home possible mortgages webinar - essex...

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.

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Highlight

© 2017 Freddie Mac 22

Agenda

ResourcesSources of

FundsFeatures and

BenefitsGeneral

Requirements

Guide Chapter 4501


• 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


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


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/

http://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


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


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%.


Number of Units LTV TLTV HTLTV

Home Possible Advantage Mortgages

1-unit primary

residence, that is not a

Manufactured Home

97% 105%** NA


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


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%


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


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


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


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


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


Features and Benefits:

First-time Homebuyer (cont’d)

FreddieMac.com/creditsmart/tutorial.html


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


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


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)


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!


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


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.


Questions

and Answers?

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