Home Possible and Home Possible Advantage

Transcription

1 Home Possible and Home Possible Advantage 1

2 Freddie Mac Home Possible and Home Possible Advantage mortgages (collectively referred to as Home Possible mortgages) are Freddie Mac s Affordable Mortgage products. Both offer flexibility and options to meet a variety of borrowers needs. What types of borrowers will benefit from these products? First-time homebuyers, move-up borrowers, and retirees. Families in underserved areas. Very low and low-to-moderate income borrowers. What is Home Possible Advantage? Home Possible Advantage Mortgages are Home Possible Mortgages with additional flexibility of higher loan-to-value (LTV) and total LTV (TLTV) ratio limits. 2

3 NEW Conventional Product Matrices & Guidelines! Government coming September 3 rd! You must log in through to access these materials. 3

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5 All blue links are live & will open to full underwriting guidelines 5

6 The following are links to important materials you will use regularly for Home Possible and Home Possible Advantage Mortgage products. You may wish to save these links to your Favorites, Bookmark, or create shortcuts on your desktop to get to them quickly. Wholesale Home Possible/Home Possible Advantage Product Matrix Wholesale Home Possible/Home Possible Advantage Guidelines Remember that if you do not log in through the FWL website, you will be prompted to enter your login/password credentials to open these direct links 6

7 Wholesale Broker Product Codes CONV FIX 30 Home Possible - Wholesale CONV FIX 25 Home Possible - Wholesale CONV FIX 20 Home Possible - Wholesale CONV FIX 15 Home Possible - Wholesale CONV ARM 5/1 LIBOR Home Possible - (2.25 Margin 2/2/5 Caps) - Wholesale CONV ARM 7/1 LIBOR Home Possible - (2.25 Margin 5/2/5 Caps) - Wholesale CONV ARM 10/1 LIBOR Home Possible - (2.25 Margin 5/2/5 Caps) - Wholesale CONV FIX 30 Home Possible Advantage - Wholesale CONV FIX 25 Home Possible Advantage - Wholesale CONV FIX 20 Home Possible Advantage - Wholesale CONV FIX 15 Home Possible Advantage - Wholesale Wholesale Correspondent Product Codes CONV FIX 30 Home Possible - Correspondent CONV FIX 25 Home Possible - Correspondent CONV FIX 20 Home Possible - Correspondent CONV FIX 15 Home Possible - Correspondent CONV ARM 5/1 LIBOR Home Possible - (2.25 Margin 2/2/5 Caps) - Correspondent CONV ARM 7/1 LIBOR Home Possible - (2.25 Margin 5/2/5 Caps) - Correspondent CONV ARM 10/1 LIBOR Home Possible - (2.25 Margin 5/2/5 Caps) - Correspondent CONV FIX 30 Home Possible Advantage - Correspondent CONV FIX 25 Home Possible Advantage - Correspondent CONV FIX 20 Home Possible Advantage - Correspondent CONV FIX 15 Home Possible Advantage - Correspondent 7

8 Freddie Mac Home Possible Fact Sheet Comparison of Home Possible & Home Possible Advantage Freddie Mac Home Possible Advantage Fact Sheet Freddie Mac Home Possible Training Opportunities CreditSmart Online Homebuyer Education Tutorial Income & Eligibility Tool 8

9 Mortgages with the following characteristics are not eligible for purchase as Home Possible Mortgages: 2-4 Units on Home Possible Advantage Adjustable Rate Mortgages (ARMs) on Home Possible Advantage Buy downs (Permanent, Temporary or Subsidy) Cash on hand for downpayment or costs Cash-Out Refinances Concurrent Short Sales Construction Conversion and Renovation Mortgages Co-Op Properties Custom/Reduced (non-standard) MI High Cost (Section 32) Loans Manual Underwriting Manufactured Housing Mortgages with RHS Leverage Second Super Conforming Mortgages Sweat Equity Texas 50(a)(6) Mortgages 9

