t week, I received a telephone call from my friend Jason. [/b]It was a collect call – Jason is currently in a Virginia jail over some matter regarding a rental truck that he failed to return. In any event, Jason wanted to know if it would be possible to loan him $100, either in cash or a money order. When I asked why he needed the money, he said it was ‘for buying toiletries’ from the jailhouse store. Although I don't possess a degree in economics or any great knowledge of toiletries retailing, I somehow suspect that my $100 would not be well invested with this particular transaction. But my admittedly peculiar case is not too far removed from the bigger picture within the financial services industry: Money is tight and lending criteria are at a new level of restrictive conservatism. Lenders are now looking at loan applications in regard to the individual quality of the application rather than trying to reach an artificial level of origination quantity. That's why I am very interested in a new program being offered by the Ohio Housing Finance Agency (OHFA). It is called Grants for Grads, and it is predicated on the notion that anyone who graduates from an Ohio college or university can be eligible to receive down-payment and closing-cost assistance within 18 months of receiving their diploma. Grants for Grads is pretty broad in its potential borrower base. If you earned an associate's, bachelor's, master's, doctoral or other postgraduate degree from a state or private college or university, you might be eligible to get a mortgage through OFHA's First-Time Homebuyer Program. The only caveat is that you have to remain in Ohio for at least five years after buying a house. For those who aren't aware, Ohio has been particularly hard hit-with the collapse of the housing market. Back in May 2007, I reported in [b][i]Secondary Marketing Executive[/i][/b] that the OHFA issued a $100 million municipal bond to help 1,000 families with the refinancing of their toxic mortgages. At the same time, the municipal government in the Cleveland suburb of Shaker Heights was paying to mow the lawns and keep up the proper appearances on the growing number of empty foreclosed houses, in an obvious attempt to prevent the appearance of neighborhood blight. This was going on at a time when Fed Chairman Ben Bernanke insisted in congressional testimony, ‘The impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained.’ Ohio is also experiencing double-digit unemployment, and it would appear that the OHFA leadership is concerned that tomorrow's leaders will be taking up residence in other locations once their higher education studies have been completed. Grants for Grads is clearly designed to ensure that Ohio's up-and-comers stay home in the Buckeye State. However, the program also has some obvious hiccups. For starters, the vast majority of undergraduate and graduate students are already burdened with heavy financial responsibilities from the student loans they needed to take out in order to get an education. It is hard to imagine they would want to add more debt to their lives with mortgages. Also, the newly graduated who are lucky enough to get jobs will probably face lower-paying entry-level positions. Whether they can afford a mortgage on tight salaries seems unlikely for the near future. Still, even if only a dozen or fewer young Ohioans are successful in getting a home loan through this program, then at least it is a small step in helping the state's housing market recover. Grants for Grads may not be perfect, but it is an interesting idea that deserves consideration. I genuinely hope that other state housing finance agencies and private lenders consider its merits and determine how it can be improved and expanded. What is your view on OHFA's program? Feel free to e-mail me or leave your comments on this page – I am interested in hearing what the members of the industry think about this. – Phil Hall, editor, [b][i]Secondary Marketing Executive[/i][/b]. [i] (Please address all comments regarding this opinion column to hallp@sme-online.co
