Native American Indian Housing Council 2018 Annual Conference. San Diego, CA May 30, Collaborating with Fannie Mae to Expand Affordable Housing

Transcription

1 Native American Indian Housing Council 2018 Annual Conference San Diego, CA May 30, 2018 Collaborating with Fannie Mae to Expand Affordable Housing 2017 Fannie Mae. Trademarks of Fannie Mae. 1

2 Agenda Who Is Fannie Mae and What Do We Do What Is Duty to Serve Who Are Fannie Mae s Partners Efforts and Outreach Fannie Mae Mortgage Products HomeReady Benefits and Eligibility Research Project in 2018 Next Steps in 2018 How can tribes partner with Fannie Mae? How can we help and contact information 2017 Fannie Mae. Trademarks of Fannie Mae. 2

3 Who Is Fannie Mae? Fannie Mae s mission is to expand homeownership. We have a special focus on helping underserved Americans overcome the unique barriers they face. Fannie Mae provides private capital to all communities, at all times, under all economic conditions, at the lowest rates possible. Fannie Mae is dedicated and committed to expanding homeownership in tribal communities and overcome barriers to provide capital on tribal lands. We firmly believe that our housing finance system can and must do more to ensure that all homeowners have an equal opportunity to obtain affordable mortgage financing Fannie Mae. Trademarks of Fannie Mae. 3

4 Prior Work in Indian Country Fannie Mae s first formal effort with tribal communities began in 1994 we committed to purchase HUD-184 and USDA RD 502 guaranteed mortgages on tribal lands; Fannie Mae Foundation partnered with First Nations Oweesta Corporation and others to develop a culturally appropriate consumer financial skills curriculum Building Native Communities: Financial Skills for Families; Fannie Mae s American Dream Commitment included an investment to serve families on reservations and trust land and to expand our network of partnerships to include tribes; provided over $30 million in Native American housing investments in 1999, serving over 265 households, including 16 conventional loans; In 2003, Fannie Mae invested more than $18 million with the Raymond James Indian Country Tax Credit 2017 Fannie Mae. Trademarks of Fannie Mae. 4

5 What Is Duty to Serve? In December 2016, Duty to Serve regulation was implemented to ensure that Fannie Mae continues to provides leadership to facilitate a secondary market for and to improve the availability of home financing for very low- to moderate-income families in three underserved markets: 1. Manufactured Housing 2. Rural Regions and Populations** 3. Affordable Housing Preservation **Rural Populations include American Indians and Alaskan Native lands 2017 Fannie Mae. Trademarks of Fannie Mae. 5

6 What Is Duty to Serve? 2017 Fannie Mae. Trademarks of Fannie Mae. 6

7 Who Are Fannie Mae s Partners? State Housing Finance Agencies, banks, mortgage lenders, and small financial institutions Native CDFIs Tribes and TDHEs Bureau of Indian Affairs Native American Housing Coalitions Government Leaders Tribal Advocates 2017 Fannie Mae. Trademarks of Fannie Mae. 7

8 Challenges and Commitments According to Research Among AIAN households in tribal areas, there is a strong and as yet unmet demand for homeownership. Options for mortgage financing are limited due to land complexities. Develop Targeted and Goal-Oriented Solutions Fannie Mae can help by doing what we do best; develop tools to expand access to homeownership Homeownership is a key driver of economic growth and revitalization. Expanding homeownership on trust land by reducing barriers improves reservation economies and their well-being. Support Sustainable Homeownership Fannie Mae has a vested interest in homeownership education; we believe HBE positions borrowers for long-term success 2017 Fannie Mae. Trademarks of Fannie Mae. 8

9 Outreach Efforts Met with tribes and viewed housing first hand on reservations Blackfeet Tribe in Montana San Felipe Pueblo in New Mexico Gila River and Pasqua Yaqui in Arizona Pine Ridge in South Dakota Hosted Roundtable Discussions with TDHE s Montana in April 2017 and Arizona in June 2017 New Mexico in September 2017 Minnesota and Wisconsin Early 2018 South Dakota May 2018 Attended and Sponsored Conferences and Housing Coalitions Sponsor and participate in NAIHC s Annual and Legal Conferences Great Lakes Indian Association Meeting July 2017 Southwest and Northwest Housing Tribal Alliance Meetings 2017 Fannie Mae. Trademarks of Fannie Mae. 9

10 What is a Fannie Mae Advisory Committee? In March, 2018 Fannie Mae established an advisory committee with Native American Community Leaders represented: Center for Indian Country Development Native American Indian Housing Council Two (2) Native American CDFIs Responsibilities could include providing recommendations and strategic information, evaluating performance of an activity outlined in the Rural Housing Plan, serving as an advocate to promote Duty to Serve, assisting in the future development of the Plan, and gathering and presenting material when necessary 2017 Fannie Mae. Trademarks of Fannie Mae. 10

