Cambridgeport Bank Introduces 1% Down Payment Mortgage with No Mortgage Insurance For First-Time Homebuyers; New Program Will Allow Many To Achieve Dream of Home Ownership

Business Wire, Jan 29, 2001

Business Editors

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Jan. 29, 2001

Cambridgeport Bank today announced that it has introduced a new, exciting mortgage program that will make home ownership more affordable for first-time homebuyers and people who have not owned a home in the last three years.

The new mortgage program, a fixed-rate mortgage with a 30-year term, features a one percent down payment and no mortgage insurance. The offering of the new program is being made possible as a pilot program through an alliance between Cambridgeport Bank, Fannie Mae (FNM/NYSE), the nation's largest source of financing for home mortgages, and Self-Help, a community economic development lender based in North Carolina.

"We are pleased to continue our long tradition of helping individuals and families become homeowners," stated James B. Keegan, President and Chief Executive Officer of Cambridgeport Bank. "This new program should help reduce the down payment obstacle that many families may face in their desire to own a home."

Keegan indicated that Cambridgeport Bank conceived the new mortgage program and proposed it to Fannie Mae, who brought in Self-Help. After a loan is originated by the Bank, it is purchased by Self-Help, which in turn sells the loan to Fannie Mae. Fannie Mae then packages the loan as a mortgage-backed security that is purchased by investors. Cambridgeport Bank continues to service the loan.

The new program combines a number of features to help improve affordability and qualification. For example, with a $150,000 purchase price for a single family home, a borrower would only need to make a $1500 down payment. The program is made even more affordable as closing costs may include the borrower's own funds, gifts, grants or money from a down payment assistance program.

"Each loan application will be considered on an individual basis," stated Bruce C. Ocko, Senior Vice President of Retail Lending at Cambridgeport Bank. "It is our hope that this program will help many people realize their dream of becoming a homeowner," he added.

For example, to help with qualification, consideration will be given for nontraditional credit histories. If a traditional credit history is not available, a minimum of four sources of nontraditional credit will be considered. All sources of credit must have at least a twelve-month history. For two and three family homes, qualification consideration will even be given for a percentage of the anticipated rental income.

The absence of a mortgage insurance requirement can also help make monthly payments more affordable. For example, the monthly mortgage insurance premium on a 3% down, standard $150,000 mortgage can be $130 per month. With this program, that cost is eliminated.

"This is an exciting new program that will help more working men and women achieve the American Dream of homeownership. With rents so high throughout Massachusetts, many people find that they can afford the cost of a monthly mortgage, but have little left over to save for a down payment. This program helps reduce that obstacle, making homeownership much more attainable. I commend Cambridgeport Bank and Fannie Mae for their efforts," stated Rep. Mike Capuano.

The one percent down payment program is available for single-family homes up to $275,000 and for two family homes up to $351,950. For three family homes the down payment requirement is 10 percent with loan amounts up to $425,400.

The program is available on homes purchased within Cambridgeport Bank's community reinvestment assessment area, which includes the towns of Arlington, Bedford, Belmont, Boston, Braintree, Brookline, Burlington, Cambridge, Canton, Dedham, Dover, Framingham, Lexington, Lincoln, Medford, Milton, Natick, Needham, Newton, Norwood, Quincy, Randolph, Sherbourne, Somerville, Stoneham, Walpole, Waltham, Watertown, Wayland, Wellesley, Weston, Westwood, Weymouth, Winchester and Woburn. The borrower's income can be up to 115% of the HUD median area income.

"Fannie Mae believes in the power of partnerships to help more people purchase homes," said Robin Drill, Director of Fannie Mae's Massachusetts Partnership Office. "We look forward to working with Cambridgeport Bank to help many more families purchase their first home."

"We are very enthusiastic about working with Cambridgeport Bank and Fannie Mae on this new program," said David Buchholz, Coordinator of Lender Partnerships at Self-Help. "We believe that this new, flexible mortgage product will help many families achieve homeownership for the first time."

Founded in 1853 in Cambridge, Cambridgeport Bank is a Massachusetts-chartered stock bank that is a wholly owned subsidiary of Port Financial Corp. (NASDAQ:PORT). Port Financial Corp. had assets of $949.2 million as of September 30, 2000. At its last Community Reinvestment Act (CRA) Performance Evaluation, the Bank received a rating of "outstanding" from the FDIC.

Fannie Mae is a New York Stock Exchange company and the largest non-bank financial services company in the world. It operates pursuant to a federal charter and is the nation's largest source of financing for home mortgages. Fannie Mae is working to shrink the nation's "homeownership gaps" through a $2 trillion "American Dream Commitment" to increase homeownership rates and serve 18 million targeted American families by the end of the decade. Since 1968, Fannie Mae has provided $2.9 trillion of mortgage financing for over 35 million families. More information about Fannie Mae can be found on the Internet at http://www.fanniemae.com.