Banking & Finance, Nonprofits, and Real Estate

Huntington likely to unveil new mortgage program

Regional lender will make KCLBA-designed effort part of its offerings.

October 11, 2013
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A locally originated program designed to keep underwater homeowners in their houses may soon become operational in six states.

Kent County Land Bank Authority Executive Director Dave Allen recently told board members the Home Saver program he drew up last year with Tracie Coffman of Home Repair Services has been adopted by Huntington Bank.

Allen said the regional banker with 725 branches across six states, including Michigan, would unveil the program in the very near future. “It was a really unique idea,” he said to board members.

Allen declined to discuss the program’s details so as not to steal the bank’s thunder from its upcoming announcement, but he noted that Huntington participated in it from its conceptual beginning.

In March 2012, Allen and Coffman, Home Repair’s financial consulting manager, met with local Huntington officials including Dan Shanahan, the mortgage retail division manager for the Huntington Mortgage Group in Grand Rapids.

Todd Householder, a senior vice president with Huntington who oversees risk management for the lender from his office at corporate headquarters in Columbus, Ohio, also attended the meeting.

“As we opened the meeting, Todd expressed how impressed he was with our concept and stated it was extremely ‘doable’ and that the timing for a program such as this could not be better in light of where the mortgage industry sits, particularly in regard to the current state of GSE’s, Fannie, Freddie, and FHA,” wrote Allen in a memo to the KCLBA board at that time.

After a lengthy discussion, Allen said everyone agreed the land bank would act as the “investor” in the Home Saver program, meaning it would provide the funding Huntington needed to execute loans on KCLBA’s behalf.

“Huntington Bank will underwrite, originate, close and service mortgage loans using KCLBA funds and our lending criteria,” said Allen.

The test case for the program was an occupied house on Dickinson Street SE in Grand Rapids. The owner was the victim of a predatory loan issued by the now defunct AmeriQuest Mortgage Co. in 2003. Three years later, she lost her job, was placed on total disability, fell behind in her mortgage payments, and then the nation’s housing market collapsed.

By 2012, she had accumulated $150,000 in debt on her home, including $50,000 worth of charges tied to her $100,000 mortgage. Her home had a market value of $20,000 then. Chase Bank, which bought the servicing of the mortgage, wrote off the loan in 2010 rather than foreclose on the house.

The land bank ended up purchasing the house from Chase for $12,000, and then turned to Huntington to create a small mortgage reflecting the home’s market value. The occupant/original owner paid rent to the land bank for the first month KCLBA owned the home.

“Someone like this homeowner is not a candidate for a loan due to credit issues, not to mention many lenders do not want to issue mortgages under $30,000. So to have an option where this homeowner could settle her debt without any further worry of recourse, have an affordable payment and no longer be underwater on her home is an amazing program that could not have come at a better time,” said Allen to board members.

Huntington issued a 30-year, $20,000 mortgage to the land bank in May 2012. The original owner has agreed to a monthly mortgage payment of $369 and an automatic electronic withdrawal of the charge. The land bank expects to be made whole by the mortgage’s 18th month, which arrives at the end of this year.

“We will be assigning, or selling, the mortgage in 18 months. Technically, Huntington Bank will be servicing the mortgage,” said County Treasurer Ken Parrish then. Parrish founded and chairs the land bank.

Allen said Shanahan told him that once the loan is seasoned, meaning payment dates have been met in full for about 18 months, Huntington will buy the mortgage. That action will bring the Home Saver test case to a successful ending.

Huntington has been closely aligned with the land bank since its inception. The lender makes an annual line of credit available to KCLBA, and its vice president of community development, Renee Williams, is on the agency’s advisory council. Founders Bank and Trust serves in a similar capacity with the land bank.

Besides Michigan, Huntington has offices in Ohio, Pennsylvania, Indiana, West Virginia and Kentucky. It’s unknown when the bank will announce the Home Saver program as a new initiative.

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