home possible mortgages webinar · namb home possible® and homeonesm mortgages june 2019 discover...

NAMB

Home Possible® and HomeOneSM Mortgages

June 2019

Discover the Possibilities!

NOTE: This document is not a replacement or substitute for the information found in the Freddie Mac Single-Family Seller/Servicer Guide, and/or terms

of your Master Agreement and/or other Pricing Identifier Terms.

© 2019 Freddie Mac 22

How can Home Possible help

20% 10% 5% 3%

Fixed Rate vs.

Adjustable

Rate Mortgage

Area median income limit

Gift amounts

Down payment amounts

Down payment assistance programs

1- to 4-unit dwellings


How Can Home Possible Help

▪ First-time

homebuyers

▪ Repeat Buyers

▪ Low- to

moderate-income

homebuyers

▪ Homebuyers

looking for low

down payments

▪ Homebuyers

looking for flexible

sources of funds

Who Does it Serve?


Combining the Offering

No longer need to support two products!

Home

Possible

Home

Possible

Advantage

Same flexibilities with expanded policies!

Home

Possible

Introducing One Simple Home Possible Mortgage


Agenda

Home Possible HomeOne Resources


Mortgage

Eligibility


*Must be submitted to Loan Product Advisor

and receive a Risk Class of Accept

Mortgage Eligibility

Transactions, property types, and eligible mortgages

▪ Purchase

▪ No cash-out refinance

▪ 1- to 4-units

▪ Attached, detached,

PUD, condo

▪ Manufactured home NEW

▪ Conventional

conforming mortgages

▪ Super conforming

mortgages*


Mortgage Eligibility

Home Possible Mortgages

Purchase and No cash-out refinances

Property Type Maximum LTV for non-

Super conforming

Mortgages

Maximum LTV for

Super Conforming

Mortgages*

Fixed Rate

1-unit 97%1 95%2

2-unit 95% 85%

3-4 unit 95% 80%

5/5, 5/1, 7/1, and 10/1 ARMs

1-unit 95% 95%

2-unit 95% 85%

3- to 4-unit 75% 75%

Notes:

• 1TLTV ratios exceeding 97% and up to 105% TLTV is permitted when secondary financing is an Affordable Second

• 2TLTV ratios exceeding 95% and up to 105% TLTV is permitted when secondary financing is an Affordable Second• * Superconfforming Mortgages must be submitted to Loan Product Advisor and receive an Accept Risk Class

• Manufactured homes refer to Chapter 5703

• Non-occupying borrower transactions refer to Guide Section 4501.7

NEW

NEW


Mortgage Eligibility: 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


▪ 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

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%


Income

Eligibility


Income Eligibility

Guide Chapter 4501

Borrower’s qualifying income converted to an annual basis…

AMI Limit: The maximum allowed

qualifying income based on the median

income for the area in which the

mortgaged premises is located

Borrower Income – You must use income used to qualify the Borrower to establish

that the income limits are not exceeded.

Low-income Census Tract:

AMI requirements do not apply

Low-income Census Tract: Defined

as a census tract where the income is

at or below 80% of the AMI

Must not exceed 100% of the Area

Median Income (AMI)Except,


Income Eligibility - Loan Product Advisor

Using Loan Product Advisor

Checks Home Possible® income

limits based on the property

location for address entered

Refer to Guide Section 4500 for Manually Underwritten Mortgages


Income Eligibility - Loan Product Advisor

Using Loan Product Advisor

Refer to Guide Section 4500 for Manually Underwritten Mortgages

General Messages: Feedback

message returned when the Home

Possible Offering Identifier

has been selected

Updated feedback

messages


Check-In

True or False: All conventional conforming

mortgages submitted to Loan Product

Advisor® are checked for Home Possible®

mortgage area median income eligibility.

FalseTrue


Excerpt from Loan Product Advisor Feedback message returned when Home Possible or

Home Possible Advantage Offering Identifier has NOT been selected

Check-In


Income Eligibility - Home Possible Income &

Property Eligibility Tool


Borrower

Eligibility


Borrower Eligibility - Occupancy

Required funds to

close: Occupying or

non-occupying

borrower

*For manually underwritten mortgages refer to 4501.7(b)

**Home Possible Mortgage must be a fixed-rate

1-unit property only

LTV/TLTV/HTLTV ratio:

95% Loan Product

Advisor® Accept Risk*

105% TLTV ratio

Affordable Second**

Permitting non-occupying borrowers NEW

One borrower must

occupy the property

as their primary

residence

Reminder: You must use income used to

qualify the borrower to determine if your borrower(s) meet the income requirements for a Home Possible mortgage


Check-In

Question: Now that we are allowing

non-occupying borrowers do the

homeownership education requirements

still apply?

NoYes

Not sure


Borrower Eligibility - Homeownership Education

Landlord Education

Program

When all occupying borrowers are

first-time homebuyers at least one

occupying borrower must participate1

Homeownership

Education Program

2-4 unit purchase transactions, at least

one borrower must participate2

NOTE: Must not be provided by an interested party to the transaction, the originating lender or Seller

1- For any transaction when the credit reputation for all Borrowers is established using only Noncredit Payment References then at least one Borrower must

participate in a homeownership education program before the Note Date. Also, a copy of Homeownership Education Certification, or document with comparable information, must be retained in the mortgage file.

2- A copy of a certificate evidencing successful completion of the landlord education program must be retained in the mortgage file.


