CEFCU Opens Home Ownership Doors with Downpayment Plus Program

PEORIA, Ill. – CEFCU is still the only credit union in the state providing financial assistance to qualified low income homebuyers through the Downpayment Plus program, a joint program of the Federal Home Loan Bank of Chicago and the Illinois League of Financial Institutions. This year the $2.4-billion credit union has its sights set on assisting a substantially greater number of qualified homebuyers thanks to a change in the program’s policy. The Downpayment Plus program used to be limited to first time homebuyers. Starting in 2003, it was opened up to any low-income homebuyer – regardless if they’re purchasing their first home or they’re a repeat homebuyer – who meets the program’s qualifications. The Affordable Housing Program of the FHLB of Chicago which funds the program has committed $3.8 million to the program in 2003. In 2001, Sara Payne, CEFCU’s first mortgage operations manager, said the credit union facilitated 20 grants, and last year it did 19. Already, in the first quarter of 2003, the credit union has implemented 10 Downpayment Plus grants. CEFCU is one of 77 financials in Illinois that is involved with the Downpayment Plus program. Participants do not make the actual loan to a qualified homebuyer; instead they make a grant to low income qualified homebuyers of up to $4,000 to be used torwards a downpayment, closing costs, reserves, homeownership counseling, or other expenses related to a home purchase. The financial is then reimbursed for the grant by the FHLB of Chicago. Payne said reimbursement typically takes about 30 days. To qualify for grant assistance, the candidate’s aggregate annual household income must be 80% or less than the area median family income, adjusted for family size. Homebuyers must also make a cash contribution of at least $750 towards the home purchase. They also have to receive homeowners education to make sure they understand the home buying process as well as the financial responsibilities of homeowners. Grants are forgiven after a five-year term, at the rate of 1/60th each month, as long as the home remains owner occupied. Since borrowers cannot apply for grants on their own directly with the FHLB, but must apply through a financial participating in the program, that means a potential candidate who is not a member of CEFCU and wants to apply for the grant through the credit union must first join. Payne said so far this year out of 10 members who received the grants through CEFCU, two opened their account with the credit union before the grant application was taken. CEFCU has $1.2 million in its mortgage servicing portfolio, but Payne stressed that the grants do not remain in the credit union’s mortgage portfolio. “Sometimes the only thing standing between someone purchasing their own home and the front door is being able to afford the downpayment requirements and meet the closing costs,” said Payne. “The Downpayment Plus program is a way to help families in Central Illinois who otherwise wouldn’t qualify for a mortgage, to overcome some of the major obstacles.” -