Expanding Homeownership Responsibly with
Freddie Mac® Home Possible
February 2017
© Freddie Mac 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 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 4
Growing Responsible Affordable Lending –
Together
Housing CounselorsReal Estate
Professionals
Lenders
Products
& Services
© Freddie Mac 5
We support your efforts in:
Freddie Mac’s Commitment
to Housing Counselors
Preparing prospective
homebuyers for
responsible ownership
Helping struggling
borrowers avoid
foreclosure
Nationwide toll-free:
877-300-4179
© Freddie Mac
Agenda
Key Points and
Resources
Sources of
funds
General Requirements
Features and Benefits
Home Possible
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Maximum LTV of 97 percent;
TLTV 105 percent
Maximum LTV and TLTV of
95 percent
Introducing…
Home Possible Home Possible Advantage
© Freddie Mac
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 moderate-
income borrowers
Features and Benefits
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
Eligibility Criteria*
* See Freddie Mac Single-Family Seller/Servicer Guide for details.
Eligibility Criteria Home Possible & Home Possible Advantage
Eligible Mortgages
− 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
Occupancy Primary residence
Property Type1- to 4-units: Single-family, Condos, PUDs, Manufactured Housing –Home Possible Advantage only: 1-unit: Single-family, Condo, PUD
Underwriting Method Loan Product AdvisorSM or manual
Other IncomeBoarder 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
Fund Sources for Down Payment & Closing Costs
Gifts, grants, Affordable Seconds
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YOUR CLIENT’S
NEW HOME
Home Purchase Price
+
Closing Costs
__________________________
TOTAL REQUIRED TO CLOSE
Flexible Sources of Funds
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
Other Assistance Programs
Remaining down payment or closing cost assistance
needed to close the loan
© Freddie Mac
Affordable Seconds
To view the full checklist, go to Freddiemac.com/homepossible
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Number of UnitsMinimum Contribution from Borrower Personal Funds
Reserves
Home Possible Advantage
1-unit primary residence,
that is not a Manufactured
Home
None required 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
Features and Benefits:
Borrower Contribution and Reserves
Guide Chapter 4501
© Freddie Mac
Minimum Indicator Score
and Qualifying Ratios
Property/Mortgage TypeMinimum Indicator
ScoreQualifying
Ratios
Loan Product Advisor
A borrower’s credit reputation is acceptable if the Home Possible Mortgage
Received a risk class of Accept.Per AUS
Manually Underwritten Mortgages
Home Possible
1-unit other than an ARM or a “no cash-out
refinance mortgage660 45%
1-unit that is an ARM, or a “no cash-out
refinance mortgage680 45%
2- to 4-unit 700 45%
Manufactured Homes (must be submitted to
LPA first)720 45%
Home Possible Advantage
1-unit fixed-rate mortgages that are purchase
transactions660 43%
1-unit fixed-rate mortgages that are “no cash-
out” refinance transactions680 43%
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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
• No housing payments past due
Borrowers With No Usable Credit Score
Eligible 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
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Key Points and Resources
© Freddie Mac
Why choose Home Possible over FHA?
Mortgage Insurance
Stays for the life of the loanEnds when LTV < 80%
FHA: Upfront AND monthly
premiums
Conventional MI: monthly
OR single premiums
Down payment funds applied
to principal AND upfront PMI
Down payment funds
applied to principal
WHAT THIS MEANS: With more funds applied toward the
principal upfront, a Home Possible mortgage with PMI lets the
borrower build equity faster.
Home Possible FHAvs.
Required regardless
of the LTV
Only required if the LTV is 80%
or higher
© Freddie Mac
Home Possible Income and
Property Eligibility Tool
www.FreddieMac.com/Home
Possible/eligibility.html
© Freddie Mac
Home Possible Income and Property
Eligibility Tool
© Freddie Mac
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
Housing Professionals Resource Center
http://www.freddiemac.com/singlefamily/housingpros/
housing_counselors_resource_center.htm
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CreditSmart®
www.freddiemac.com/creditsmart
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Down Payment Assistance
* Available on FreddieMac.com
DownPaymentResource.com
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Website for consumers on renting, buying and owning a home
My Home by Freddie Mac®
MyHome.FreddieMac.com
© Freddie Mac
Be Invited toTrainings and Networking
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
Select the Housing Counselor Box
Get the Latest Resource Center Updates
Housing Professionals Outreach News and
Subscription Center
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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
What does this all mean for
YOU and YOUR client?
25
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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
Top Four Things to Remember About
Freddie Mac Home Possible
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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
YOU are the critical link
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CreditSmart Webinar Series
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&QA