As newlyweds, James and Kim Boots were not looking forward to receiving tea towels or appliances as wedding gifts.
The couple, who were married recently in Austintown, near Cleveland, wanted cold hard cash. Money in the bank. They plan to apply it toward the down payment on a new home or to renovate the one Kim, a 27-year-old pharmacist, already owns.
So before they mailed out the invitations, they signed up at PNC Mortgage Corp. for MatriMoney, a of bridal registry designed to help couples use cash wedding gifts to save for a down payment for a home, in many cases, a first home.
“This was a way to tactfully ask for what we really wanted, instead of ending up with a bunch of stuff we didn’t want or already had,” said James Boots, 25.
Boots, a PNC loan officer, was keenly tuned in a year ago when former Secretary of Housing and Urban Development Henry G. Cisneros announced the bridal registry savings account program at 36 FHA (Federal Housing Administration)-approved banks, including two in Ohio.
It was touted as one of several Clinton administration efforts to raise the homeonwnership rate among young families. Studies show that saving money for a down payment is the biggest obstacle facing wannabe home buyers. The ownership rate for households under age 35 is 58.8 percent vs. 65.4 percent for households nationwide.
Bridal registries seemed a convenient place to help prospective homebuyers. The HUD initiative came on the heels of a June 1996 Modern Brides magazine survey of 2,000 engaged women, which showed that nine in 10 brides-to-be register for bridal gifts. And 14 percent said they would consider registering for mortgage down payment accounts.
About 83 percent of the brides-to-be said they planned to make major purchases within 12 months, and that their combined household income would be $50,800. For 27 percent, a new home was a top priority.
The average amount of money expected as wedding gifts in 1995 was $3,432, the survey said. That’s a good start toward the 5 percent to 20 percent down payment needed to purchase a $112,431 single-family home, the average cost of an abode in the Dayton metro area, according to the Dayton Area Board of Realtors. The median value of a home in Montgomery County is $78,889.
Here’s how most of these accounts work: Couples pick up brochures about the registries such as Illinois-based PNC Mortgage’s MatriMoney Wedding Registry at financial institutions, mortgage companies, bridal shows or shops.
A sales representative gathers basic information to set up an interest-bearing money market account at an affiliated bank. In most cases, the mortgage company provides the couple with a registry invitation kit, which includes gift cards with attached receipt slips and envelopes for depositing cash gifts. The company also provides checks and deposit tickets. In most cases, no minimum balance is required for the first six months and there are no service charges. But monthly fees can be imposed if the account falls under a minimum of $1,500. PNC charges $8.
The couple encloses the gift cards with shower and wedding invitations, or gives them directly to friends and family. When guests attend the wedding bearing congratulatory cards, they include the receipt slip that came attached to the gift card. The receipt states the amount of the cash gift and the giver’s relationship to the couple, be they relative, friend or employer. The receipts are designed to help eliminate the tedious, and at times unnerving, paper work necessary to certify cash gifts as part of a mortgage down payment. Typically, prospective mortgagees must provide a “gift letter” from anyone who has contributed to their down payment. PNC waives that requirement with its MatriMoney program.
Mortgage lenders require verification of all cash gifts to ensure that a couple has not borrowed money for a down payment, which could mean greater liability for the lender.
“FHA’s concern is that the account has to be monitored,” said Randy Sargent at Colony Mortgage Co. in Cleveland, which offers a mortage registry. “The whole point is to make sure that the money was not borrowed. You can’t show up with five grand in your hand and say someone gave it to you. So we supply the gift letters.”
While some banks permit unlimited withdrawals from the account, Sargent at Colony Mortgage says, “The money should stay in and not go flying in and out (by) writing 20 checks on it every month, otherwise it becomes difficult to establish that the money was a gift.” As funds begin to accumulate in the account, the banks issues a monthly statement to the couple and maintains a record of those who have contributed to it for thank-you card purposes. When all the gifts are in, couples may decide to close the account and shift the money to a higher-yielding certificate of deposit or short-term bonds.
In the end, should the couple change their minds, they don’t have to use the money for a down payment. “The account is really viewed as something to facilitate saving, if they decide there’s another use and want to apply the money to something else that’s their choice,” said Larry Costello at PNC.
Mona Kohler at Colony Mortgage said that couples who wish to set up this type of registry, “don’t have to go through the mortgage company. They can go straight to the bank to set up the account.”
Some banks indicated they would be willing to improvise — but you won’t get all the handy paper work.
“Sometimes, in case of an emergency or tragedy, Key Bank opens savings accounts that the public can contribute to. You could conceivably use the same thing for a couple wanting to save for a home,” said Marcia Hagler, director of marketing.
Deciding to set up a bridal registry account was a no-brainer for the Boots — until it was time came to mail the wedding invitations. Etiquette issues arose.
Was it appropriate to ask for cash from everyone? Would anyone be offended or embarrassed?
The couple decided to send the gift cards to about half of the 200 invited guests.
“We selectively placed those cards in the invitations because we didn’t feel it was appropriate to place them in everyone’s card, for one reason or another,” said Jim Boots. For example, some guests might have been embarrassed if they could not afford a large cash gift.
“We had to determine who we felt were good candidates,” said Boots. “I didn’t use it for my close friends and relatives. I used it more for people we felt would have a problem deciding what to do: The ones who might give gifts which we didn’t want.”
And guests that the couple suspected would give cash anyway did not receive a card for the home ownership account.
“People we’ve heard from so far liked the idea a lot. They thought it was fantastic,” said Boots. “We haven’t had any negative responses.”
By two days before the wedding, $878 had accumulated in the registry account, including $3 in interest. Some friends admitted that the cash gift eased the pressure of frustrating, and often frantic, gift shopping.
Banks also pitch the homeownership account as a way to help new couples start a disciplined saving program, and establish a relationship with a financial institution that can lead to smarter money decisions for a lifetime.
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Not every institution offers an official mortgage registry program. Check with your banking institution or mortgage provider to see if one is planned.
For other banks and mortgage companies that offer registries, see the HUD website at www.hud.gov
