overview of hfa advantage mortgages - chfa home page...freddie mac provides hfas with a source of...

Overview of

HFA

Advantage

Mortgages

© Freddie Mac 2

Freddie Mac provides HFAs with a source of liquidity and supports their

service to low and moderate income borrowers.

▪ Launched HFA Advantage Mortgage, our enhanced product for housing

finance agencies, which includes:

➢ 97% LTV and 105% TLTV (1-unit)

➢HFA income limits in lieu of Home Possible Area Median Income limits

➢HFA determines homebuyer education requirements

➢Credit enhancement options including Charter-level mortgage insurance

➢No minimum LTV, no minimum borrower contribution, no reserves

➢No credit fees in price (aka: pricing adjustments)

➢ NEW! - Borrowers can now own other property

➢ An alternative to FHA financing

▪ Majority of HFAs provide “true grant” funds or affordable secondary financing

as part of their down payment assistance programs.

HFA Advantage Features and Benefits

© Freddie Mac

FHA: Upfront AND monthly

premiums

MI required regardless

of the LTV

Upfront MIP added to

principal AND amortized

OR

OR

OR

OR

Charter Level MI:

Monthly/single/split

MI only required if the

LTV is 80% or higher

No upfront MIP

MI stays for the life of the loan

TEXT HERE OR TEXT HERE

TEXT HERE OR TEXT HERE

Mortgage Insurance (MI)

Why Choose HFA Advantage over FHA?

HFAAdvantage

MI Ends when LTV < 80%

FHA

WHAT THIS MEANS: With more funds applied toward the principal upfront, a

HFA Advantage mortgage with PMI lets the borrower build equity faster.

© Freddie Mac 4

Charter Level Mortgage Insurance

HFA Advantage vs. FHA

© Freddie Mac 5

Loan Product

Advisor (LPA)

Loan Product Advisor

Instructions for Entering HFAAdvantage into Loan ProductAdvisor.

Select HFAAdvantage in the “Offering Identifier” field within the “Mortgage Type and Loan Terms” section of

Loan ProductAdvisor. See screen below. If using a Loan Origination Software (LOS) system, please contact

them to verify what field and value to enter. Some LOS systems may have you enter “251”.

© Freddie Mac 7


An Affordable Second® that does not require a payment within the first 60 months can be entered in the “Total

Gift Fund” field located in the “Assets and Reserves” section. *** Please ensure when the loan is delivered in the

Loan Selling Advisor SM that the secondary financing fields are completed accurately. *** A Grant that does not

require a repayment will also be included in the Total Gift Fund in LPA.

© Freddie Mac 8

The 3 C’s of Underwriting Used in LPA

© Freddie Mac 9

Credit reputation, Capacity and Collateral are often called

the "three Cs" of underwriting.

If one of these components is not acceptable

or if there is excessive layering of risk across components,

the mortgage may not be acceptable for sale to Freddie Mac.


© Freddie Mac 10

Credit Reputation

• Credit Score

• Foreclosures, bankruptcies, liens and/or judgments

• Mortgage delinquencies

• Credit delinquencies, repossessions, collections, or charge-offs

• Credit accounts: type, age, limits, usage and status of revolving accounts

• Borrower's request for new credit in last 12 months

Capacity

• Debt ratios: Qualifying monthly housing expense-to-income ratio or monthly debt payment-to-income ratio

• Salaried versus self-employed borrower

• Cash reserves

• Number of borrowers

• Loan Characteristics:

• Product: a 15-, 20-, and 30-year fixed rate, an adjustable rate mortgage

• Purpose of Loan: purchase or refinance (cash-out or no cash-out)

Collateral

• Borrower's total equity or down payment

• Property type: a 1-unit or 2- to 4- unit detached property, Condominium Unit or ManufacturedHome

• Property use: Primary Residence, Second Home or Investment Property

Loan Product Advisor Feedback Certificate

© Freddie Mac 11


Verify the loan was submitted correctly by ensuring the value entered in the “Offering Identifier” field is showing

HFA Advantage as shown below. This is found in the Mortgage Information section of the Loan Product Advisor

feedback.

© Freddie Mac 12

The “Area Median Income” returned in the “General Messages” section of the Loan Product Advisor feedback, is

the Freddie Mac income limit established by our regulator. This often differs from the income limits that an HFA

requires. Please always refer to your HFA for their program eligibility income limits.

Code “81” is the message returned for all HFA Advantageloans.


© Freddie Mac 13

LoanBeam’s technology with Loan Product Advisor® delivers the only AUS-integrated self-employed

borrower income assessment solution

Its an automated process that captures tax data in digital form with 99.7% accuracy and standardizes

the income calculations

Underwriting the Self-Employed Borrower

© Freddie Mac 15

AIM: Asset and Income Modeler

Features

Leverages optical

character recognition

(OCR) technology

Validates borrowers

assets such as bank

statements

Validates borrowers

income and

employment

Lender benefits

Takes cost and time

out of the process

while increasing

accuracy and quality

Provides rep and

warranty relief on

validated data

Turns more qualified

borrowers into

homeowners

Future State

Validation of Income

and Asset via Direct

Deposit

© Freddie Mac 16

AIM: Asset and Income Modeler

LOS Vendors

Review the full list at:

http://www.freddiemac.com/singlefamily/tech_vendors.html

© Freddie Mac 17

http://www.freddiemac.com/singlefamily/tech_vendors.html

Ace: Automated Collateral Evaluation

Features

Only available through


Option to underwrite

certain loans without a

traditional appraisal

Uses big data to assess

the condition and

marketability risks

associated with the

property

Lender benefits

Get to closing faster – no

need for a traditional

appraisal

Save money – no appraisal

fee

Immediate certainty –

automatically eligible for

collateral rep and warranty

relief

Consistently higher hit rates

Future State

What could go here?

© Freddie Mac 18

Supporting

Your Business

with Freddie

Mac Resources

Receive the Latest News and Updates

Sign Up For News and Updates:freddiemac.com/singlefamily/news/subscribe.

html

© Freddie Mac 22

Resources

© Freddie Mac 24

David Mendez

Affordable Lending Manager

[email protected]

Mobile: 818-919-6241

mailto:[email protected]

overview of hfa advantage mortgages - chfa home page...freddie mac provides hfas with a source of...

Documents