Expanding Homeownership Responsibly with Freddie Mac Home Possible. February 2017

Transcription

1 Expanding Homeownership Responsibly with Freddie Mac Home Possible February 2017

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 2

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 3

4 Growing Responsible Affordable Lending Together Real Estate Professionals Lenders Housing Counselors Products & Services Freddie Mac 4

5 Freddie Mac s Commitment to Housing Counselors We support your efforts in: Preparing prospective homebuyers for responsible ownership Helping struggling borrowers avoid foreclosure Nationwide toll-free: Freddie Mac 5

6 Agenda Features and Benefits General Requirements Sources of funds Key Points and Resources Home Possible Freddie Mac

7 Introducing Home Possible Maximum LTV and TLTV of 95 percent Home Possible Advantage Maximum LTV of 97 percent; TLTV 105 percent Freddie Mac 7

8 Features and Benefits 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 moderateincome borrowers 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

9 Eligibility Criteria* Eligibility Criteria Eligible Mortgages Occupancy Property Type Underwriting Method Other Income Fund Sources for Down Payment & Closing Costs Home Possible & Home Possible Advantage 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 Primary residence 1- to 4-units: Single-family, Condos, PUDs, Manufactured Housing Home Possible Advantage only: 1-unit: Single-family, Condo, PUD Loan Product Advisor SM or manual Boarder 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 Gifts, grants, Affordable Seconds * See Freddie Mac Single-Family Seller/Servicer Guide for details. Freddie Mac

10 10 Flexible Sources of Funds YOUR CLIENT S NEW HOME 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 Home Purchase Price + Closing Costs TOTAL REQUIRED TO CLOSE Other Assistance Programs Remaining down payment or closing cost assistance needed to close the loan Freddie Mac

11 Affordable Seconds To view the full checklist, go to Freddiemac.com/homepossible Freddie Mac

12 Features and Benefits: Borrower Contribution and Reserves Number of Units 1-unit primary residence, that is not a Manufactured Home Minimum Contribution from Borrower Personal Funds Home Possible Advantage None required Reserves 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 Guide Chapter 4501 Freddie Mac 12

13 Minimum Indicator Score and Qualifying Ratios Property/Mortgage Type Loan Product Advisor Minimum Indicator Score A borrower s credit reputation is acceptable if the Home Possible Mortgage Received a risk class of Accept. Qualifying Ratios Per AUS 1-unit other than an ARM or a no cash-out refinance mortgage 1-unit that is an ARM, or a no cash-out refinance mortgage Manually Underwritten Mortgages Home Possible % % 2- to 4-unit % Manufactured Homes (must be submitted to LPA first) 1-unit fixed-rate mortgages that are purchase transactions 1-unit fixed-rate mortgages that are no cashout refinance transactions Home Possible Advantage % % % Freddie Mac

14 Borrowers With No Usable Credit Score Eligible 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 Not Eligible Home Possible Advantage 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 No housing payments past due Freddie Mac 14

15 Key Points and Resources Freddie Mac 15

16 Why choose Home Possible over FHA? Home Possible Mortgage Insurance vs. FHA Ends when LTV < 80% Stays for the life of the loan Conventional MI: monthly OR single premiums Only required if the LTV is 80% or higher Down payment funds applied to principal FHA: Upfront AND monthly premiums Required regardless of the LTV Down payment funds applied to principal AND upfront PMI WHAT THIS MEANS: With more funds applied toward the principal upfront, a Home Possible mortgage with PMI lets the borrower build equity faster. Freddie Mac

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

18 Home Possible Income and Property Eligibility Tool Freddie Mac

19 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

20 Housing Professionals Resource Center housing_counselors_resource_center.htm Freddie Mac

21 CreditSmart Freddie Mac 21

22 Down Payment Assistance DownPaymentResource.com * Available on FreddieMac.com Freddie Mac 22

23 My Home by Freddie Mac Website for consumers on renting, buying and owning a home MyHome.FreddieMac.com Freddie Mac 23

24 Housing Professionals Outreach News and Subscription Center Select the Housing Counselor Box Be Invited totrainings and Networking Events Get the Latest Resource Center Updates 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

25 What does this all mean for YOU and YOUR client? 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 Freddie Mac 25

26 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 26

27 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 27

28 CreditSmart Webinar Series Freddie Mac 28

29 QA & Freddie Mac 29