State to help teachers buy homes

Massachusetts teachers will be allowed to put less money down when they borrow to buy homes under a plan state Treasurer Timothy P. Cahill will unveil today during a speech at the Greater Boston Chamber of Commerce, according to a Cahill aide and a banking executive.

Cahill has struck a deal with Sovereign Bank, which handles about $30 billion of the state's money, to set aside $100 million for a home mortgage program for teachers. The teachers would not get a break on interest rates but would be allowed to put down as little as 5 percent, instead of the usual 20 percent, without paying penalties. The loans will be available beginning June 1.

Sovereign displaced FleetBoston Financial Corp. as the state's primary banker two years ago.

''[The state is] a very important client. We do have a close personal relationship with them, and we do have a desire to support the community that we live and work in," said Joseph P. Campanelli, chief executive of Sovereign Bank New England.

In addition to allowing teachers to put less money down, Sovereign will relax its usual rules on loaning to people with a lot of debt, and give teachers a discount on closing costs, Campanelli said.

A national program, run through Fannie Mae and Freddie Mac, already offers flexible mortgage financing to teachers, firefighters, police officers, and healthcare workers. But Campanelli said the state's high housing costs have made it difficult for many teachers to take advantage of that program.