freddie mac’s hfa advantage mortgage master servicer: us bank · freddie mac’s hfa advantage...

Freddie Mac’s HFA Advantage Mortgage®

Master Servicer: US Bank___

Presenter: Tom Ward

March 2017

NOTE: This document is not a replacement or substitute for the information found in the Single-Family Seller/Servicer Guide, and/or terms of your Master Agreement and/or Master Commitment. This document is wholly-owned by Freddie Mac -- US Bank is not responsible for any of the content.

HFA Advantage Mortgage:

…available exclusively through

participating

State or Local

Housing Finance Agencies

Maximum 97% LTV / 105% TLTV

HFA income limits

All delivery fees waived

Charter-level mortgage insurance available

© 2017 Freddie Mac 2Master Servicer: US Bank

Objective / Agenda

HFA Advantage is available exclusively to Housing Finance Agencies

Resources

Underwriting and

Processing Tips

Features and Benefits

General Requirements

Objective: Familiarize you with the benefits, key features and requirements for

Freddie Mac’s low down payment mortgage offering: HFA Advantage


Key Features: HFA Advantage

• 97% LTV / 105% TLTV (Affordable Seconds® only)

• No Minimum LTV

• No Minimum Borrower Contribution

• Purchase/No Cash-out Refinance

• First-time homebuyers, repeat buyers

• 1- unit primary residence*

(Detached / attached, PUDs)

• All borrowers must occupy the mortgaged

premises as their primary residence, and

*Manufactured homes are not eligible;

Condominiums are eligible if LTV ≤ 95%

• No reserves required (for Loan Product Advisor

evaluated loans)

• Fixed rate

• Temporary subsidy buydown (2/1 or 1/1)

HOME

POSSIBLE

&

HOME

POSSIBLE

ADVANTAGE

Loan Product

AdvisorSM

(no manual underwriting if

LTV > 95%)

Use of alternative automated

underwriting system is permitted

HFA ADVANTAGE

Income Limits

Established

by HFA


Features and Benefits

LTV Ratio

HFA Advantage

Mortgage Insurance

Coverage*

(Fixed rate only)

Standard

Mortgage

Insurance

Coverage

(Fixed rate,

term > 20 years)

Greater than 80% up to 85% 6% 12%



Greater than 95% up to 97% 18%

* HFA Advantage Mortgage Insurance:

Premiums may not be financed

Lender-paid mortgage insurance option may not be used

Mortgage Insurance:

© 2017 Freddie Mac 5Master Servicer: US Bank 5

Check-In

Are the HFA Advantage Mortgage offerings

available only to first-time homebuyers?

Guide Chapter 4501

No, the borrower does not

have to be a first-time

homebuyer


Check-In

As of the note date*, can a borrower have ownership

interest in any other residential properties?

The borrower is a

cosigner/guarantor on the

related Mortgage debt and

someone other than the

borrower has made payments

on the debt associated with the

property for the most recent 12

months, as documented with

copies of canceled checks or a

statement from the lender.

The borrower inherited

their ownership interest in

the property and shares

ownership with another

party,

OR

The borrower owns the

property with another party

and the debt associated

with the property was

assigned to the other party

by a court order (e.g., a

divorce decree),

OR

Yes, there are circumstances in which a borrower may hold ownership

interest in a property that are compatible with the intent of the program.

To allow for these situations, we are permitting ownership in other

residential property provided the borrower does not occupy the other

property, and:

*Or as of the effective date of permanent financing for Construction Conversion and Renovation Mortgages


Qualifying Income / Income Limits

• Qualifying Income must

include all stable monthly

income for all borrowers.

• Mortgage Credit Certificates

(MCCs) may be considered

as qualifying income with

HFA Advantage mortgages

provided the requirements of

the Guide are met.

• HFA will determine income

eligibility based upon their

own income limits.


Temporary Subsidy Buydown Plans

• Must meet Guide

requirements

• Limited buydown plan

available (no more than two

percentage points)

• Borrower must be qualified

using monthly payments

calculated at the Note rate.


Flexible Down-payment & Closing-cost

Sources

Financing Concessions» 3% LTV/TLTV ratio > 90%

» 6% LTV/TLTV ratio > 75% < 90%

» 9% LTV/TLTV ratio < 75%

Borrower Personal Funds

(Borrower Minimum Contribution, if applicable)

Pooled funds

Individual Development Account

(IDA): include matching funds only if

not subject to recapture tax

Community Savings-Borrower

contribution

Cash value of life insurance policy

Trade equity

Rent Credits

Depository accounts

Cash on hand

Securities

Retirement accounts

Government bonds

Loan secured by borrower’s

assets

Sale of borrower’s real

property

Sale of borrower’s assets

Borrower’s real estate

commission

Funds from a trust

Credit card charges, cash advances or

unsecured line of credit: to pay fees

associated with the mortgage application

process

Other

Eligible Sources of Funds

Gift funds or gift of equity: Related Person

Gift funds: wedding gift**

Gift/Grant: Agency

Gift/Grant: Seller as the originating lender

Affordable Seconds

Secondary Financing (Home Possible Only)

