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Home Possible® and HomeOneSM Mortgages
June 2019
Discover the Possibilities!
NOTE: This document is not a replacement or substitute for the information found in the Freddie Mac Single-Family Seller/Servicer Guide, and/or terms
of your Master Agreement and/or other Pricing Identifier Terms.
© 2019 Freddie Mac 22
How can Home Possible help
20% 10% 5% 3%
Fixed Rate vs.
Adjustable
Rate Mortgage
Area median income limit
Gift amounts
Down payment amounts
Down payment assistance programs
1- to 4-unit dwellings
© 2019 Freddie Mac 33
How Can Home Possible Help
▪ First-time
homebuyers
▪ Repeat Buyers
▪ Low- to
moderate-income
homebuyers
▪ Homebuyers
looking for low
down payments
▪ Homebuyers
looking for flexible
sources of funds
Who Does it Serve?
© 2019 Freddie Mac 4
Combining the Offering
No longer need to support two products!
Home
Possible
Home
Possible
Advantage
Same flexibilities with expanded policies!
Home
Possible
Introducing One Simple Home Possible Mortgage
© 2019 Freddie Mac 55
Agenda
Home Possible HomeOne Resources
© 2019 Freddie Mac 6
Mortgage
Eligibility
© 2019 Freddie Mac 7
*Must be submitted to Loan Product Advisor
and receive a Risk Class of Accept
Mortgage Eligibility
Transactions, property types, and eligible mortgages
▪ Purchase
▪ No cash-out refinance
▪ 1- to 4-units
▪ Attached, detached,
PUD, condo
▪ Manufactured home NEW
▪ Conventional
conforming mortgages
▪ Super conforming
mortgages*
© 2019 Freddie Mac 8
Mortgage Eligibility
Home Possible Mortgages
Purchase and No cash-out refinances
Property Type Maximum LTV for non-
Super conforming
Mortgages
Maximum LTV for
Super Conforming
Mortgages*
Fixed Rate
1-unit 97%1 95%2
2-unit 95% 85%
3-4 unit 95% 80%
5/5, 5/1, 7/1, and 10/1 ARMs
1-unit 95% 95%
2-unit 95% 85%
3- to 4-unit 75% 75%
Notes:
• 1TLTV ratios exceeding 97% and up to 105% TLTV is permitted when secondary financing is an Affordable Second
• 2TLTV ratios exceeding 95% and up to 105% TLTV is permitted when secondary financing is an Affordable Second• * Superconfforming Mortgages must be submitted to Loan Product Advisor and receive an Accept Risk Class
• Manufactured homes refer to Chapter 5703
• Non-occupying borrower transactions refer to Guide Section 4501.7
NEW
NEW
© 2019 Freddie Mac 99
Mortgage Eligibility: Mortgage Insurance
Guide Section 4701.1
1 If custom mortgage insurance is chosen, in addition to all other applicable delivery fees, the custom mortgage
insurance delivery fee in Exhibit 19 applies, including on Home Possible Mortgages 2 Manufactured Homes are limited to a maximum LTV ratio of 95%
▪ Refer to the chart below for coverage levels
▪ Lender-paid* and financed mortgage insurance premiums described in Section 4701.2 are permitted
Standard Mortgage Insurance
▪ Refer to the chart below for coverage levels
▪ Loan Product Advisor Accept Risk Class only
▪ Premiums may not be financed
▪ Lender-paid mortgage insurance option may not be used
Custom Mortgage Insurance1
*Must obtain Freddie Mac's approval to sell Mortgages with annual or monthly premium lender-paid mortgage insurance to Freddie Mac
Transaction Type MI
Coverage
LTV Ratio
>80% & <85% >85% & <90% >90% & <95% >95% & <97%
Fixed-rate term >20
years; ARMs; and
manufactured homes2
Standard 12% 25% 25% 25%
Custom1 6% 12% 16% 18%
Fixed-rate, term
<20years
Standard 6% 12% 25% 25%
Custom1 N/A N/A 16% 18%
© 2019 Freddie Mac 10
Income
Eligibility
© 2019 Freddie Mac 1111
Income Eligibility
Guide Chapter 4501
Borrower’s qualifying income converted to an annual basis…
AMI Limit: The maximum allowed
qualifying income based on the median
income for the area in which the
mortgaged premises is located
Borrower Income – You must use income used to qualify the Borrower to establish
that the income limits are not exceeded.
