MATT GOURAS Associated Press Writer HELENA
The Montana Board of Housing is suspending a loan program for first-time buyers because of troubles in the nationwide credit markets. Bruce Brensdal, executive director of the board, said that credit troubles have made it more difficult to get money to back loans in the program. The program is offered to moderate income Montanans who are buying their first home. About 1,650 such loans were issued last year totaling $193 million. Brensdal said that it became clear it would become difficult for the board to sell new tax exempt bonds to pay for more loans, so it will be suspended after $10 million the board has left for the program is committed. "We are in a position where we kind of suspended the program, but only as long as we need to ... only until the market corrects itself," he said. He said banks that originate the loans and use the program have been notified. No one who has been promised such a loan will be denied. Brensdal said the board had been able to offer loans at slightly lower interest rates than conventional loans, but now the rates would be higher in the current market. He said the board is uncertain how many people, if any, would want to use the program with higher rates. The board instead decided not to seek bonds at those higher rates until the market corrects itself. "The board said 'let's watch this market and make the right decision,'" Brensdal said. He said most of they buyers who used the program would have other options with conventional loans. He said some seeking really high loanto- value loans may have trouble in the current market finding a loan. "There are not just as many options now days with some of the things that happened in the market," he said. Brensdal said the problem is not in Montana. He said the board's loans continue to have low default rates. But a credit crisis on Wall Street is making it difficult to get bonds to back municipal and home loan securities. Experts don't know how long the situation will last. "We hope that it's not long," Brensdal said. "We hope it's a minimal time."