10 TWO VERY IMPORTANT REQUIREMENTS FOR HOME POSSIBLE / HOME POSSIBLE ADVANTAGE PRODUCTS 10

11 Home Possible Home Possible Advantage Income Limit Qualifying Income up to 100% of the Area Median Income (AMI) Limit Higher area median income limit in designated High Cost Areas No limit in Underserved Areas How do you determine the maximum income limit? Option 1: Utilize Freddie Mac s Home Possible Income & Property Eligibility Tool to look up area median income limits by property address or zip code. 11

12 Example of an AMI Search The following results were obtained by entering a zip code in Wisconsin: 12

13 Option 2: Let Loan Product Advisor (formerly Loan Prospector) do all the work. All conventional, conforming loans will be reviewed to determine if income limits are met. (Even when Home Possible or Home Possible Advantage offering identifier has not been selected.) Feedback Message when Offering Identifier has been selected properly: Feedback Message when Offering Identifier has not been selected properly: 13

14 Notes on determining Area Median Income Limit: The income used to qualify the Borrower converted to an annual basis must not exceed the Home Possible income limit for the area. All income reported on the loan application must be verified in accordance with standard Freddie Mac requirements. Any discrepancies, including underreported income, must be corrected before submitting the Mortgage to Loan Product Advisor. All income reported on loan application that has been verified and that meets the criteria for stable monthly income must be used to qualify the Borrower and submitted to Loan Product Advisor. Income from non-borrowing spouses, or other household members should not be considered (which differs from Fannie Mae s Home Ready affordable housing product). 14

15 When is Homebuyer and Landlord Education required? Homebuyer Education Purchase When all borrowers are first-time homebuyers*, at least one qualifying borrower must participate in a homeownership education program. No Cash-Out Refinance Not required. Landlord Education 2-4 unit properties: At least one qualifying borrower must provide a completion certificate for a landlord education program before the note date Not required, but encouraged. Note: A copy of the Homeownership Education Certification, or other comparable document, and a copy of the certificate evidencing successful completion of the landlord education program (if applicable) must be retained in the Mortgage file, 15

16 What types of Homeownership Education are acceptable? Homeownership education programs may use different formats and require different lengths of time to complete. The following are acceptable: Programs developed by HUD-approved counseling agencies, Housing Finance Agencies (HFAs) or Community Development Financial Institutions (CDFIs) Homeownership education programs developed by mortgage insurance companies or other providers programs that meet the standards of the National Industry Standards for Homeownership Education and Counseling ( Alternatively, programs using Freddie Mac s FREE online financial literacy curriculum, CreditSmart. 16

17 Access Freddie Mac s CreditSmart Steps to Homeownership Tutorial 17

18 Resources for Accepted Landlord Education: Genworth Register a borrower for Landlord Education Landlord Education Guide MGIC: unit property purchases: At least one qualifying borrower must provide a completion certificate for a landlord education program before the note date 18

19 Standard Product Guidelines, Requirements, Restrictions 19

20 Amortization/Terms (See Product Codes in next slides) Home Possible Fixed Rate 30, 20, 15, and 10 Year Term 5/1, 7/1, or 10/1 ARM Home Possible Advantage Fixed Rate 30, 20, 15, and 10 Year Term (ARMS not permitted on HPA) LTV/TLTV/HTLTV 95% / 95% 97% / 105%* Loan Purpose Purchase No Cash-Out Refinance * With eligible Affordable Second Purchase No Cash-Out Refinance Occupancy Primary Residence Property Type 1-4 Unit PUD Condominium 1 Unit PUD Condominium 20

21 1-unit primary residences: Use Form 70, Uniform Residential Appraisal Report. Condominiums: Use Form 465, Individual Condominium Unit Appraisal Report. 2- to 4-unit primary residences: Use Form 72, Small Residential Income Property Appraisal Report. (eligible ONLY for Home Possible not for Home Possible Advantage) 21

22 Minimum Contribution Requirements Borrower Contribution: ZERO unless property is a 2-4 unit then 3% minimum is required from borrower personal funds* Reserves: ZERO unless property is a 2-4 unit, then 2 months reserve is required 22

