Mass Educators Eligible for Low Cost Home Loans Under $100M Program
By Michael P. Norton for the State House News Service
       The state Treasury and one of its largest banks are about to begin helping more teachers and school administrators buy homes in Massachusetts.
       All certified educators in Massachusetts, including public and private
grade school teachers, school administrators and state college or university educators are eligible for low-cost loans, under a $100 million program that will be formally launched on Thursday by Sovereign Bank New England and state Treasurer Timothy Cahill.
       “We’re rolling it out as we speak,” Sovereign Bank New England President and CEO Joseph Campanelli said in an interview on Wednesday. “Our goal is to make as many loans as we can.”
       The program’s supporters say it will stabilize communities and schools and help the state meet its goal of developing a more educated workforce by enabling more teachers to settle down in cities and towns, where rising prices and a limited supply of new homes are making home ownership more difficult to achieve.
       “It’s a great venture when you have the public and private sector working together on an issue that challenges the region,” Campanelli said. “We’ve got to find ways to be more innovative and to enable people to live where they grew up and to stay competitive on a national basis.”
       Under the Massachusetts Educators Home Loan program, educators buying their primary residences or refinancing an existing mortgage to obtain fixed rate home mortgage loans and home equity loans may make down payments of as little as 5 percent. No fees will be charged to lock in rates or to apply, and closing costs will be discounted.
       Sovereign will administer the program, and deliver market rate returns to the state Treasury, which is depositing $100 million in state trust fund revenues with the bank to support the mortgage loans. The “linked deposit” was recommended earlier this year by a task force convened by Cahill as a way to retain and create jobs.
       Campanelli said the down payment provision will appeal to teachers who are having trouble coming up with the 10 to 20 percent deposits that some banks require on mortgage loans. In many cases, he said, teachers who are renting are not paying much less than they would be paying with a mortgage. “Many times it’s a question of having that necessary down payment,” he said. “The real issue is being able to acquire a home sooner rather than later.”
       According to the state Department of Education, the average teacher salary in fiscal 2003 in Massachusetts was $51,800. According to the
Massachusetts Association of Realtors, the median home sale price in 2004 was $340,000, an increase of 11.5 percent over 2003.
       “Unfortunately, buying a home in Massachusetts can be difficult to manage on a teacher’s salary,” said Cahill. “This new lending program will help us retain talented educators by providing them with the resources needed to make living and owning a home in Massachusetts more affordable.”
       Educators who would like to apply for Sovereign’s Massachusetts Educators Home Loan program may visit any one of Sovereign Bank’s 240 banking offices in Massachusetts, or call 888-758-7076.