CHICAGO –Building on his commitment to help working families realize the American Dream of homeownership, Governor Rod R. Blagojevich today launched a new mortgage program designed to help hardworking, taxpaying individuals and families from the immigrant and minority communities. The program, called Opportunity I-Loan, will help those individuals and families who do not have a traditional checking account or have not been able to establish a credit history, qualify for low-interest mortgage loans and buy their first home. This program will make Illinois only the second state in the nation to provide affordable, 30-year fixed rate mortgage loans for qualifying individuals and families that live and work and pay taxes but have no credit history or social security numbers. The program will also offer further protections from predatory home loans.
“Buying a home is a key first step for many working families to start realizing the American Dream. But when you are paid in cash, or you can’t open a checking account or establish a credit history, applying for a mortgage loan is a lot more difficult,” said Gov. Blagojevich. “That’s why we created the Opportunity I-Loan program to help Latino families, African-American families, Asian-American families and so many other families qualify for a loan and buy a home. Our new program helps families build equity and security for their future, it protects them from predatory loans, and it will help thousands of families across Illinois build better lives.”
The Opportunity I-Loan will target populations that live and work in a cash economy, under the radar of credit reporting companies. These groups are traditionally wary of banks and prefer to cash their paychecks at the local grocery store and pay their bills in cash. Because mainstream financial institutions cannot qualify them for mortgages, they are at the highest risk for predatory loans, unaffordable ARM and interest-only products, and other loans that threaten the safety of working families and the prosperity of the communities where they live and work.
Applicants to this program must show that they have paid income taxes for the past two years. The Illinois Housing Development Authority (IHDA) will accept tax returns with social security numbers or ITIN’s.
Opportunity I-Loans have a below market interest rate (currently 5.95%) for a 30-year fixed rate mortgage. The interest rate varies depending on market interest rates but is always at least a half of a percentage point below market interest rates. Through the program, homebuyers are eligible for $1,000 down payment assistance for a slightly higher interest rate. Additional down payment assistance is available through community organizations including Spanish Coalition for Housing and LUCHA.
Homebuyers using Opportunity I-Loans do not need a bank account or a social security number to qualify for the loan, removing major obstacles to homeownership. IHDA expects to help 100 families buy homes with $15 million in Opportunity I-Loans in 2006.
Congressmen Danny K. Davis (D-7th) and Luis Gutierrez (D-4th) today joined with the Governor’s Deputy Chief of Staff Esther Lopez, Illinois Housing Development Authority (IHDA) Director Kelly King Dibble, housing advocates and hundreds of residents in Chicago’s Lawndale community, to formally announce the Governor’s new mortgage program. Opportunity I-LOAN will be implemented by IHDA as part of the state agency’s I-Loan Mortgage Program. IHDA will expand its underwriting guidelines to accept alternative forms of credit and the Internal Revenue Service’s issued ITIN numbers.
According to US Census Bureau’s Survey of Income Program Participation and Chicago’s Center for Financial Services Innovation, 46% of all African American’s are ‘unbanked’ or don’t have bank accounts. 34% of US born Hispanics are similarly unbanked and a third of all immigrants, Asian, European, Latino and other are unbanked. “This program will break down the barriers between conventional banks and the communities that are underserved by them,” Governor Blagojevich said.
“The Opportunity I-Loan program is the same affordable 30-year fixed rate mortgage we offer under our other mortgage programs, and it is also at least a half percent below the market rate,” said Kelly King Dibble, IHDA executive director. “The change we are announcing today is that IHDA will now accept payroll check stubs, rent receipts, phone bills and other documents that prove credit-worthiness rather than relying on scores from credit reporting companies.”
“While many people of all ethnicities are fearful of credit card companies, it is clearly a problem in the African American community, where check cashing storefronts thrive. But Governor Blagojevich understands that we can’t let that fear be a barrier from the security of buying a home, or hinder a neighborhood from growth and stability from homeownership,” said Danny K. Davis. “This program is necessary to bring Illinois residents into a safe mortgage before they get robbed by predatory lenders.”
“Homeownership is a central wealth-building tool and an essential vehicle for long-term financial security and stability,” said U.S. Congressman Luis V. Gutierrez (D-IL) “The Opportunity I-Loan program will help immigrant and minority families tear down barriers that prevent homeownership and provide opportunities and options for first-time buyers. This initiative is another example of how Governor Blagojevich is making Illinois a state where all those who work hard can have access to the American Dream.”
Juanita Irizarry, the executive director of Latino’s United and a prominent member of Governor Blagojevich’s Statewide Housing task force emphasized that “Illinois has more than 440,000 immigrant households and that they will account for one quarter of new homebuyers in the Chicago area. With this program, the Governor has proactively addressed their situation, helping them become homeowners.”
Man-Yee Lee, a 34-year old British-born immigrant in Chicago who works as a coordinator at the Chinese Mutual Aid Association believes that the problem is with the banks, not the communities. “I don’t have a credit score because my local banks wouldn’t give me a credit card,” she said at the event today. “Even though I am perfectly legal, with a social security number and a good job, I was denied a credit card. I don’t have a credit score and I can’t get a mortgage from a bank.” Man-Yee and her husband, a US citizen, hope to qualify for an Opportunity I-Loan.
IHDA does not originate loans directly to consumers. Rather, to receive a home mortgage through this program, borrowers must go through an IHDA-approved partner bank that originates IHDA’s loans. Currently seven banks are trained to accept applications for Opportunity I-Loans. “We will continue to train all IHDA-approved originators across the state on this program throughout the next several months as interest grows and resources permit,” said Kelly Dibble. The seven banks that currently originate the Opportunity I-Loan are:
These actions have brought a new focus on the state’s housing needs and have expanded the resources available to create and preserve quality, affordable homes.