23 Eligible Sources of Funds Purpose Permitted Source Minimum Borrower Contribution Borrower Personal Funds Down Payment (Purchase) Borrower Personal Funds Other Borrower Funds Additional Equity (NCO Refi) Borrower Personal Funds Other Borrower Funds Closing Costs, Financing Costs, Prepaids/Escrows Borrower Personal Funds Other Borrower Funds Flexible Sources of Funds Reserves Borrower Personal Funds Other Borrower Funds Eligible Assets 23

24 Eligible Sources of Funds (Continued) Borrower Personal Funds Other Borrower Funds Flexible Sources of Funds Depository Accounts Secured Loan Sale of Asset Trust Disbursement Pooled Funds IDA (include matching funds only if no recapture tax) Rent Credit Trade Equity Community Savings (deposited by the borrower Gifts (Related Person) Gift/Grant (Agency) Affordable Second Secondary Financing (Home Possible only) Employer Assisted Homeownership Benefit IDA (matching funds subject to recapture tax) Unsecured Loan* (Agency/Related Person or Community Savings System) Financing Concessions (meeting standard requirements) Premium Financing Unsecured Loan* *Unsecured loans must meet the requirements indicated in section of the Freddie Mac Seller Guide (see next slide). 24

25 For purchase transactions, proceeds from an unsecured loan meeting the requirements of Unsecured Loans (below) from the following sources: An Agency, A Related Person, or A Community Savings System (funds in excess of the Borrower contribution to the Community Savings System) An unsecured loan is a loan that meets all of the following: Is not documented in the local jurisdiction's land records and is not secured by the Mortgaged Premises Does not contain provisions that allow or could result in negative amortization Has a maturity date that: Does not exceed the maturity date of the Mortgage, and Is at least five years after the Note Date of the Mortgage, unless the unsecured loan is fully amortizing Has an interest rate that is no greater than the Note Rate on the Mortgage Is not a cash advance from a credit card or unsecured line of credit Has its source, terms and conditions documented on the Form 65, Uniform Residential Loan Application Has its terms documented in the Mortgage file For purchase transactions, the required minimum down payment from Borrower Personal Funds, as applicable, is satisfied If used in connection with a purchase transaction, the lender is not an interested party to the transaction (as described in Interested Party Contributions), and did not obtain funds from an interested party to the transaction If the loan is an Employer Assisted Homeownership (EAH) Benefit, its terms permit the Borrower to continue making payments on the loan in the event the Borrower no longer works for the employer and may not require repayment in full unless: The Borrower terminates his or her employment for any reason, or The employer terminates the Borrower's employment for any reason other than long-term disability, the elimination of the employee's position or reduction-in-force 25

26 What is an Affordable Second? Subsidized secondary financing or other type of financial assistance, evidenced in land records, that is provided by an Agency and that meets the requirements for Affordable Seconds, indicated below. A few key specifics: Source An Affordable Second must be provided by an Agency under an established, ongoing, documented secondary financing or financial assistance program. The source of the Affordable Second must not be the property seller or another interested party to the transaction. Financing Structure The Affordable Second financing cannot be a HELOC. Eligible First Lien Mortgages A fixed-rate Mortgage or an ARM with an initial fixed-rate period of five years or greater A purchase transaction or a "no cash-out" refinance, and Secured by a 1- to 4-unit Primary Residence Loan Product Advisor The amount of the Affordable Second can be entered in the "Total Gift Fund" field of Loan Product Advisor instead of entering it into the "Subordinate Amount" field, provided that: The Affordable Second does not require a payment before the Due Date of the 61 st monthly payment, and It meets all the other requirements for an Affordable Seconds. Note: Affordable Second must be included in the TLTV. 26

27 Reminder- This information can only be accessed by logging in to Products & Guidelines through the FWL internet website Request for Review of DPA Grant or Secondary Financing Provider Request for Review of DPA or Secondary Financing Provider Submission Sheet 27

