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GINNIE MAE TARGETED LENDING INITIATIVE CREATES FUNDING FOR MORE THAN 59,000 NEW HOME MORTGAGES
WASHINGTON – Ginnie Mae today announced that an initiative that encourages lenders to provide mortgage loans to underserved central city neighborhoods to boost homeownership helped provide $5.3 billion in financing for 59,108 new loans in the 1997 and 1998 fiscal years.
Ginnie Mae is a wholly-owned government corporation within the Department of Housing and Urban Development that supports federal housing initiatives by providing liquidity to the secondary mortgage market and by attracting capital to the residential mortgage markets. Ginnie Mae programs help increase the supply of affordable housing by guaranteeing securities issued by private lenders backed by pools of residential mortgages insured by the Federal Housing Administration (which is part of HUD), the Department of Veterans Affairs and the Rural Housing Service.
The Targeted Lending Initiative was launched during 1996 with the goal of producing $1 billion of new lending and 15,000 new homeowners in targeted areas each year.
Total lending in targeted areas during the 1998 fiscal year amounted to $12.9 billion, representing a $1.1 billion increase over the benchmark total for such loans. Over the past two fiscal years, loans pooled from targeted areas amounted to $23 billion.
Ginnie Mae reduces the guarantee fees it charges to lenders by up to 50 percent when lenders make home mortgage loans to central city homebuyers in one of 72 communities around the nation. The areas represent communities designated by HUD as Urban Empowerment Zones, Supplemental Empowerment Zones, Enterprise Communities or Enhanced Enterprise Communities. Underserved areas adjacent to the zones are also eligible.
The Empowerment Zones/Enterprise Communities initiative, announced by President Clinton in 1994, is restoring opportunity to distressed communities by providing tax incentives to attract private enterprise, and also provides social services and other programs.
Content Archived: January 20, 2009