expanding homeownership responsibly with freddie mac home … · −construction conversion and...

Expanding Homeownership Responsibly with

Freddie Mac® Home Possible

February 2017

© Freddie Mac 2

Presenter – Dennis J. Smith

• Joined Freddie Mac in September 2015

as Affordable Lending Manager

• Works with lenders, nonprofits and

government agencies to create affordable

homeownership opportunities.

• Helps existing Freddie Mac borrowers

avoid foreclosure.

• Twenty-year mortgage industry veteran

© Freddie Mac 3

A Better Freddie Mac …and a better housing finance system

For homebuyers

...innovating to improve the liquidity, stability and

affordability of mortgage markets

For customers

...competing to earn their business

For trusted advisors

...supporting their role to help prepare prospective homebuyers for

responsible homeownership

For taxpayers

...reducing their exposure to mortgage risks

© Freddie Mac 4

Growing Responsible Affordable Lending –

Together

Housing CounselorsReal Estate

Professionals

Lenders

Products

& Services

© Freddie Mac 5

We support your efforts in:

Freddie Mac’s Commitment

to Housing Counselors

Preparing prospective

homebuyers for

responsible ownership

Helping struggling

borrowers avoid

foreclosure

Nationwide toll-free:

877-300-4179

© Freddie Mac

Agenda

Key Points and

Resources

Sources of

funds

General Requirements

Features and Benefits

Home Possible

© Freddie Mac 7

Maximum LTV of 97 percent;

TLTV 105 percent

Maximum LTV and TLTV of

95 percent

Introducing…

Home Possible Home Possible Advantage

© Freddie Mac

High LTV mortgage for qualified first-time homebuyers, low- and

moderate-income borrowers and move up buyers

Borrower Profile

First-time homebuyers

Repeat homebuyers

Families in underserved areas

New immigrants

Very low and low- to moderate-

income borrowers

Features and Benefits

Key Features

Maximum LTV/TLTV:

Home Possible Advantage -

97% LTV / 105% TLTV

Home Possible – 95% LTV /

95% TLTV

Eligible annual income of up to

100% of Area Median Income

(higher in high cost areas)

No income limit in Underserved

Areas

Borrower Benefits

Low down payment

No minimum borrower

contribution from personal

funds

Flexible down payment and

closing cost funding options

No cash-out refinancing

No reserves required on 1

unit owner-occupied

properties (2 months reserves

on 2-4 units)

Homebuyer education

available at no cost to the

borrower

© Freddie Mac

Eligibility Criteria*

* See Freddie Mac Single-Family Seller/Servicer Guide for details.

Eligibility Criteria Home Possible & Home Possible Advantage

Eligible Mortgages

− 15-, 20- and 30-year fixed− 5/1, 7/1 and 10/1 CMT- and LIBOR-indexed ARMS− Construction Conversion and Renovation Mortgages− Home Possible Advantage only: 15-, 20- and 30-year fixed

Occupancy Primary residence

Property Type1- to 4-units: Single-family, Condos, PUDs, Manufactured Housing –Home Possible Advantage only: 1-unit: Single-family, Condo, PUD

Underwriting Method Loan Product AdvisorSM or manual

Other IncomeBoarder income (1-unit properties only) up to 30% of qualifying income from this source allowed if 12 months documentation of recent rent payments and continued rental arrangement included

Fund Sources for Down Payment & Closing Costs

Gifts, grants, Affordable Seconds

© Freddie Mac

10

YOUR CLIENT’S

NEW HOME

Home Purchase Price

+

Closing Costs

__________________________

TOTAL REQUIRED TO CLOSE

Flexible Sources of Funds

First Mortgage

Borrower obtains a 30-year conventional

fixed-rate loan

+

Mortgage Credit Certificate (MCC),

when available

Money Out of Pocket

Borrower’s personal contribution towards the purchase

can be as low as 3% of the purchase price

“Gap” Loan

Silent second loan from a local government agency

requires no monthly payment and, therefore, is not

counted as a borrower’s debt during underwriting

Other Assistance Programs

Remaining down payment or closing cost assistance

needed to close the loan

© Freddie Mac

Affordable Seconds

To view the full checklist, go to Freddiemac.com/homepossible

© Freddie Mac 12

Number of UnitsMinimum Contribution from Borrower Personal Funds

Reserves

Home Possible Advantage

1-unit primary residence,

that is not a Manufactured

Home

None required None required

Home Possible Mortgages

LTV/TLTV/HTLTV

< 80%

LTV/TLTV/HTLTV

> 80% < 95%

1-unit primary residence None required None required None required

2- to 4-unit primary residence None 3% 2 months

Manufactured Home None None required None required

Features and Benefits:

