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Mortgages > Purchase
Fannie Mae offering larger loans on homes near public transit
DAVID B. CARUSO, Associated Press Writer. Associated Press.
Copyright Associated Press
PHILADELPHIA (AP) _ Hoping to ease traffic and revive older suburbs, Fannie Mae is offering bigger mortgages to people who buy homes near train stations and bus stops and agree to own just one car.
After a modest debut in a few cities, the program was introduced this week in Philadelphia. Fannie Mae, or the Federal National Mortgage Association, as the company is formally known, is hoping to offer it soon in Washington, D.C., Atlanta, Baltimore, Louisville, Ky., and State College, Pa.
Buyers who purchase a home within a quarter-mile of a bus line or a half-mile of a train station can qualify for a mortgage up to 8 percent larger than they could get under a traditional loan.
In exchange, they must agree to limit the number of cars they own to no more than one per adult driver.
The arrangement was perfect for Charlotte and Benjamin Loveland, who are buying a home in Ogden, Utah, about 40 miles north of Salt Lake City.
The couple had not been planning to use public transportation, but the larger loan is allowing them to buy a four-bedroom house on a street served by a city bus line. Now, Benjamin Loveland plans to take the bus to class at Weber State University.
"He doesn't have to pay for parking. He doesn't have to fight the crowds," Charlotte Loveland said. "He has enough stress at work. We figured using the bus to commute to school would be more relaxing."
The program is aimed in part at reviving older suburbs that fell out of favor when people began driving longer distances to work.
In the Philadelphia area, the "Smart Commute" program is being administered by Citizens Bank in five counties served by buses and commuter trains. The program will cover much of the city as well as older suburbs like Norristown, Chester and Jenkintown.
The program is based on studies showing that people who commute on public transportation can save $200 to $250 per month, compared to the cost of owning, maintaining and insuring an automobile.
"Basically what the program acknowledges is that commuting by train or by bus is cheaper than owning a car, and because you are spending less money, you can afford more house," said Barry Seymour of the Delaware Valley Regional Planning Commission, which did research for the program.
So far the loan offer is still considered a pilot program.
It began three years ago in a limited and somewhat different form in Chicago, Seattle and San Francisco. In the past year or so, Fannie Mae has backed about $3 million in loans in a 10-block neighborhood along a commuter train line in Minneapolis and recently began offering the program in the Salt Lake City area and Pittsburgh.
In some cities the loans are paired with discounts on public transportation. The Lovelands got six months of free bus passes with their home loan. In Seattle, participants can get half-off on a monthly transit pass.
"I think it is inconceivable that people could live without a car in America. We recognize that reality," said Robert Sahadi, vice president for housing impact at Fannie Mae. "But when people are sitting in traffic all day, the romance of the suburbs can fade pretty fast. We want to give real estate agents something to market, which is that their commute could be much better if they took the train."
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On the Net: Federal National Mortgage Association: http://www.fanniemae.com Citizens Bank: http://www.citizensbank.com Reproduced with permission of the copyright owner. Further reproduction or distribution is prohibited without permission.
Companies: Fannie Mae(Ticker:FNM, NAICS: 522294, Duns:04-951-5430 )
Dateline: PHILADELPHIA
Text Word Count 577
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