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I called one of my good friends the other day; this guy is both a personal and professional acquaintence of mine as he is a mortgage loan originator (loan officer) for Fifth Third Bank. I was disappointed to learn that Fifth Third Bank had retired a popular mortgage product that I have long touted and promoted to clients: The Good Neighbor Home Loan.

This loan was unique in the respect that it allowed first-time home buyers to borrow 100% of the sale price of the home on a competitive 30-year, fixed rate mortgage WITHOUT having to pay PMI (private mortgage insurance). To qualify as a first-time home buyer the applicant had to not own a home within the last two years. There was also an income limitation (cap, not minimum) so it was great for young professionals, newly weds, recent college graduates, or just your regular working stiffs. The closing costs were very reasonable, too. I want to say that the numerous closings that I had as a Realtor where the borrower used this loan program, the closing costs to the borrower were usually $1,200 to $1,600. Also, the seller could help pay some of the buyer’s closing costs (up to 3% of the sale price I believe) so the buyer could almost walk in and buy the home with no cash at closing.

Now I realize that with the rise in foreclosures and everything you hear on the news about subprime loans and banks having problems with liquidity that this program sounds horrible to a bank for the same reasons it sounds great to buyers! But this wasn’t for your subprime borrower… the buyers had to have good credit to get these loans, conforming loans as opposed to non-conforming. This loan program gave Fifth Third a nice competitive edge in the first-time home buyer market and I can only assume helped build loyalty and helped sell additional products and services. The borrowers were given a half a point reduction on the interest rate of their loans if they had the monthly payment automatically drafted from their Fifth Third checking account. Hence, borrowers then started doing more and more banking with Fifth Third.

I would like to see Fifth Third bring back this loan program. If you bank with Fifth Third and if you are ever in a position where you’re asked by an employee or manager what you like or don’t like about the bank, I hope you will mention that you’d like to see them bring back The Good Neighbor Home Loan Program. In the meantime, there are still many loan programs out there to help first-time home buyers - such as FHA loans. If you have questions or need specific advice, call or stop by the bank of your choice to talk to a lender that you know and trust.

As always, I welcome your comments and feedback…