Douglas, VHFA announce $10 million housing initiative

BURLINGTON, Vt. --A $10 million initiative designed to help people buy homes in areas designated by the state for residential growth was unveiled Tuesday by the Vermont Housing Finance Agency.

That program is being accompanied by the launch of two new insurance products for VHFA borrowers by the Mortgage Guaranty Insurance Corp., which advocates said would help to make home ownership more affordable.

"This is another way of helping people realize their dream of affordable homeownership," Sarah Carpenter, VHFA executive director, said in a news release announcing the program.

She said qualifying borrowers could get 30-year fixed-rate mortgages with 4.75 percent interest rates for new homes in designated developments. The prime rate, the rate that banks charge their best customers and that they use as a basis for other lending, is 8.25 percent, according to The Wall Street Journal and the Web site bankrate.com.

The loan program would be good for homes newly built in developments designated by state government for housing growth, Carpenter said.

She said that requirement would encourage developers to help in driving down the cost of housing. "We feel this program also helps encourage the development of affordable housing in areas where Vermont communities have decided they want housing built," Carpenter said.

Gov. Jim Douglas, who participated in the announcement of the program, echoed that. "The concern over housing affordability on the part of consumers, employers and the housing industry remains high, which is why we still need the kind of creative and effective thinking that goes into programs like the ones we're announcing today," Douglas said. "Creating more affordable housing helps us create more and better paying jobs."

Douglas' Democratic opponent in the governor's race, Scudder Parker, chastised him for his record on housing. Parker said Douglas had requested too little funding for the Vermont Housing and Conservation Board, which resulted in the creation of 500 fewer units of housing than would have been built during his administration if he had requested "the level of property transfer tax funds called for in statute. Voters should ask why."

VHFA did not allow itself to be drawn into the political debate.

Carpenter said the new initiative would also help make housing more affordable by offering a pair of new insurance products through the Mortgage Guaranty Insurance Corp. One, which would be offered free, would provide insurance against involuntary unemployment. Beneficiaries could get up to $2,000 a month for six months if claimed within the first two years of the loan. The other program was a lower cost mortgage insurance plan, which VHFA said cost 35 percent less than conventional programs.

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On the Net:

Vermont Housing Finance Agency: http://vhfa.org