MassWorks News

By David Eiranova
THE LOWELL SUN

ANDOVER -- Stroll into your human-resources department and ask if your company has a mortgage-assistance program and you'll probably get that "deer in the headlights" stare.

But a new initiative from the Massachusetts Housing Partnership is working to change that.

MassWorks Mortgage, which began in 2007, is touted as a way employers can help maximize employees' ability to obtain their first house. Working in conjunction with the state's SoftSecond mortgage program, MassWorks will provide up to $5,000 in matching grants to employees of a participating company.

"What this means, dollar for dollar," assuming the employer makes the minimum contribution of $2,500, "is that if you're looking at approximately a $200,000 purchase price on a home, a difference in payment versus a conventional loan would be about $500 (less) per month," said Gina Govoni, who manages the SoftSecond loan program for the MHP.

She spoke yesterday to the board of directors of the Merrimack Valley Economic Development Council at their meeting at the Wyndham Hotel in Andover.

Govoni told The Sun later that there no Lowell companies are participating. But she said that in Worcester large employers like UMass Memorial Hospital and Worcester Polytechnic Institute have begun to offer employees a chance to take advantage of the benefits of this program.

MassWorks is targeted to first-time buyers, and only to those whose incomes do not exceed 100 percent of the median income of
their community. In addition, participants must complete an approved homebuyer-education course.
The minimum downpayment required (downpayments may also receive assistance) is 3 percent. The SoftSecond program splits the remaining amount into two loans, one covering 77 percent of the purchase, and one covering 20 percent. These are discounted fixed-interest loans, and not subject to rate increases, unlike the adjustable rate mortgages that have resulted in many people losing their homes in recent times. In addition, these loans do not require private mortgage insurance.

So what is the benefit to employers?

Responding to a question from the audience, Govoni said a driver in getting businesses involved has been the interest from large institutions in developing the community around them.

Housing costs can be much less in other parts of the country, so one way that the MassWorks program benefits employers is by making it easier for key employees, such as workers that must go through an extensive training, to remain in the area.

Govoni says SoftSecond loans have been instrumental in helping to stabilize the housing market by allowing people to become homebuyers who might not otherwise be able to get financing.

"To date we have about 12,000 homebuyers who've used the program, and we're very happy to say that," she said. According to Kelly Maloy, operations manager of the SoftSecond program, 31 people in Lowell took out a SoftSecond loan in 2007, and 60 have done so in 2008.

One thing the MassWorks loans can do is increase the purchasing power of a homebuyer. According to information presented in a brochure, just the SoftSecond loan alone allows a homebuyer to afford, at the same monthly payments, a home worth about $40,000 more than with a conventional mortgage.

When there is a $2,500 employer contribution (matched by MassWorks), purchasing power increases another $9,600.

All SoftSecond loans are subsidized by the state with $5,000, which allows for a graduated payment for the first 10 years of the loan.

"Those are the years that the homebuyer needs the most help. That is when and if someone's going to face trouble with their mortgage, it's most likely to happen in those early years of home ownership," said Govoni.