Expanding Home Ownership Opportunity II: The Soft Second Loan Program 1991-2006
September 01, 2007
The SoftSecondTM Loan Program was developed in 1991 by the Massachusetts Bankers Association, the Massachusetts Housing Partnership, and the Massachusetts Affordable Housing Alliance to address community concerns over low levels of mortgage lending to traditionally underserved borrowers and neighborhoods. Launched in Boston, the program was expanded statewide in 1992 and is now available in every city and town in the Commonwealth through numerous participating lenders. The program is funded by the state legislature and administered by the Department of Housing and Community Development and the Massachusetts Housing Partnership.
The SoftSecond program was designed to reduce the substantial down payments and large monthly mortgage bills that often present insurmountable obstacles to lower-income homebuyers. The program requires only a three percent down payment and provides qualified homebuyers with two 30- year fixed-rate mortgage loans: the first for 77 percent of the price of the home, and the “soft second” mortgage for the remaining 20 percent. The second mortgage is interest-only for the first ten years and, in many cases, monthly bills are further reduced by public subsidies of these interest payments. SoftSecond loans have no points, no mortgage insurance fees and, in most cases, below-market interest rates.
This report updates the information presented in Expanding Homeownership Opportunity: The SoftSecond Loan Program, 1991-1993, released by the Massachusetts Community & Banking Council in 2004.