SONYMA to borrow $168 million to finance 2,468 new mortgages
About 530 loans would be made in Western New York by Sept. 15
The State of New York Mortgage Agency plans to issue $168 million in bonds to support the purchase of about 2,468 new mortgages valued at $323 million statewide — one-fifth of them in Western New York.
The planned mortgage purchases, which will occur through Sept. 15, represents a 76 percent increase from $183 million in loans purchased from Jan. 1 to Sept. 15 in 2007.
The surge in expected demand through the next month follows the record level of new loan applications for the first seven months of 2008. That means the full year’s volume could approach SONYMA’s all-time high of $565 million, officials said.
They attributed the popularity of the program this year to the agency’s outreach over the past two years, changes to streamline the program, and the tightening of credit underwriting standards by private-sector lenders that has driven borrowers to seek out alternatives.
Demand has increased throughout the state, with particular growth in New York City and on Long Island. About 530 loans are expected in the eight counties of Western New York, up 46 percent from last year. That includes 346 in Erie County and 82 in Niagara County.
“SONYMA has been able to respond to this surge in demand because we streamlined our procedures and increased our outreach to the lending community,” SONYMA President and CEO Priscilla Almodovar said in a press release. “By doing so, we remain a viable option in tough economic times for working families.”
SONYMA’s efforts to respond to what it calls “near-record demand” for its low-interest, fixed-rate mortgages represents one of numerous attempts by state and federal agencies to prop up the nation’s shaky mortgage and housing market. Some efforts focus on refinancing high-cost adjustable- rate mortgages into more affordable loans to prevent foreclosures, while others seek to help borrowers buy new homes.
SONYMA was created in 1970 to help low-and moderate-income families buy homes. The agency offers a variety of loans through participating lenders, featuring low down payments and below-market interest rates, as well as closing cost assistance. Products include 30-year and even 40-year mortgages. Its current rate is 5.875 percent for 30 years, with 3 percent down.
It then buys and keeps the loans, rather than selling them to third-party investors. The proceeds from the new bond sale, expected to close next week, will fund purchases.
This is SONYMA’s second bond issuance this year, after selling $97 million earlier. Officials expect to issue another $250 million in bonds by yearend.
