Huntsman proposes aid for housing

Gov. Jon Huntsman Jr. is proposing dramatic measures that include using as much as $400 million in state money to help steady Utah's floundering housing market.

Huntsman this month announced a plan in his state budget proposal that would include $400 million in bond funding through the Utah Housing Corp. to buy mortgage-backed securities from Utah lenders.

According to agency president Bill Erickson, the proposal is an effort to help more qualified homebuyers get into affordable houses.

"It's harder for buyers to get a mortgage, so our attempt is to develop an alternative source of capital," he told the Deseret News.

The plan would essentially have the agency acting as the state's version of Fannie Mae or Freddie Mac, the federal government-sponsored enterprises whose primary purpose is to purchase and securitize mortgages in order to ensure that funds are consistently available to the institutions that lend money to home buyers, Erickson said.

The details of the proposal have yet to be ironed out and would not be implemented until early next year, he said.

In addition to trying to stimulate the home-buying sector with bonding efforts, the governor also directed the Housing Action Coalition to address the growing number of foreclosures in Utah. Erickson said that would include efforts to try to stave off foreclosure proceedings and keep families in their homes.

Another consideration would be to reduce the inventory of unsold new homes currently languishing on the market around the state, he said.

Huntsman, speaking during a news conference earlier this month to present his budget proposal, said that Utah has an estimated 4,000 unsold new homes on the market.

Erickson said Huntsman's plan would help about 1,600 buyers purchase homes, based on a $250,000 average mortgage. The plan would probably place no specified limits on income to qualify for help, he said. The typical buyers would earn the area's median income, and the value of homes purchased through the program would be $400,000 or less.

Interest rates on loans through the program would be dictated by market conditions, and the program would mitigate buyers' costs by offering down-payment and closing-cost assistance.