Low-income Census Tract:
AMI requirements do not apply
Low-income Census Tract: Defined
as a census tract where the income is
at or below 80% of the AMI
Must not exceed 100% of the Area
Median Income (AMI)Except,
© 2019 Freddie Mac 1212
Income Eligibility - Loan Product Advisor
Using Loan Product Advisor
Checks Home Possible® income
limits based on the property
location for address entered
Refer to Guide Section 4500 for Manually Underwritten Mortgages
© 2019 Freddie Mac 1313
Income Eligibility - Loan Product Advisor
Using Loan Product Advisor
Refer to Guide Section 4500 for Manually Underwritten Mortgages
General Messages: Feedback
message returned when the Home
Possible Offering Identifier
has been selected
Updated feedback
messages
© 2019 Freddie Mac 1414
Check-In
True or False: All conventional conforming
mortgages submitted to Loan Product
Advisor® are checked for Home Possible®
mortgage area median income eligibility.
FalseTrue
© 2019 Freddie Mac 1515
Excerpt from Loan Product Advisor Feedback message returned when Home Possible or
Home Possible Advantage Offering Identifier has NOT been selected
Check-In
© 2019 Freddie Mac 1616
Income Eligibility - Home Possible Income &
Property Eligibility Tool
© 2019 Freddie Mac 17
Income Eligibility - Home Possible Income &
Property Eligibility Tool
© 2019 Freddie Mac 18
Income Eligibility - Home Possible Income &
Property Eligibility Tool
© 2019 Freddie Mac 19
Borrower
Eligibility
© 2019 Freddie Mac 20
Borrower Eligibility - Occupancy
Required funds to
close: Occupying or
non-occupying
borrower
*For manually underwritten mortgages refer to 4501.7(b)
**Home Possible Mortgage must be a fixed-rate
1-unit property only
LTV/TLTV/HTLTV ratio:
95% Loan Product
Advisor® Accept Risk*
105% TLTV ratio
Affordable Second**
Permitting non-occupying borrowers NEW
One borrower must
occupy the property
as their primary
residence
Reminder: You must use income used to
qualify the borrower to determine if your borrower(s) meet the income requirements for a Home Possible mortgage
© 2019 Freddie Mac 21
Check-In
Question: Now that we are allowing
non-occupying borrowers do the
homeownership education requirements
still apply?
NoYes
Not sure
© 2019 Freddie Mac 2222
Borrower Eligibility - Homeownership Education
Landlord Education
Program
When all occupying borrowers are
first-time homebuyers at least one
occupying borrower must participate1
Homeownership
Education Program
2-4 unit purchase transactions, at least
one borrower must participate2
NOTE: Must not be provided by an interested party to the transaction, the originating lender or Seller
1- For any transaction when the credit reputation for all Borrowers is established using only Noncredit Payment References then at least one Borrower must
participate in a homeownership education program before the Note Date. Also, a copy of Homeownership Education Certification, or document with comparable information, must be retained in the mortgage file.
2- A copy of a certificate evidencing successful completion of the landlord education program must be retained in the mortgage file.
© 2019 Freddie Mac 23
Borrower Eligibility - Homeownership
Education
Freddie Mac’s online
homeownership course that meets
the home ownership education
requirements.
It’s free, easy and an effective
education tool.
