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FIHOP offers developers another option

Mississippi Home Corp. unveils new lending program

JACKSON — The new FIHOP program, available through the Mississippi Home Corporation (MHC), offers developers an attractive and innovative way to buy, build, recondition and renovate housing for low to moderate income families.

Unveiled earlier this month by MHC, in cooperation with the Federal Deposit Insurance Corporation, Office of Thrift Supervision, Office of the Comptroller of the Currency and the Federal Reserve Bank, the Mississippi Financial Institution Housing Opportunity Pool (FIHOP) was established by financial institutions operating in Mississippi and developed to assist in the construction or rehabilitation of residential housing in the state for persons of low to moderate income.

“It’s brand new. As a matter of fact, it’s not fully operational yet,” said Chuck Morris, senior vice president of program operations of MHC, who originated the concept of FIHOP. “We’re probably three months away from it being fully operational. We’re just now getting the banks to give their commitments to the fund. We’re telling everybody about it, and people that have an interest, we’ll put them in line.”

FIHOP has established an escrow account for the disbursement of construction draws and will maintain a minimum commitment reserve of $5 million. A monthly report detailing escrow account activity will be distributed to all participants.

MHC will make a 10% commitment participation in each loan to the fund, with member banks’ minimum pool participation commitment determined by asset size, ranging from $100,000 for banks holding assets of less than $100 million to $1 million for banks with assets of over $1 billion.

“Banks have been very receptive to the idea,” Morris said. “All four regulatory agencies — OTS, FDIC, OCC and the Federal Reserve — have indicated their support of the program and participated in the development of the program. The agencies’ support is something that banks are interested in because the purpose of the fund is to increase their CRA involvement in the state.”

Morris said the biggest challenge was getting the federal regulators to acknowledge that contributions to the fund would be a credit for Community Reinvestment Act (CRA) purposes for the banks.

“The regulatory authorities are fairly restrictive in how CRA investment credits are calculated and how they’re given to financial institutions,” he said. “Getting that into this fund was probably the biggest hurdle.”

Even though numerous government agencies are involved, there shouldn’t be too much red tape, Morris said.

The program will be geared toward funding low to moderate-income housing in particular areas in the state, such as the Delta and the Gulf Coast, in which banks don’t want to take the full risk of lending, Morris said.

“By participating in this pool, it minimizes banks’ risk in a particular loan,” he said. “The Gulf Coast, for example, has a problem because not enough housing is available.”

Non-profit corporations or partnerships, government agencies, other partnerships, for-profit corporations and limited equity cooperatives are eligible borrowers of FIHOP.

“We have several developers, both single and multi-family, who are interested in participating in the program as soon as it is operational,” Morris said.

FIHOP may be used to assist financing of an assortment of housing needs such as construction and rehabilitation of single or multi-family housing, interim financing for lease purchase programs and interim financing to allow pooling of loans for bond, securitization or other permanent financing. Financing loan terms will not exceed seven years with amortization 25 years or less.

The pool administration consists of an administrator, an escrow account, member banks, participants and the board of representatives.

Contact MBJ contributing writer Lynne Wilbanks Jeter at lwjeter@yahoo.com or (601) 853-3967.


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