Thirteen million union members will be eligible for more affordable financing under a nationwide expansion of a two-year old experimental mortgage program.

Members of the AFL CIO will be able to choose from one of the widest selections of loan options available, including mortgages with minimal downpayments and loans with monthly payments that are tied to the borrower's payday.

They also will receive free appraisals, credit reports and home buyer education. And they will have access to their own set of trained, bilingual loan officers via a dedicated, toll free hotline.

The initiative "provides union members with the information, guidance and financial resources needed to make owning a home a reality," said AFL-CIO John Sweeney.

Under the Hit Home program, the loans will be made to union members through Countrywide Financial, one of the nation's largest mortgage lenders.

The loans will then be sold to Fannie Mae, which will package them into securities that will be purchased by the AFL-CIO's Housing Investment Trust, a pension fund with more than $3 billion in assets.

About 2,000 loans have been made to union members, many of whom are minorities and single-parent households, during the program's two-year, 20-city pilot. But now that the effort is being rolled out nationally, Sweeney expects to serve 10,000 more working families over the next 36 months.

"Our goal is to help America's working families reap the benefits of home ownership," the union leader said.

Some 60 unions are under the AFL CIO umbrellas, and about 700,000 of their members buy and sell houses in any given year.

The program is being rolled out at a time when mortgage rates are at their lowest level in nearly 40 years. Even since the initiative was started in January 2000, the market has changed significantly.

Two years ago, the average rate on a $160,000 mortgage was 8.32 percent and carried a monthly payment for principal and interest of $1,210. Now the rate for the same loan is 5.99 percent, lowering the monthly cost $252 to $958.

With offices in every state, Countrywide offers more than 130 mortgage programs.

One of its newest choices, a suite of loans known as EasyWay, gives borrowers the option of contributing just 1 percent of the loan amount or $500, whichever is less, as their share of the downpayment.

The balance of the funds required for closing can come from gifts, grants or employer contributions.

The EasyWay package also features a zero-downpayment option.

Under another program, payments can be timed to coincide with the borrower's payday. That way, union members can pay their loans off more quickly, saving thousands of dollars in interest in the process, and build equity faster.

If the borrower is paid every other week, for example, half the monthly payment can be deducted automatically from each paycheck. And if he's paid weekly, 25 percent can be deducted electronically.

According to Countrywide, a borrower with a 30-year, $100,000 mortgage at 7 percent can save more than $35,000 in interest by taking the bi-weekly "Working Family Mortgage" option and reduce the loan's term by nearly six and a half years.

Other lenders offer similar programs. But under the Hit Home initiative, the Fortune 500 lender has agreed to wave costly set up or draft fees that some of its competitors charge.

To help union members who are not familiar with the American housing finance system or may not understand the various choices available to them, the Calabasas, Calif.-based mortgage company will offer counseling services and classes.

The Housing Investment Trust, one of two funds operated by the AFL CIO with money invested by affiliated unions seeking to diversify their portfolios, invests in secured mortgages and mortgage backed securities.

It is one of the country's leading fixed-income investment vehicles, producing highly competitive returns while advancing the union movement's labor, social and economic objectives.

Published: February 6, 2003

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