A Washington think tank and a nonprofit housing advocacy group have teamed up to create a new version of the 15-year mortgage that they hope will change lending in the U.S. by allowing borrowers to build up equity quickly rather than slog through paying down debt over decades.
Called the Wealth Building Home Loan, the product is the result of collaboration between American Enterprise Institute (AEI) fellows Edward Pinto and Stephen Oliner, and the Boston-based Neighborhood Assistance Corp. of America (NACA) and its founder, Bruce Marks.
There is no down payment, the interest rates are below average for 15-year mortgages, there are no closing costs or funding fees, and there is an option to buy down the interest at a quicker half-percent rate.
Underwriting standards are different, too. NACA underwrites the loans and does not look at a borrower’s credit history, instead looking at recent payment history and residual income, similar to U.S. Department of Veterans Affairs (VA) loans.