State To Help Low-Income Families Buy Homes

The Mississippi Home Corp. has issued $25 million in bonds to fund a program for would-be homebuyers with flawed credit records. Gov. Ronnie Musgrove said Monday the lease-to-own program will help low-income buyers and those with credit problems sidestep obstacles in getting loans to buy homes.

"With the first issuance of $25 million in bonds, we're going to be able to help between 250 and 300 families across the state to have homes,'' Musgrove said.

The Get On Track Mortgage program is a partnership involving the Mississippi Home Corp., the mortgage company Freddie Mac and lenders.

Congress created Freddie Mac to buy home loans from banks and other lenders to supply ready cash to the home mortgage market. They buy mortgages from lenders to keep in their portfolios and package others into securities for sale on Wall Street. The MHC, established by the state to oversee government programs, repays the bonds with revenue generated by the mortgages.

Get on Track allows potential homebuyers to lease homes for up to 39 months. By then, officials estimate, the would-be buyers will have improved their credit standing enough to assume a mortgage loan. The MHC pays for credit counseling to lessees during the 39-month period. The program also pays the 3 percent needed for a down payment and closing costs.

The maximum purchase price for a home is $310,000. The mortgages carry an interest rate of 6.625 percent. Chuck Morris, senior vice president of program operations for MHC, said the program is the first of its kind in the nation.

"We're plowing new ground,'' Morris said.

At 65 percent, Mississippi has one of the nation's highest home ownership rates. Morris said lenders across the state have already reported receiving 150 applications for the program.