Borrower Contribution and Reserves

Guide Chapter 4501

© Freddie Mac

Minimum Indicator Score

and Qualifying Ratios

Property/Mortgage TypeMinimum Indicator

ScoreQualifying

Ratios

Loan Product Advisor

A borrower’s credit reputation is acceptable if the Home Possible Mortgage

Received a risk class of Accept.Per AUS

Manually Underwritten Mortgages

Home Possible

1-unit other than an ARM or a “no cash-out

refinance mortgage660 45%

1-unit that is an ARM, or a “no cash-out

refinance mortgage680 45%

2- to 4-unit 700 45%

Manufactured Homes (must be submitted to

LPA first)720 45%


1-unit fixed-rate mortgages that are purchase

transactions660 43%

1-unit fixed-rate mortgages that are “no cash-

out” refinance transactions680 43%

© Freddie Mac 14

Home Possible

May be manually underwritten

without credit scores if each

borrower's credit history for the most

recent 24 months shows:

• No unpaid judgments, tax liens or

collections

• No payments 60 days or more past

due

• No more than two payments 30

days past due

• No housing payments past due

Borrowers With No Usable Credit Score

Eligible Not Eligible


Ineligible if none of the Borrowers

have a usable Credit Score.

Manufactured Home

A Home Possible Mortgage secured

by a Manufactured Home may be a

Manually Underwritten Mortgage

only when the Mortgage meets the

Minimum Indicator Score

© Freddie Mac 15

Key Points and Resources

© Freddie Mac

Why choose Home Possible over FHA?

Mortgage Insurance

Stays for the life of the loanEnds when LTV < 80%

FHA: Upfront AND monthly

premiums

Conventional MI: monthly

OR single premiums

Down payment funds applied

to principal AND upfront PMI

Down payment funds

applied to principal

WHAT THIS MEANS: With more funds applied toward the

principal upfront, a Home Possible mortgage with PMI lets the

borrower build equity faster.

Home Possible FHAvs.

Required regardless

of the LTV

Only required if the LTV is 80%

or higher

© Freddie Mac

Home Possible Income and

Property Eligibility Tool

www.FreddieMac.com/Home

Possible/eligibility.html

© Freddie Mac

Home Possible Income and Property

Eligibility Tool

© Freddie Mac

What is an “Underserved Area”?

Low income tract: Census tracts or block numbering areas in which

median income does not exceed 80% of the AMI.

Disaster area designation: Disaster areas are designated at the county

level by FEMA. A county will be treated as a designated disaster area for

three years, beginning January 1 after the FEMA designation.

Minority census tracts: Census tracts that have a minority population of

at least 30%.

© Freddie Mac

Housing Professionals Resource Center

http://www.freddiemac.com/singlefamily/housingpros/

housing_counselors_resource_center.htm

http://www.freddiemac.com/singlefamily/housingpros/housing_counselors_resource_center.html

© Freddie Mac 23

Website for consumers on renting, buying and owning a home

My Home by Freddie Mac®

MyHome.FreddieMac.com

© Freddie Mac

Be Invited toTrainings and Networking

Events

Staying connected is quick and easy!

Go to the Freddie Mac Housing

Professionals Outreach News Subscription

Center and sign up today!

FreddieMac.com/singlefamily/housingpros/subscribe.html

Select the Housing Counselor Box

Get the Latest Resource Center Updates

Housing Professionals Outreach News and

Subscription Center

http://www.freddiemac.com/singlefamily/housingpros/subscribe.html

© Freddie Mac 25

Historically low interest rates and lower home prices will

continue homebuyer affordability

Additional mortgage option for first-time homebuyers

Qualified first-time homebuyers need your help to overcome

misconceptions and concerns, and get educated on the home

buying process

Freddie Mac provides a wide variety of products and

offerings to help you help your clients

What does this all mean for

YOU and YOUR client?

25

© Freddie Mac 26

1. High LTV – No minimum down payment

2. Higher AMI limits (100% AMI;100%+ in high-cost areas)(not

just 80% AMI) means broader borrower income eligibility so

more borrowers will qualify

3. No income limit on properties located in Underserved Areas

4. Flexible sources of funds

Top Four Things to Remember About

Freddie Mac Home Possible

© Freddie Mac 27

YOU are the critical link to helping well-qualified homebuyers achieve their

homeownership objectives:

» Provide Education on the home buying process which include mortgage

products

» Explain the process and dispel the 20% down payment myth

» Identify and match available financial resources in your area

(government, nonprofit, private sources) with a sustainable mortgage

solution

» Take advantage of Freddie Mac training and resources for both you and

your borrower

First-time homebuyer dream realized—and more clients for you—if you

know your market and where to find those affordability gap solutions

Freddie Mac is here to help

YOU are the critical link

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