing Cost Assistance Loan (CCAL). CCAL allows borrowers to receive either $5,000 or 5% of their total loan amount – whichever is greater – to cover expenses associated with closing a mortgage loan. CCAL requires no monthly repayment, is interest free and is forgiven after ten years.

National home loan guaranty programs for veterans generally require down payments of up to 10%, require payment of borrower points, and do not offer closing cost assistance.

To qualify, veterans must provide proof of active duty and proof of release from duty under conditions other than dishonorable by submitting DD Form 214, Certificate of Release or Discharge from Active Duty.

Additionally, veterans must satisfy SONYMA’s income and home purchase price limits as well as other eligibility requirements. Maximum annual incomes for SONYMA programs range from $35,630 to $67,550 for the Achieving the Dream Program and $63,100 to $135,100 for all other programs. The limits vary based on the program selected, the household size and the location of the prospective home.

SONYMA is a public benefit corporation of the State of New York created in 1970. The Agency’s mission is to create affordable homeownership opportunities for low and moderate income first time homebuyers and other qualifying homebuyers. In addition, SONYMA’s homeownership programs help stabilize and rebuild federally designated economically depressed Target Areas throughout New York State by enhancing opportunities for homeownership.

The New York State Division of Veterans’ Affairs was created in 1945 as part of the Executive Department to assist veterans, members of the armed forces, their families, and their dependents in securing benefits earned through military service.

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• Legislature Passes Bill To Make SONYMA Mortgages More Attractive

Effective May 1, 2007, SONYMA (State of New York Mortgage Agency) will accept loans that are 40 years in term. SONYMA has allocated an additional $10 million for its Closing Cost Assistance Loans (CCAL) which provides borrowers with the greater of $5,000 or 5% of their total mortgage amount to cover the expenses associated with closing their mortgage loan.

The 40 year mortgage product will offer up to 97% financing, and a below market interest rate that remains fixed for the duration of the loan. The fixed rate on the 40-year mortgage will initially be offered at 5.5% for SONYMA’s standard program, the Low Interest Rate Program. This is an estimated 0.875 % below average market rates for 40-year mortgages.

With this new 40 year product, borrowers will have lower monthly payments than a traditional 30-year mortgage. On a loan amount of $225,000, this translates into monthly savings of approximately $100. This difference can help first-time homebuyers achieve their goal of sustainable homeownership. said Priscilla Almodovar, the President and Chief Executive Officer of State of New York Mortgage Agency.

By reducing or eliminating borrowers contributions towards closing costs, SONYMA’s CCAL helps borrowers overcome one of the larger obstacles to homeownership – the amount of funds generally necessary for down payment and closing costs. The assistance is available in combination with any currently available SONYMA mortgage program. It requires no monthly payments and is forgiven after ten years.

The purpose of the Agency is to create affordable homeownership opportunities for low and moderate income first time homebuyers and other qualifying homebuyers. SONYMA is a public-benefit corporation of the State of New York created in 1970.

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• Homes for Veterans Program to Provide SONYMA Low Interest Rate Mortgages for New York State Veterans
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• SONYMA Now Provides Federal Recapture Tax Reimbursement to Borrowers
• Downstate Purchase Price Limits Increased To Make SONYMA Mortgages More Attractive
• Legislature Passes Bill To Make SONYMA Mortgages More Attractive