28 AUS/Underwriting LPA Accept required (no Manual Underwriting) The following LPA Offering Identifiers are REQUIRED: Home Possible: 241 Home Possible Advantage: 250 **IMPORTANT** Encompass LOS- Freddie Mac Additional Data Screen These fields must be completed in order for LPA to read and review the application for Home Possible eligibility. Be sure you determine where these fields are located in your LOS system if you do not use Encompass! 28

29 Eligible Borrowers Borrowers are not required to be first time homebuyers. Non-occupant co-borrowers are not permitted. All borrowers must occupy the property as their primary residence. 620 minimum credit score required by FIMC A borrower s credit reputation is acceptable if the Home Possible mortgage receives a risk class of Accept All borrower must have traditional credit scores Manual underwriting not permitted 29

30 DTI: No maximum - Determined by LPA. Secondary Financing Home Possible Any secondary financing that meets Freddie Mac requirements is permitted. Home Possible Advantage Only Affordable Seconds are permitted. 30

31 Employment/Income Must meet Area Median Income (AMI) Limits All income reported on the loan application must be verified (and considered in AMI requirements) Rental income from 1-unit property Is eligible if Documentation is provided to evidence that the tenant & borrower have resided together for at least one year, Requires specific documentation showing tenant s address = that of the borrower for past 12 months Rental payments can be verified for the last 12 months 12 months cancelled checks, bank statements A written statement from the borrower is obtained affirming the source of rental income and that the person providing the rent has resided and will continue to reside with the borrower. Rental income for qualifying does not exceed 30% of total income used for loan qualification 31

32 Occupancy Primary Residence Only All borrowers must occupy the mortgaged premises. Non-Occupant Borrowers not permitted Ownership in Additional Properties Borrower(s) may not have an ownership interest in any other residential property as of the note date. Note- they can sell another property simultaneously as long as the sale closes before the Home Possible mortgage. 32

33 Coverage Requirements Eligible Mortgage Insurance Providers Accepted by FWL: Arch, Essent, Genworth, MGIC, National MI, Radian and United Guaranty. Note: Be sure to check with the MI provider guidelines for additional Home Possible overlays as may be applicable. Eligible Mortgage Insurance Payment Plan Options: Monthly BPMI Annual/Single BPMI Financed MI LPMI (paid through premium pricing) Custom/Reduced MI coverage is not eligible. 33

34 Income Restrictions Mortgage Insurance Max cash back on refinance Non-Borrowing Spouse Comparison of Home Possible & FHA Topic Home Possible / Home Possible Advantage Products are only eligible for borrowers who fall within income limits No up-front MI required. MI will automatically end when the LTV drops below 80 Incidental cash back to borrower is the lesser of 2% of the loan amount or $2,000 No credit report or qualifying required for NBS FHA No income restrictions apply Both up-front and annual MI are required. MI will remain for life of the loan $500 max back for incidentals Credit must be pulled and debts considered in qualifying for NBS in community property states 34

35 Test Your Knowledge Let s see if you were paying attention?! 35

36 1. What is a major difference between a Home Possible and Home Possible Advantage? a) Home Possible requires higher MI coverage than Home Possible Advantage does b) Home Possible allows for 2-4 unit property whereas Home Possible Advantage only allows 1 unit property c) Both of the above. d) None of the above. 2. How many months of reserves are required when purchasing a 3 unit property? a) Reserves TBD by Loan Product Advisor (LPA) b) 1 months reserves c) 2 months reserves d) None of the Above. 36

37 1. Home Possible max LTV is restricted to 95% whereas Home Possible Advantage allows up to 97% LTV True or False? 2. Landlord education certificate of completion is required when buyer is purchasing a 2-4 unit property True or False? 3. Homeownership education is required through Freddie Mac s CreditSmart Course True or False? 4. Adjustable rate mortgages are eligible for both Home Possible and Home Possible Advantage mortgages True or False? 5. Non-occupant co-borrowers can help occupant borrowers qualify on Home Possible Mortgages True or False? 37

38 Wholesale For quickest answers: Guideline & scenario questions: Pricing & Rate Locks: Thank you for attending! 38