Borrower Eligibility - Homeownership

Education

Freddie Mac’s online

homeownership course that meets

the home ownership education

requirements.

It’s free, easy and an effective

education tool.

CreditSmart Steps to Homeownership

https://creditsmarttutorial.freddiemaclearning.com/


Borrower Eligibility - Ownership of Other

Residential Property

Effective July 3rd,

Occupying Borrower may

not have ownership

interest in more than two

residential properties1

Update

*Guide Section 4501.71Includes subject property


Check-In

Scenario: The occupying borrower is going

to convert their current home to a rental.

Question: Is this loan eligible for Home

Possible?

NoYes

Not sure


Check-In

Scenario: Your borrower is selling their

current home, however, it will occur after the

Home Possible mortgage Note Date.

In addition to their current home, they also

cosigned on their son’s mortgage and have

provided the required documentation to

exclude the debt.

Question: Is this loan eligible for Home

Possible?

NoYes

Not sure


Source of

Funds


Sources of Funds - Minimum Borrower

Contribution

Borrower Contributions – Personal Funds & Other Eligible Sources of

Funds

1-unit None required 1

Borrower Contributions – Personal Funds

2- to 4-unit primary

residence

Home Possible® Mortgages with

LTV/TLTV/HTLTV ratios >80% <=95%3%

Low Minimum Contribution

Requirements

1 3% required ONLY when the Borrower is receiving a gift or grant from the lender or an Agency affiliated with the lender. Gifts or grants from

Seller or Agency affiliated with the lender may not be funded through the Mortgage transaction, including differential pricing in rate, discount

points, or fees for individual loans or across the Home Possible offering.


Sources of Funds

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

» 6% LTV/TLTV ratio > 75% < 90%

» 9% LTV/TLTV ratio < 75%

Borrower Personal Funds

Home Possible only: 2-4 unit primary residence LTV >80% < 95%:. 3% of value

▪ 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 trustCredit 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 from Seller as 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 (4501.10 (ii))

▪ Lender Credit

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

Flexible Sources of FundsC

losin

g c

osts

*Gifts or grants from the Seller as the originating lender will be permitted only after a contribution of at least 3% of value is made from

Borrower personal funds and/or other eligible sources of funds


Sources of Funds – Cash On Hand

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

▪ Evidence that all funds used for

the down payment, Closing

Costs, and reserves are

deposited in a financial institution

or are held in an institutional

escrow account prior to closing

▪ Credit report shows no more than three tradelines

» Copies of three 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

▪ Six months’ cash receipts or other alternative documentation (refer to Guide Chapter 5202)

The Mortgage file must have no indication that the Borrower

typically uses checking, savings or similar accounts

Cash on hand is unique to Home Possible


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

Affordable Seconds

https://sf.freddiemac.com/working-with-us/origination-underwriting/mortgage-products/affordable-seconds


Source of Funds – Affordable Second

Checklist


HomeOne

HomeOneSM Mortgages

This conventional mortgage,

offers qualified first-time

homebuyers

3% down payment

option

NOgeographic or

income limitations

Complimentary to our suite of

Low Down Payment mortgage

offerings

• HomeOneSM

• Home Possible®

• HFA Advantage®

Provides a solution to

capture the growing first-

time homebuyer segment

© Freddie Mac

Overview of HomeOne SM Conventional

Mortgage

HomeOneSM

LTV maximum ratios97% LTV /TLTV/HTLTV - 105% TLTV with Affordable Second

Only

Purchase StatusAt least one borrower must be a first-time homebuyer (as

defined in the Guide)

Refinance

No Cash-Out Refinance

Mortgage being refinanced must be owned or securitized by

Freddie Mac unless it has secondary financing that is an

Affordable Second®

Units1- Unit Only

No Manufactured Homes

Primary ResidenceAll borrowers must occupy the mortgaged premises as their

primary residence

Loan Type Fixed Rate

Income Limits No Limits

Homeownership Education:

Purchase Transactions

Required when all borrowers are first-time homebuyers at least

one Borrower must complete homeownership education

program before the Note date

Underwriting Path Loan Product Advisor only


Eligibility: Underwriting

Must receive an

Accept Risk Class

New Loan Product Advisor

feedback messages


Mortgage Insurance Coverage

Transaction Type MI CoverageLTV Ratio

>80% & <85% >85% & <90% >90% & <95% >95% & <97%

Fixed-rate, term

<20years

Standard 6% 12% 25% 35%

Custom2 N/A N/A 16% 18%

Fixed-rate term

>20 years

Standard 12% 25% 30% 35%

Custom2 6% 12% 16% 18%

Eligibility: Mortgage Insurance


▪ Lender-paid1 and financed mortgage insurance premiums described in Section 4701.2 are permitted

Standard Mortgage Insurance


▪ Loan Product Advisor® Accept Risk Class only

▪ Premiums may not be financed

▪ Lender-paid mortgage insurance option may not be used

Custom Mortgage Insurance2

2 - If custom mortgage insurance is chosen, in addition

to all other applicable delivery fees, the custom

mortgage insurance delivery fee in Exhibit 19 applies

1 - Must obtain Freddie Mac's approval to sell Mortgages with annual

or monthly premium lender-paid mortgage insurance to Freddie Mac


Resources


Resources: All For Home


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home possible mortgages webinar · namb home possible® and homeonesm mortgages june 2019 discover...

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