11 Fannie Mae Announces $100 Million Low-Income Housing Tax Credit Fund The Raymond James Affordable Housing Fund 11 L.L.C. will focus on Hurricane Harvey impacted markets, as well as rural markets and Native American housing, by backing multifamily projects in these underserved areas with funding for rehabilitation and construction Fannie Mae. Trademarks of Fannie Mae. 11

12 Fannie Mae Mortgage Products Purchase (Income Restrictions and No Income Restrictions) Refinance (Existing Loan to Lower Rate/Mortgage Payment) Rehabilitation of Existing Units Community Second (Second Mortgages) Construction to Permanent Financing Manufactured and Modular Housing Let Talk about a Few of These Products in More Detail 2017 Fannie Mae. Trademarks of Fannie Mae. 12

13 Down Payment and Closing Cost Programs - Community Seconds Community Seconds mortgages permit Fannie Mae lenders to leverage limited public, non-profit, and employer funds to finance a down payment and/or closing costs, thus helping more families achieve homeownership. For most Fannie Mae purchase loans, no minimum contribution from the borrower s own funds is required on one-unit properties. A Community Seconds loan may provide the necessary funds for all or part of the down payment, closing costs, and property renovations Fannie Mae. Trademarks of Fannie Mae. 13

14 Fannie Mae s May 2018 Selling Guide expands our Community Seconds Provider Option Fannie Mae supports homeownership opportunities by allowing Native American tribes and their sovereign instrumentalities to provide grants or community seconds loans to members. These funds are eligible to cover all or part of a down payment, closing costs, and/or property renovations. Why is this important? Not everyone can be a provider of these funds. Community Seconds mortgages permit Fannie Mae lenders to leverage these funds to finance a down payment and/or closing costs 5% over the value of home or 105% CLTV, thus helping more families achieve homeownership Fannie Mae. Trademarks of Fannie Mae. 14

15 Benefits of Fannie Mae Mortgage Products Important to diversify the mortgage product; provide options to members Ease of Doing Business (Tribes and Lenders will have Fannie Mae Dedicated Staff); Less paperwork; more streamlined process; loan does not have to be submitted to HUD for additional approval Fannie Mae recognizes and respects the tribal court system Possible to customize the product based upon individual tribe s community/culture need 2017 Fannie Mae. Trademarks of Fannie Mae. 15

16 Benefits of Fannie Mae Mortgage Products No mandatory 1.5% upfront or annual guarantee fees CLTV up to 105% with community seconds including Manufactured Housing; Down Payment Assistance funds from the tribe are considered community seconds Flexible underwriting criteria i.e. 50% DTI to Qualified Homebuyers Boarder Income from roommates in a single-family property occupied as the applicant s primary residence is acceptable Homebuyer Education is mandatory and plays an important role Provide servicing support and follows the standard loss mitigation waterfall method; options to resolve delinquency 2017 Fannie Mae. Trademarks of Fannie Mae. 16

17 Standard Manufactured Housing (MH) Fannie Mae invests in manufactured housing loans to serve its mission of expanding affordable housing by providing liquidity to a market segment that is crucial to many Americans. MH offers a low-cost alternative to site-built homes for millions of American households, especially in high-cost and rural areas. We define a manufactured home as a dwelling that is built on a permanent chassis and installed on a permanent foundation system. Fannie Mae purchases mortgages secured by manufactured housing titled as real estate via our approved lender partners using our standard MH underwriting guidelines Fannie Mae. Trademarks of Fannie Mae. 17

18 Future Work Under Duty to Serve Manufactured Housing Titled as Personal Property (Chattel) Manufactured housing titled as personal property (chattel) makes up the majority of manufactured housing in the U.S. However, financing options are limited and the market is faced with numerous challenges, including: 1. The lack of overall market transparency makes it difficult to understand risks which discourages Enterprise, lender, and investor participation in the market; 2. Market data and information on chattel is largely unavailable; 3. There is a lack of understanding of how chattel loans perform 2017 Fannie Mae. Trademarks of Fannie Mae. 18

19 Future Work Under Duty to Serve Manufactured Housing Titled as Personal Property (Chattel) Acquire and study industry chattel data and information essential to the development of a chattel pilot such as: Publish to the public a comprehensive set of learning and analysis from all outreach activities to promote transparency across the housing industry and encourage collaborative engagement by the end of This will require approval from our FHFA, our regulator as we move forward 2017 Fannie Mae. Trademarks of Fannie Mae. 19

