Expanding Homeownership Responsibly with Freddie Mac. March 2, 2017

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1 Expanding Homeownership Responsibly with Freddie Mac March 2, 2017

2 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 2

3 What does expanding homeownership responsibly mean? It means Providing credit to more qualified borrowers by giving our customers confidence to originate loans using our full credit box. Providing our customers with technology that gives you confidence that comes with greater certainty. Providing products for creditworthy borrowers that are built on credit safety and soundness. Freddie Mac 3

4 Advancing affordable lending Offering financing solutions to help qualified borrowers become homeowners» For low- and moderate-income households, including first-time homebuyers, via Home Possible Advantage Supporting underserved markets» Rural housing» Manufactured housing Renewing the affordable lending ecosystem Freddie Mac 4

5 Growing Responsible Affordable Lending Together Real Estate Professionals Lenders Housing Counselors Products & Services Freddie Mac 5

6 Freddie Mac s Commitment to Strengthening the Housing Market We support efforts in: Preparing prospective homebuyers for responsible ownership Helping struggling borrowers avoid foreclosure Nationwide toll-free: Freddie Mac 6

7 Home Possible Mortgages Home Possible Home Possible Advantage Freddie Mac

8 Benefits for your client No Minimum Credit Scores No Minimum Borrower Contribution Mortgage Insurance (capped) that may be cancelled No Reserves Required Condominiums Are Eligible Manufactured Homes Are Eligible under Home Possible 95 Seller Help With Prepaids & Closing Costs Freddie Mac 8

9 Helping to reach goals with a 3% down payment through Home Possible Advantage Borrower types» First-time and repeat homebuyers» Residents of underserved areas» Immigrant households» Households earning 100% area median Income More in some counties No limit in underserved areas Borrower benefits» Low down payment» No minimum contribution of borrower s own funds» Flexible funding of down payment and closing costs» No reserves on 1-unit, owner-occupied properties» Free homebuyer education available with CreditSmart Freddie Mac 9

10 General Requirements Affordable Income and Property Eligibility Area Median Income (AMI) Limit: The maximum allowed qualifying income based on the median income for the area in which the mortgaged premises is located Qualifying Income* up to 100% of the AMI Higher AMI limits in designated High Cost Areas Lifted in Underserved Areas *All stable monthly income for all borrowers for qualifying. The Seller must attempt to verify all income reported on the Form 65, Uniform Residential Loan Application, in accordance with the Guide. Any discrepancies, including underreported income, must be corrected before submitting the mortgage to Loan Prospector. All income reported on the Form 65 that has been verified and that meets the criteria for stable monthly income as described in Chapters must be used to qualify the borrower and submitted to Loan Prospector for Loan Prospector Mortgages. Guide Chapter 4501 Freddie Mac 10

11 Home Possible Income and Property Eligibility Tool Possible/eligibility.html Freddie Mac

12 Home Possible Income and Property Eligibility Tool Freddie Mac

13 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

14 CreditSmart Freddie Mac 14

15 My Home by Freddie Mac Website for consumers on renting, buying and owning a home MyHome.FreddieMac.com Freddie Mac 15

16 Down Payment Assistance DownPaymentResource.com * Available on FreddieMac.com Freddie Mac 16

17 Lender Outreach News and Subscription Center Select the Lender Box Receive updates on Freddie Mac Products and Services, Trainings and 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 Freddie Mac

18 Top Four Things to Remember About Freddie Mac Home Possible 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 Freddie Mac 18

19 YOU are the critical link 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 Freddie Mac 19

20 QA & Freddie Mac 20