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MySanAntonio.com, April 4 2008

Mortgage bridal registries: The perfect gift

Aissatou Sidime
Express-News Business Writer

With spring comes the annual launch of wedding season.

Engaged couples across the country busily are picking porcelain patterns and coordinated curtains, blenders and linens, tissue holders and table lamps for their wedding gift registries.

Many couples also dream of starting their new lives in new homes. But, alas, they can't seem to save enough money to meet the down payment.

But in recent months, mortgage bridal registries seem to be regaining the popularity they enjoyed in the late 1990s.

Mortgage bridal registries are similar to other gift registries in that the happy couple enrolls in the program, usually through a bank, online register or lender escrow. But instead of containing a list of household items, the registry has just one option: to donate cash the couple will use to buy a home. The cash goes into an open bank account, escrow account or online payment account in the couple's name.

The future spouses usually send a written notice that they have joined the mortgage bridal registry to wedding guests, including the account number and payment instructions. Then wedding guests mail checks or make online payments to the registry account.

Mortgage bridal registries mushroomed after the Federal Housing Administration agreed in 1996 to allow borrowers to use gifts from family and friends toward the 3 percent cash investment required on an FHA loan. They took off in places like the Northeast and Hawaii where cash is the preferred wedding gift.

More recently, Austin agents at HomeSweetHome.com have partnered with National City Mortgage to market mortgage registries to first-time home buyers at Texas bridal shows. California-based FeatherOurNest.com launched a nationwide mortgage registry online in February.

Home buyers like mortgage bridal registries for these key reasons:

-Easier pre-qualification for a mortgage. A lender can pre-qualify the couple for a mortgage based on projected gift funds.

-Faster shopping. Real estate agents prefer to work with buyers who are pre-qualified for loans.

-Reduced documentation. Many first-time home buyers use the FHA's home buyer program. But getting the FHA's approval can become complicated when the buyer uses money from outsiders. For instance, when wedding gifts are mixed with other cash in an account, most lenders will require that each donor sign a document stating that his or her contribution was a gift and not a loan to the buyer, according to Joanne Rossa, senior loan officer at National City Mortgage that offers an FHA Bridal Registry.

"FHA wants to see that there isn't any other liability on that buyer and that there is a clear 3 percent investment from the couple," Rossa said.

But the buyers won't need any extra documentation if they have all cash gifts sent directly to a mortgage registry account.

-Getting the desired wedding gift, rather than four blenders. That is attractive to couples who have waited to marry and already have all the household items they desire, as well as to first-time home buyers struggling to save for a down payment, according to Carol Peterson, founder of the FeatherOurNest.com mortgage bridal registry.

"When I was active in real estate sales, I would constantly see young couples coming through and finding a home they really loved and who, more than likely, had the income to make the monthly payments but who had not accumulated that chunk of cash to make the down payment," Peterson said.

So why is it you may not have heard about these registries?

Several mortgage bridal registry programs suffered in the South because consumers were hesitant to request cash from wedding guests. Then, when lenders began offering 100 percent mortgage financing, little upfront cash was necessary and the registries faded from the radar.

Until now. Now, as loans are harder to get and down payments again are being required, the system is gaining steam.

And as Americans - even Southerners - get more comfortable with customized wedding ceremonies, they also have gotten more comfortable asking for specialized gifts and mortgage funds.

"Where I grew up in New York, nobody gave gifts, everybody gave money," said Diana Boucher, owner of I Do! Wedding Consultant in Helotes. "So it's not as offensive as one might think."

There are some key issues to review before signing up for a mortgage bridal registry, however.

First, fees and amenities can vary widely on accounts. For instance, National City Mortgage and SunTrust Bank will provide a free introductory letter or note card that explains the registry to wedding guests. But at FeatherOurNest.com, customers must pay a $300 registration fee to get the introductory notes and thank-you cards. (FeatherOurtNest.com will refund the fee at closing if the couple uses a referred real estate agent.)

Second, registry services differ on how long they will hold the gift money. For instance, FeatherOurNest.com will continue to collect cash in a PayPal account until two weeks after the wedding date. Then the company sends a check for the full balance to the newlyweds. Bank-arranged registry accounts usually have no time limit but may require the couple to pay a renewal fee after a set period. Some accounts charge extra fees to get final checks.

Third, mortgage registry accounts at banks may or may not earn interest depending on the type of account that was set up, said Brad Buckles, owner of bridesclub.com. Bridesclub.com members have partnered with lenders to set up escrow accounts that accept online deposits from wedding guests.

Buckles cautions couples to pay close attention to the terms for interest payments and usage when they sign the contract to set up the mortgage registry account.

"Read the fine print," Buckles said.