Potential home buyers who haven't qualified for traditional mortgages might be eligible for a new loan program unveiled Monday by a Lexington nonprofit.
Community Ventures has secured $5 million through state Attorney General Jack Conway's office and five banks for mortgages for people who have trouble securing loans because of poor credit scores or failing other lending criteria.
As many as 70 Kentucky families will be eligible for the new bank financing, called the American Dream Loan Fund, Community Ventures leaders announced.
Conway's office provided $200,000 for the fund. Cumberland Valley Bank, Kentucky Bank, Traditional Bank, PNC Bank and Republic Bank also contributed money to the loan program.
Conway's contribution is part of a $60 million national mortgage settlement among 49 states and five of the country's largest banks. The majority of the $60 million national settlement has gone directly to consumers, Conway's office has said.
Community Ventures president and CEO Kevin Smith said the public-private partnership would give some people who were shut out of the mortgage market a shot at buying a home. It also will provide more affordable housing.
"This is a win-win-win event," Smith said. "The consumer wins, with 70 families currently shut out of the home ownership market now owning their own homes. The community wins, as 70 vacant homes now become occupied. The banks win, as they receive new bankable customers."
To qualify for a loan under the American Dream Loan Fund, an applicant must have wages at 80 percent of the area's median income or buy a home in a targeted area.
All applicants must complete one-on-one counseling on home ownership, credit and budgeting before the home sale is completed.
Smith said people who don't qualify for the American Dream Loan program might qualify for other mortgage plans through Community Ventures.
If the first $5 million loan program is successful, Community Ventures and its banking partners hope to start a second American Dream Loan program. Community Ventures' core mission is to encourage financial independence by encouraging small-business growth, home ownership and expansion of local jobs.