CreditSmart Steps to Homeownership
© 2019 Freddie Mac 24
Borrower Eligibility - Ownership of Other
Residential Property
Effective July 3rd,
Occupying Borrower may
not have ownership
interest in more than two
residential properties1
Update
*Guide Section 4501.71Includes subject property
© 2019 Freddie Mac 25
Check-In
Scenario: The occupying borrower is going
to convert their current home to a rental.
Question: Is this loan eligible for Home
Possible?
NoYes
Not sure
© 2019 Freddie Mac 26
Check-In
Scenario: Your borrower is selling their
current home, however, it will occur after the
Home Possible mortgage Note Date.
In addition to their current home, they also
cosigned on their son’s mortgage and have
provided the required documentation to
exclude the debt.
Question: Is this loan eligible for Home
Possible?
NoYes
Not sure
© 2019 Freddie Mac 27
Source of
Funds
© 2019 Freddie Mac 2828
Sources of Funds - Minimum Borrower
Contribution
Borrower Contributions – Personal Funds & Other Eligible Sources of
Funds
1-unit None required 1
Borrower Contributions – Personal Funds
2- to 4-unit primary
residence
Home Possible® Mortgages with
LTV/TLTV/HTLTV ratios >80% <=95%3%
Low Minimum Contribution
Requirements
1 3% required ONLY when the Borrower is receiving a gift or grant from the lender or an Agency affiliated with the lender. Gifts or grants from
Seller or Agency affiliated with the lender may not be funded through the Mortgage transaction, including differential pricing in rate, discount
points, or fees for individual loans or across the Home Possible offering.
© 2019 Freddie Mac 2929
Sources of Funds
▪ Financing Concessions» 3% LTV/TLTV ratio > 90%
» 6% LTV/TLTV ratio > 75% < 90%
» 9% LTV/TLTV ratio < 75%
Borrower Personal Funds
Home Possible only: 2-4 unit primary residence LTV >80% < 95%:. 3% of value
▪ Pooled funds
▪ Individual Development Account
(IDA): include matching funds only if
not subject to recapture tax
▪ Community Savings-Borrower
contribution
▪ Cash value of life insurance policy
▪ Trade equity
▪ Rent Credits
▪ Depository accounts
▪ Cash on hand
▪ Securities
▪ Retirement accounts
▪ Government bonds
▪ Loan secured by borrower’s
assets
▪ Sale of borrower’s real
property
▪ Sale of borrower’s assets
▪ Borrower’s real estate
commission
▪ Funds from a trustCredit card charges, cash advances or
unsecured line of credit: to pay fees
associated with the mortgage application
process
Other
Eligible Sources of Funds
▪ Gift funds or gift of equity: Related Person
▪ Gift funds: wedding gift
▪ Gift/Grant: Agency*
▪ Gift/Grant from Seller as originating lender*
▪ Affordable Seconds
▪ Secondary Financing (Home Possible Only)
▪ Employer-Assisted Homeownership Benefit
▪ IDA: matching funds subject to recapture tax
▪ Unsecured loan: Agency/Related Person, or
Community Savings Systems (For
Community Savings funds in excess of
Borrower’s contribution)
▪ Sweat equity (4501.10 (ii))
▪ Lender Credit
▪ Unsecured Loan: Originating Lender (Refer to Guide Section 5501.4)
Flexible Sources of FundsC
losin
g c
osts
*Gifts or grants from the Seller as the originating lender will be permitted only after a contribution of at least 3% of value is made from
Borrower personal funds and/or other eligible sources of funds
© 2019 Freddie Mac 3030
Sources of Funds – Cash On Hand
▪ Complete Monthly Budget and Residual Income Analysis (Exhibit 23), or another document containing the same information
▪ Evidence that all funds used for
the down payment, Closing
Costs, and reserves are
deposited in a financial institution
or are held in an institutional
escrow account prior to closing
▪ Credit report shows no more than three tradelines
