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TRANSCRIPT
Home Possible® Mortgages
March 2017
Note: This document is not a replacement or substitute for the requirements set forth in the Freddie Mac Single-Family Seller/Servicer Guide (Guide), Loan Product Advisor® Functionality
Guide, and/or terms of your Master Agreement and/or Master Commitment.
NOTE: This presentation is straight from FHLMC. Essex does not do manual underwrites or manufactured homes.
© 2017 Freddie Mac 22
Agenda
ResourcesSources of
FundsFeatures and
BenefitsGeneral
Requirements
Guide Chapter 4501
© 2017 Freddie Mac 33
• Fixed Rate
• Temporary subsidy buydown (1-unit primary residence only)
• 1- unit primary residence (Detached/Attached, PUDs,
Condominiums)
• All Borrowers must
occupy the Mortgaged
Premises as their
Primary Residence
• Fixed Rate
• 5/1ARM if secured by a
1- to 2-unit property, other
than a Manufactured Home
• 7/1 or 10/1 ARMs if secured by a
1- to 2-unit property
• Temporary subsidy buydown (1-to 2-unit primary residence only)
• 1- to 4-unit primary
residence (Detached/Attached,
PUDs, Condominiums)
• Manufactured Homes
• All Borrowers must
occupy the Mortgaged
Premises as their
Primary Residence
General Requirements
• 95% LTV/TLTV/HTLTV
• Purchase/No Cash-out Refinance
(Manufactured Homes refer to Guide Chapter 5703)
• 97% LTV / 105% TLTV (Affordable Second® only)
• Purchase/No Cash-out Refinance
Guide Chapter 4501
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General Requirements
Area Median Income (AMI) Limit:
The maximum allowed qualifying income based on the median income
for the area in which the mortgaged premises is located
Guide Chapter 4501
Affordable Income and Property Eligibility
*All stable monthly income for all borrowers for qualifying. The Seller must attempt to verify all income reported on the
Form 65, Uniform Residential Loan Application, in accordance with the Guide. Any discrepancies, including
underreported income, must be corrected before submitting the mortgage to Loan Product Advisor. All income reported
on the Form 65 that has been verified and that meets the criteria for stable monthly income as described in Chapters
5300-5305 must be used to qualify the borrower and submitted to Loan Product Advisor® for Loan Product Advisor
Mortgages.
Qualifying Income* up to 100% of the AMI
Higher AMI limits in designated High Cost Areas
Lifted in Underserved Areas
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General Requirements: Area Median Income
Loan Product Advisor Feedback Certificate
The loan meets Home Possible income limits based
on the property location for address entered
Employment & Income
Section: Feedback message
returned when either
Home Possible or Home
Possible Advantage
Offering Identifier
has been selected
*Applies to Conventional Conforming Mortgages
*General Messages
Section: Feedback
message returned when
Home Possible or Home
Possible Advantage
Offering Identifier
has NOT been selected
© Freddie Mac 6
Home Possible Income & Property Eligibility Tool
www.FreddieMac.com/homepossible/AMI-eligibility/
© Freddie Mac 7
Search Results: Zip Code – 22102 (McLean, VA)
© Freddie Mac 8
Search Results: City – Commack, New York
© Freddie Mac 9
Search Results: Property Address –
929 Wheelwood Way, Richmond, Virginia
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May be submitted to Loan
Product Advisor or a Manually
Underwritten Mortgage*
» Manufactured Homes must
first be submitted to Loan
Product Advisor
General Requirements: Underwriting Path
Guide Chapter 4501
*Manually Underwritten Mortgages must meet the requirements of Chapters 4501 and Chapters 5100-5500, including but not
limited to, the requirement that each Borrower individually, and all Borrowers collectively, have an acceptable credit reputation.
Note: The maximum debt-payment-to-income ratio for manually underwritten Home Possible Mortgages is 45%.
Home Possible Mortgages
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Home Possible Advantage
May be submitted to Loan
Product Advisor, or
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. A Home
Possible Advantage Mortgage where
none of the borrowers have a usable
Credit Score is not eligible
General Requirements: Underwriting Path
Guide Chapter 4501
*Manually Underwritten Mortgages must meet the requirements of Chapter 4501 and Chapters 5100-5500, including but not
limited to, the requirement that each borrower individually, and all borrowers collectively, have an acceptable credit reputation.
Note: The maximum debt-payment-to-income ratio for manually underwritten Home Possible Advantage Mortgages is 43%.
