Wisconsin Police, Firefighters Can Get Low-Cost Loans
by Michele Derus, Milwaukee Journal Sentinel
Wisconsin firefighters, paramedics and police officers are safe bets as borrowers, lenders say.
That’s why a partnership led by St. Francis Bank this week will launch a $500-down, special-attention home purchase program for them.
“They’re good credit risks, stabilizing influences in the community, and this is a way to show some appreciation for the services they’ve provided all of us,” said Jim Eckel, executive vice president of the Brookfield-based bank.
The housing promotion group Select Milwaukee Inc. will help applicants navigate the loan process, Fannie Mae will buy the loans and Mortgage Guaranty Insurance Corp. (MGIC) will provide insurance.
Sponsors will recruit safety professionals through their unions and associations. Informational sessions are scheduled at 4:30 p.m. Tuesday and 1 p.m. Wednesday at the Milwaukee Professional Firefighters Association office, 5625 W. Wisconsin Ave.
Key elements of the offer, called Safety First:
- Loans up to $ 300,700, at market rates -- which are now about 5.75% on a 30-year, fixed-rate loan -- on housing anywhere in the state.
- Down payments as low as $ 500, credit scores as low as 600, total-debt ratios as high as 50% of income.
- Applicants must agree to clean up credit record problems and attend homeownership counseling.
- No income limit in the City of Milwaukee, and a median-income limit elsewhere. Currently, metro Milwaukee’s median income is $ 67,200.
“We could have done these as portfolio loans, because this population is a good bet. But some factors have jelled -- Fannie Mae willing to buy all the loans we can make, MGIC willing to insure them and mortgage rates at 40-year lows -- that we’ll probably never see again,” Eckel said.
Eligible safety professionals include sworn law enforcement officials in state, local and federal government, on college and hospital grounds and at hospitals, utilities, airports and port authorities. Also included are emergency medical technicians, paramedics and firefighters.
These groups constitute a huge, largely untapped market, said Ray Schmidt, Select Milwaukee’s executive director. “They’re relatively young people, not making a tremendous amount of money, and probably never purchased a home before. They’re typically people who go into their work for the long haul -- good, solid, stable positions that make them great candidates for homeownership,” Schmidt said.
Safety First is patterned after a nationwide Fannie Mae program called Community Solutions. The concept, introduced a year ago, is being used in several parts of the country, said Kerri McClimen, Fannie Mae’s Midwest communications manager. Fannie Mae will buy as many mortgages here as St. Francis Bank approves, McClimen said.
Safety First assumes that applicants have scant financial resources, marred credit records or irregular savings patterns -- factors that could keep them out of the market or, worse, drive them to expensive, subprime lenders, Schmidt said.
“We could end up closing a couple hundred loans the first year alone,” with twice that number in pending loans, Eckel said. “There’s got to be thousands and thousands of people in this group and even if only 2 percent of them wind up homeowners, we’re going to be very busy.”