» Copies of three months’ statements for any open revolving account that reveal cash advances are not the source of Borrower Funds
» Any cash advances must be explained and documented
▪ Updated credit report approximately one week prior to closing to show no new accounts or increase in current accounts
▪ Six months’ cash receipts or other alternative documentation (refer to Guide Chapter 5202)
The Mortgage file must have no indication that the Borrower
typically uses checking, savings or similar accounts
Cash on hand is unique to Home Possible
© 2019 Freddie Mac 3131
Subsidized secondary financing or other financial assistance, evidenced
in land records, that is provided by an Agency and that meets the
requirements of Section 4204.1
Sources of Funds: Affordable Seconds®
*Home Possible Advantage secondary financing source must be an Affordable Second, and it may not
be a home-equity line-of-credit
Note: RHS Leveraged Seconds are not permitted with Home Possible Advantage
Affordable Seconds
© 2019 Freddie Mac 3232
Source of Funds – Affordable Second
Checklist
© 2019 Freddie Mac 33
HomeOne
HomeOneSM Mortgages
This conventional mortgage,
offers qualified first-time
homebuyers
3% down payment
option
NOgeographic or
income limitations
Complimentary to our suite of
Low Down Payment mortgage
offerings
• HomeOneSM
• Home Possible®
• HFA Advantage®
Provides a solution to
capture the growing first-
time homebuyer segment
© Freddie Mac
Overview of HomeOne SM Conventional
Mortgage
HomeOneSM
LTV maximum ratios97% LTV /TLTV/HTLTV - 105% TLTV with Affordable Second
Only
Purchase StatusAt least one borrower must be a first-time homebuyer (as
defined in the Guide)
Refinance
No Cash-Out Refinance
Mortgage being refinanced must be owned or securitized by
Freddie Mac unless it has secondary financing that is an
Affordable Second®
Units1- Unit Only
No Manufactured Homes
Primary ResidenceAll borrowers must occupy the mortgaged premises as their
primary residence
Loan Type Fixed Rate
Income Limits No Limits
Homeownership Education:
Purchase Transactions
Required when all borrowers are first-time homebuyers at least
one Borrower must complete homeownership education
program before the Note date
Underwriting Path Loan Product Advisor only
© 2019 Freddie Mac 36
Eligibility: Underwriting
Must receive an
Accept Risk Class
New Loan Product Advisor
feedback messages
© 2019 Freddie Mac 37
Mortgage Insurance Coverage
Transaction Type MI CoverageLTV Ratio
>80% & <85% >85% & <90% >90% & <95% >95% & <97%
Fixed-rate, term
<20years
Standard 6% 12% 25% 35%
Custom2 N/A N/A 16% 18%
Fixed-rate term
>20 years
Standard 12% 25% 30% 35%
Custom2 6% 12% 16% 18%
Eligibility: Mortgage Insurance
▪ Refer to the chart below for coverage levels
▪ Lender-paid1 and financed mortgage insurance premiums described in Section 4701.2 are permitted
Standard Mortgage Insurance
▪ Refer to the chart below for coverage levels
▪ Loan Product Advisor® Accept Risk Class only
▪ Premiums may not be financed
▪ Lender-paid mortgage insurance option may not be used
Custom Mortgage Insurance2
2 - If custom mortgage insurance is chosen, in addition
to all other applicable delivery fees, the custom
mortgage insurance delivery fee in Exhibit 19 applies
1 - Must obtain Freddie Mac's approval to sell Mortgages with annual
or monthly premium lender-paid mortgage insurance to Freddie Mac
© 2019 Freddie Mac 38
Resources
© 2019 Freddie Mac 3939
Resources
© 2019 Freddie Mac 4040
© 2019 Freddie Mac 4141
© 2019 Freddie Mac 42
Resources: All For Home
© 2019 Freddie Mac 4343
Subscription Center
© 2019 Freddie Mac 44
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