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Number of Units LTV TLTV HTLTV
Home Possible Advantage Mortgages
1-unit primary
residence, that is not a
Manufactured Home
97% 105%** NA
Home Possible Mortgages
1-unit primary
residence95% 95% 95%
2- to 4-unit primary
residence95% 95% 95%
Manufactured Home See Guide Chapter 5703
Features and Benefits: LTV* ratios
*LTV: Loan-to-value
TLTV: Total Loan-to-Value
HTLTV: Home Equity Total Loan-to-Value
Value as defined in Guide Section 4203.1
Guide Section 4501.10
There is no minimum LTV ratio
**Secondary financing subordinated to a Home Possible Advantage Mortgage must be an Affordable Seconds®. The Affordable
Second financing cannot be a Home Equity Line of Credit
© 2016 Freddie Mac 13
Features and Benefits: Mortgage Insurance
Guide Section 4701.1
1 If custom mortgage insurance is chosen, in addition to all other applicable delivery fees, the custom mortgage
insurance delivery fee in Exhibit 19 applies, including on Home Possible Mortgages 2 Manufactured Homes are limited to a maximum LTV ratio of 95%
Refer to the chart below for coverage levels
Lender-paid* and financed mortgage insurance premiums described in Section 4701.2 are permitted
Standard Mortgage Insurance
Refer to the chart below for coverage levels
Loan Product Advisor Accept Risk Class only
Premiums may not be financed
Lender-paid mortgage insurance option may not be used
Custom Mortgage Insurance1
*Must obtain Freddie Mac's approval to sell Mortgages with annual or monthly premium lender-paid mortgage insurance to Freddie Mac
Home Possible and Home Possible Advantage Mortgages
Transaction Type MI
Coverage
LTV Ratio
>80% & <85% >85% & <90% >90% & <95% >95% & <97%
Fixed-rate term >20
years; ARMs; and
manufactured homes2
Standard 12% 25% 25% 25%
Custom1 6% 12% 16% 18%
Fixed-rate, term
<20years
Standard 6% 12% 25% 25%
Custom1 N/A N/A 16% 18%
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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
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Check-In
Are the Home Possible Mortgage offerings
available only to first-time homebuyers?
Guide Chapter 4501
No, the borrower
does not have to be a
first-time homebuyer
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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
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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
» Cannot be provided by an interested party to the
transaction, the originating lender or Seller
2- to 4-unit primary residence (Home
Possible only): At least one qualifying
Borrower must participate in a landlord
education program before the Note Date*
» A copy of a certificate evidencing successful
completion of the landlord education program
must be retained in the Mortgage file
» Cannot be provided by an interested party to
the transaction, the originating lender or Seller
Features and Eligibility: First-time Homebuyer
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
Guide Chapter 4501*or the Effective Date of Permanent Financing for
Construction Conversion and Renovation Mortgages
Purchase Transactions Required:
Post-purchase and Early Delinquency Counseling
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Features and Benefits:
First-time Homebuyer (cont’d)
FreddieMac.com/creditsmart/tutorial.html
© 2017 Freddie Mac 1919
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
*Home Possible only: 2- to 4-unit Primary residence LTV >80% < 95%: 3% of value
Clo
sing c
ost
s an
d
Esc
row
s
**Refer to Guide Bulletin 2016-23 for
requirements and implementation
© 2017 Freddie Mac 2020
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
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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
Sources of Funds: Policy Flexibility
Cash on Hand
Guide Chapter 4501
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 Guide Chapter 5202)
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Wrap Up
How does it benefit
borrowers?
What are its key
features?
Who does it serve?
How can Home Possible and Home Possible Advantage be
YOUR affordable lending solution!
© 2017 Freddie Mac 2323
Resources
www.FreddieMac.com/homepossible/hp.html
Refer to Exhibit 19 for applicable post
settlement delivery fees and Guide
Chapter 4501 for delivery fee
exclusions
www.FreddieMac.com/purchasemarket/
www.FreddieMac.com/learn/mp/homepossible.html
© 2017 Freddie Mac 2424
Resources
The Learning Center Updates page provides quick access to new and updated
training resources to help you with underwriting, mortgage products, selling,
servicing, and more: FreddieMac.com/learn/ch_ind/
FreddieMac.com/singlefamily/news/subscribe.html
Get the latest e-mails on single-family news, updates, alerts, and new training
and education opportunities on the categories that match what's most
important for your job, your organization, and your business.
© 2016 Freddie Mac 25
Questions
and Answers?
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