The State of Maryland will offer to sell approximately $100 million worth of revenue bonds later this week to provide funds to finance low-cost mortgages and help revive the sagging construction industry.
The state's community development administration will use money raised through the bond sale to buy mortgages made by private lenders and also to provide direct low-interest loans to moderate-income families looking for housing.
The bulk of the money raised will be used for the repurchase program, in which the state expects to be able to make money available at about 11 percent. wThe exact amount to be used for each program and interest rates will be worked out later this week by the underwriters for the bond issues.
In the second part of the program, that state expects to make $10 million or more for direct loans to home buyers at 9 percent interest. Under the home ownership development program, the state will make permanent loans to qualified families who purchase new homes in previously approved developments.
"This can be a powerful stimulus to construction," said Thomas M. Cook, director of the community development administration.
To qualify, area families of three persons must earn no more than $28,200. Borrowers also must have lived in Maryland for at least one year before applying, be employed, have good credit and intend to live in the unit.
The program also requires the buyers to make a down payment of 5 percent of the total acquisition costs. In addition qualified buyers can't own other real property or have cash, assets that would allow them to obtain private mortgage financing.
So far, 248 single-family units have been sold with the $20 million that was made available through the same program last April.
Homes financed through the program are expected to be priced at about $55,000 or less.
Maryland was able to take advantage of the state's good credit rating and a technical downward adjustment in the interest rate to obtain a favorable interest rate on the bonds, said Cook. Although the exact amount of interest the state will pay hasn't been determined, Cook said he expects it would be about 10 percent on 30-year bonds.
Because of the favorable rates and because there appears to be more than enough purchasers eager to have the bonds, the state decided to sell more than the $77 million in bonds originally planned.
"We're just delighted," said Cook. "We're very fortunate being there at the right time and right place."