The Government National Mortgage Association plans to give investors a chance to put their money into people's efforts to repair and renovate their homes.
The association, known as Ginnie Mae, announced a pilot program Wednesday to begin offering securities funded by property-improvement loans backed by the Federal Housing Administration. Officials said they hope to begin the program in August.As part of the pilot program, Ginnie Mae will repackage at least $50 million worth of so-called Title I property improvement loans in the form of securities that will be offered to investors.
Once the $50 million figure is reached, Ginnie Mae will determine whether to continue or change the securitization project.
"The new program is an exciting opportunity for Ginnie Mae to assist in community revitalization efforts through a security that will make the FHA Title I program more readily available to communities," said Kevin Chavers, president of Ginnie Mae. "The security will provide added liquidity to the Title I property improvement loan program."
The FHA property loans fit strict criteria. They are designed to be used for necessary home and property repairs and improvements. The maximum amount of the loan is $25,000. To reach the $50 million goal of the pilot program at least 200,000 property improvement loans will be securitized.