Employer-Assisted Homeownership Benefit

IDA: matching funds subject to recapture tax

Unsecured loan: Agency/Related Person, or

Community Savings Systems (For Community

Savings funds in excess of Borrower’s

contribution)

Sweat equity (once 5% downpayment from

personal funds has been met)

Lender Credit

Unsecured Loan: Originating Lender (Refer to Guide Section 5501.4)

Flexible Sources of Funds

Clo

sing c

ost

s an

d

Esc

row

s

**Refer to Guide Bulletin 2016-23 for

requirements and implementation


Features and Eligibility:

When all borrowers are first-time

homebuyers, at least one qualifying

borrower must participate in a

homeownership education program

before the Note Date*

» A copy of a Homeownership Education

Certification, or another document with

comparable information, to be retained in

the mortgage file – prior to closing!

This requirement stresses the importance of

utilizing a curriculum that contains the

minimum core content specified by the

National Industry Standards for

Homeownership Education and Counseling.

These standards help ensure quality

education and counseling is delivered with

fairness and respect to homebuyers and

homeowners

Homeownership Education

*…or the Effective Date of Permanent Financing for Construction Conversion and Renovation Mortgages

Purchase Transactions Require:

HFA Advantage Program participants can leverage their own

HFA borrower education programs in lieu of the homebuyer

education requirements per Guide Section 4501.12


Underwriting & Processing Tips


Offering Identifier

HFA Advantage LTV ratio of 95.01 – 97%:

Underwriting Path: LTV 95.01 – 97%

No Manually Underwritten Mortgages

Minimum FICO score: 640

Maximum term: 30 years

Offering Identifier: 251

Home Possible

Advantage for HFAs

Must be submitted to Loan Product Advisor

» Only Accept Risk Class permitted – no exceptions

» Maximum debt-payment to income ratio (DTI) is 45%


Underwriting Path: LTV < 95%

A Manually Underwritten Mortgage*

At least one borrower must have a usable Credit

Score and an Indicator Score must be established

and must meet the required limits. An HFA

Advantage Mortgage where none of the borrowers

have a usable Credit Score is not eligible

Maximum debt-payment to income ratio (DTI) is 36%

Minimum reserves requirement: two months PITIA

*Manually Underwritten Mortgages must meet the requirements of Chapter 4501 and Chapters 5100 through 5500, including but

not limited to, the requirement that each borrower individually, and all borrowers collectively, have an acceptable credit reputation.

Offering Identifier

HFA Advantage LTV ratio of 95% or less:

May be submitted to Loan Product Advisor

Maximum debt-payment to income ratio (DTI) is 45%

Minimum FICO score: 640

Maximum term: 30 years


Loan Product Advisor Feedback Certificate


Check-In

Does the Homeownership Education Certificate

need to be placed in the mortgage file pre-closing?

Guide Chapter 4501

Yes!


Sources of Funds: Cash on Hand

Complete Monthly Budget and Residual Income Analysis (Exhibit 23), or another document containing the same information

Evidence that funds for the down

payment, Closing Costs, Financing

Costs, Prepaids/Escrows and

reserves are deposited in a financial

institution or are held in an institutional

escrow account prior to closing

Cash on Hand

The mortgage file must have no indication that the borrower

typically uses checking, savings or similar accounts

Credit report shows no more than 3 tradelines

» Copies of 3 months’ statements for any open revolving account that reveal cash advances are not the source of Borrower Funds

» Any cash advances must be explained and documented

Updated credit report approximately one week prior to closing to show no new accounts or increase in current accounts

6 months’ cash receipts or other alternative documentation (refer to Section 5202.2(b))


Subsidized secondary financing or other financial assistance, evidenced in land

records, that is provided by an Agency and that meets the requirements of

Section 4204.1

Sources of Funds: Affordable Seconds®

*Home Possible Advantage secondary financing source must be an Affordable Second, and it may not

be a home equity-line-of-credit

Note: RHS Leveraged Seconds are not permitted with Home Possible Advantage

www.FreddieMac.com/singlefamily/expmkts/affsec.html


Wrap Up

How does it benefit

borrowers?

What are its key

features?

Who does it serve?

How can HFA Advantage be YOUR affordable lending solution?


Resources www.FreddieMac.com/singlefamily/hfa.html


Freddie Mac Affordable Lending Manager

Regions

WA

UTNV

OR

CA

AZ

AK


Director: Sam Luna 818-802-4489 [email protected]

Single Family Affordable Lending Manager

Contact Information

Patricia Claproth 626 485 6262 [email protected]

Tamela Hartsfield 214-326-5537 [email protected]

Dennis Smith 571-385-7386 [email protected]

Jason Jefferies 347-721-7320 [email protected]

Nadja Vital 305-970-8592 [email protected]


Please complete the online evaluation before exiting

today’s session

Thank you for your participation!

freddie mac’s hfa advantage mortgage master servicer: us bank · freddie mac’s hfa advantage...

Documents