Prince George's County Executive Lawrence Hogan signed an agreement yesterday that will make $10 million in county pension funds available for low-interest home mortgages. The agreement, with Loyola Federal Savings and Loan, will immediately provide loans of up to $107,000 to purchasers of homes in the county.
"These funds will stimulate the construction industry because they will go primarily to mortgages for new homes," said Hogan, "and $10 million translates roughly into 150 homes."
Hogan, who chairs the board of trustees for the county's $75 million pension fund, modeled his proposal after a plan unveiled in February by Maryland Gov. Harry Hughes and developed by the Federal National Mortgage Association (Fannie Mae). Under that plan, believed to be the first of its kind in the nation, Loyola Federal obtained $20 million in mortgage funds from the state's pension system.
The Prince George's plan, with a larger maximum loan, will permit the purchase of more expensive homes than possible under the state plan. Hogan said he also approached Loyola because it was set up to handle it, and he wanted the program ready for spring home buying.
Hogan said the county will give "expeditious consideration" to fire, police, and hospital workers, whose pension funds make up the mortgage pool.
Paul Fowler, executive vice president of the county's board of realtors, lauded the announcement, noting that 758 homes were sold in the county this January and February, compared to 1,200 in the first two months of 1981.
Under the agreement signed yesterday, five-year mortgages will be made available at a 12 1/2 percent interest rate for purchasers of new homes and 14 1/2 percent for purchasers of used homes. Buyers must refinance the loans after the five years, but the monthly payments will be calculated as if they were to be extended through 30 years. The homes must be in the county, but purchasers need not be county residents at the time they apply. The pension fund, according to Hogan, will receive a 15 percent return on its investment, with builders and sellers making up the difference.
Thomas Bossle of Loyola Federal said both plans offer homebuyers significant savings. "Throughout the state of Maryland, the average homebuyer is paying an average of 16 1/2 to 17 percent, with 20 percent down," he said. "Under this you can put down 5, 10, 20 percent."