20 What Is a HomeReady Mortgage? HomeReady is an affordable low down payment mortgage product that can be used on and off tribal trust land. It is designed for creditworthy, low- to moderate-income borrowers, with expanded eligibility for financing homes in low-income communities. Unique land status Tribal Trust Land Allotted Trust Land Unrestricted or Fee Simple Underserved Markets Non-traditional credit Limited access/exposure to financing Manual underwriting 2017 Fannie Mae. Trademarks of Fannie Mae. 20

21 Who Can Benefit from a HomeReady Mortgage? Buyers who need flexibility with down payment Homeowners who want to refinance to lower monthly payments American Indian, Alaskan or Hawaiian Native (Buyers do not have to be members of a federally recognized tribe) Borrowers who meet income eligibility as follows: Area Type Low-income census tracts Percentage of Area Median Income (AMI) No income limit All other properties 100% 2017 Fannie Mae. Trademarks of Fannie Mae. 21

22 HomeReady Income Eligibility Lookup Tool 2017 Fannie Mae. Trademarks of Fannie Mae. 22

23 Borrower Income Flexibilities Flexibility Non-occupant borrowers Income considerations Consider income, assets, credit, and liabilities (DU LTV up to 95%; manual underwriting LTV up to 90%) Boarder Income *Helpful in situations when an extended family lives in home and contributes funds for rent. Include as qualifying income Rental income from an accessory unit *Detached Garage with living space Include as qualifying income 2017 Fannie Mae. Trademarks of Fannie Mae. 23

24 Boarder Income Sample Scenario 01/16/ Fannie Mae. Trademarks of Fannie Mae. 24

25 Example: Borrower Using Cash-on-Hand Scenario A borrower who does not have a bank account wants to use money he has saved (cash-on-hand) otherwise known as mattress money for his down payment to purchase a 1-unit home. Eligibility This is acceptable if the borrower customarily uses cash for expenses. May not use cash on hand for reserves (if required) Fannie Mae. Trademarks of Fannie Mae. 25

26 Summary of HomeReady Borrower Benefits Low Down Payment as little as 3% down for home purchases Fixed Interest Rates available for stability No Upfront Guarantee Fees Flexible Sources of Funds with no minimum contribution requirement from borrower s own funds (1-unit properties) Rental and Boarder Income may be considered for qualifying Down Payment Assistance acceptable from tribes and their TDHE s as an eligible Community Seconds Cancellable mortgage insurance may be removed per Servicing Guide policy Online learning through Framework s interactive course or an approved CDFI/TDHE to explain the home buying process and the essentials of homeownership 2017 Fannie Mae. Trademarks of Fannie Mae. 26

27 Conduct Research Project The goal of this research was to understand homeownership motivation and barriers, and mortgage-financing needs, among Native Americans who are recent or potential first-time homebuyers wanting to purchase on tribal trust lands. More specifically: Understand their underlying views of home and first-home ownership and how their unique identify and cultural beliefs connect to homeownership. Understand their views about money and how they manage their personal and household finances. Understand the dynamics and decision-making factors/process related to home purchase and financing. Identify the unique barriers that Native American homebuyers face and resources that could help them. Identify their network of influencers for buying and financing a home 2017 Fannie Mae. Trademarks of Fannie Mae. 27

28 Conduct Research Project Early on, I had so much fun in my life. Now, I need to provide a stable home, for me and my two girls We are not competitive people. We don t want to make more money but the mortgage payment will always be first priority The family home is what brings life to the land. With patience, hard work and guidance good things come. I went to my bank for a loan on my tribal land, but they said they can t do it Fannie Mae. Trademarks of Fannie Mae. 28

29 Tribe Responsibility Adopt Mortgage Ordinances Fannie Mae would like to review the following: Conveyances of beneficial interests in Trust Land or Restricted Land to lenders as security for Mortgages to borrowers; Recording of Mortgages; Mortgage foreclosure proceedings; Evictions, and; Transfer/resale restrictions; Residential Ground Lease 2017 Fannie Mae. Trademarks of Fannie Mae. 29

30 Current Tribe Partners Bay Mills Indian Community Michigan Three pueblos in New Mexico One tribe in Washington State One tribe in the State of Michigan Many tribes in conversations 2017 Fannie Mae. Trademarks of Fannie Mae. 30

31 What are other goals in 2018? Continue to meet with tribes to build relationships and understand needs Sign MOUs to bring Fannie Mae mortgage products to tribal trust lands Participate in coalition meetings and other tribal events Work to solve some of the appraisal challenges on tribal trust land Support, invest and partner with entities to support Financial Literacy and Homeownership Education Identify ways to support and provide capital to Native CDFIs and or Tribal Designated Housing Entities Continue to educate lenders, state and local housing agencies about tribal lending 2017 Fannie Mae. Trademarks of Fannie Mae. 31

32 Questions and Contact Information Kellie Fannie Mae Telephone: Kellie_coffey@fanniemae.com 2017 Fannie Mae. Trademarks of Fannie Mae. 32