Connecticut’s affordable housing market just got a shot in the arm from one of the nation’s largest financers.

Fannie Mae, a national source of financing for home mortgages, recently announced the American Dream Commitment for Connecticut, a statewide $15 billion affordable housing investment strategy that will help provide affordable homeownership and rental opportunities for as many as 105,000 individuals and families over the next five years.

The Fannie Mae Connecticut Partnership Office in Hartford will implement the new affordable housing strategy through its lender and community partners.

U.S. Rep. Nancy L. Johnson joined Meriden Mayor Mark Benigni, Meriden Housing Authority Executive Director Troy White, representatives from Fannie Mae, local lenders and housing partners at the Curtis Cultural Center in Meriden at an event last month to introduce the strategy and announce a new Meriden Housing Authority Housing Choice Voucher/Homeownership Assistance Program.

That program will allow recipients of Section 8 vouchers to use their vouchers toward the payment of principal, interest, taxes and insurance on a mortgage, thus helping low- and moderate-income families to become homeowners.

The American Dream Commitment is an extension of Fannie Mae’s recently completed five-year housing strategy, announced in 1999 and completed almost two years ahead of schedule, which provided $6.5 billion in financing and served more than 65,000 Connecticut residents. Through local efforts, Fannie Mae purchased loans that served 19,323 first-time homebuyers, 15,889 minority borrowers and 77,917 low- and moderate-income borrowers in Connecticut’s town and cities.

“This is the third time since 1995 that Fannie Mae has made a sizable commitment to investing in extending the American Dream of homeownership to people who live and work in Connecticut,” said Johnson at the event. “Fannie Mae’s new five-year $15 billion investment strategy recognizes that we have a long way to go to achieve housing equality in this state.”

According to Bob Kantor, director of Fannie Mae’s Connecticut Partnership Office, during the course of the five-year program, $14 billion will be funneled into single-family purchase mortgages, and no refinances. Another $500 million will be spent on multifamily mortgages and commercial properties, and the final $500 million will go toward community development and construction financings.

“We have several deals in the hopper,” said Kantor. “They’ll be like affordable condominium developments, and renovations of other buildings, because Connecticut has very old housing stock. There will also be a lot of outreach to help minorities. Connecticut lags behind the nation in terms of minority homeowners, so we plan to educate them on how to qualify for conventional mortgages.”

‘The Strongest Sector’

Kantor also noted that there is also a big push on employer-assisted housing initiatives. The housing choice voucher program will be expanded into other communities, both large and small, and Fannie Mae will get on board with Gov. John G. Rowland’s Hartford-based housing initiatives as well.

“We’ll be building, restoring or converting properties into affordable rental and condominium units. The market is really tight in several places and there is not a lot of land left to build on. We see that for rents people are paying, they can afford to own those homes and build some equity, so we’re trying to help them the best we can,” said Kantor. “The mortgage market has grown and housing has been the strongest sector of the Connecticut economy, so we’re tying to keep this housing momentum building. It creates community stability and has an important wealth building impact.”

Kantor said Harvard University’s Joint Center for Housing Studies has reported that “the difference between a homeowner’s net worth vs. a renter’s is just eye-popping.” The median net worth for a homeowner is $171,800, where a renter’s median worth is about $4,800, according to the center.

“A lot of people don’t understand what we do because we’re behind the scenes and we buy loans from banks, but we’ll keep creating new product to make it easier and easier to qualify for a mortgage,” said Kantor.

“This five-year affordable housing strategy will focus on increasing minority homeownership, community development, local housing pilots to address unique needs, and quality affordable rental housing for the critical affordable housing needs of Connecticut,” said Zach Oppenheimer, senior vice president for Fannie Mae’s single-family mortgage business. “Fannie Mae recognizes the great disparity in homeownership in the Constitution State, and is recommitting its effort to help its partners leverage the company’s resources and expertise as much as possible.”

According to U.S. Census data, both Connecticut’s and the nation’s homeownership rates are at an all-time high, exceeding 68 percent. However, only 36.5 percent of African-American and 28.1 percent of Hispanic families in Connecticut own their homes – rates even lower than the national average for minority families of just below 48 percent.

“Four years ago, Fannie Mae launched a strategy to provide low-cost capital to help 65,000 families of modest means across the state to own or rent a home affordably,” said Kantor. “With today’s announcement, we will help more than 100,000 additional families, and we’re starting by assisting the Meriden Housing Authority with its Housing Choice Voucher/Homeownership Assistance Program.”

The program will allow recipients of HUD’s Section 8 rental assistance, now known as the Housing Choice Voucher program, to use their vouchers to qualify for a mortgage. The Quality Housing and Work Responsibility Act of 1998 established a Housing Choice Voucher, authorizing public housing authorities to provide Section 8 rental assistance subsidy for an eligible family that purchases an owner-occupied, single-family home. Upon purchasing a home, the homeownership option allows voucher recipients to apply the subsidy toward the payment of principal, interest, taxes and insurance on a mortgage.

Fleet Mortgage and Wachovia Mortgage have agreed to originate loans under the Housing Choice Voucher program and Fannie Mae will purchase eligible loans.

“With help from Fannie Mae and its lender partners, Meriden will be able to increase the number of homeowners in our community,” said Benigni.

Over the next five years, Fannie Mae’s Connecticut Partnership Office will work with housing industry partners, focusing attention and resources on expanding homeownership and rental housing opportunities for minority populations, first-time homebuyers, and working families. That includes providing lending partners with affordable mortgage financing solutions, such as mortgages with low down payment requirements and flexible qualification criteria and offering valuable resources to local nonprofit groups to help more working families and other underserved communities become homeowners.

Kantor said the recent impact on the housing market hasn’t just been through the purchase market, noting that Fannie Mae has done a tremendous amount of refinancings in the past two years.

“That has helped people shave hundreds of dollars off of their mortgages and put money back into the economy, so we’re going to continue that as well,” he said.