Sweet New Suite Of Mortgages
by Broderick Perkins
A new suite of mortgages gives key community workers, working families, and borrowers with limited credit and savings greater access to low- and zero-down mortgages to buy homes in their community or refinance existing mortgages. "The biggest thing is that this suite of products is available nationally from 2,000 lenders and 10,000 mortgage brokers who use Loan Prospector (an automated underwriting tool). Previously, loans with these features were available only on a negotiable basis with lenders and they were typically tied to revitalization projects where a city was trying to stimulate home ownership in a given area," said Brad German a spokesman for Freddie Mac. Announced yesterday, this Freddie Mac product could help put home ownership within reach for tens of thousands of households that otherwise couldn't make the leap and they can realize their dream with market-rate loans. "It would be very much worth while to talk to a lender and check it out to see if you can qualify for this product. It's a conforming conventional mortgage rate as opposed to sub-prime or other rate," German added. Freddie Mac's "Home Possible Mortgage" combines borrower education, early delinquency counseling, zero- and 3-percent down payment mortgage products, and flexible credit requirements for low- and moderate-income households. Borrowers can move into a home with as little as $500 for the down payment or closing costs. "There's no hidden administration fee or other costs," German said. "A 43 percent debt-to-income ratio also gives you extra flexibility." Similar "Home Possible Neighborhood Solution Mortgages" targets teachers, law enforcement officers, firefighters, and health care workers. "Home Possible is what our lenders tell us they need to compete in today's market: a flexible, easy-to-use mortgage uniting Loan Prospector's ease and efficiency with exceptionally low down payments and flexible credit. Perhaps no other mortgage product launched in recent memory will enable our lenders to reach and help as many additional borrowers as Home Possible," said David Stevens, senior vice president of single family sourcing at Freddie Mac. The Home Possible Mortgage is available either as a 100 percent loan-to-value (LTV) mortgage that borrowers can use for single-family home purchases and no cash-out refinancing, or as a 97 percent LTV mortgage for one-to-four unit properties. Both the zero and 3 percent down payment versions of Home Possible loans allow borrowers to put down as little as $500 from their personal funds towards the down payment and closing costs for a one-unit property. Two-unit properties require borrowers to put in 3 percent of the property's value; 3-4-unit properties and manufactured homes require a 5 percent borrower contribution. Home Possible Neighborhood Solution combines a temporary subsidy buy-down (reducing the initial rate by 1.5 percentage points in the first year and 0.5 percentage points for the next two years) with a higher debt-to-income ratio to boost the home buying power of teachers, firefighters, law enforcement officers, and health care workers by as much as 30 percent. For example, a borrower with adequate reserves earning $2,761 a month and making a 3 percent down payment can boost her home buying power from $200,000 to $260,400 by opting for a Home Possible Neighborhood Solution Mortgage over standard 97 percent LTV mortgages, Freddie Mac says. Both Home Possible loan varieties are available as 15-, 20- and 30-year fixed rate mortgages (FRMs) or as 7-1 (fixed for seven years, then adjusting once a year thereafter) or 10-1 adjustable rate mortgages for one-unit properties. Borrowers can earn up to their area's median income or, if they earn more than the area's median, can buy or refinance a home in an undeserved market area to benefit from the special loans. All borrowers must be schooled in a pre-purchase borrower education program. Such programs significantly reduce mortgage delinquencies and foreclosures. "We created Home Possible Mortgages so more lenders can say 'Yes' to more borrowers," said David Stevens, senior vice president of single family sourcing at Freddie Mac. Gary Acosta, Chairman of National Association of Hispanic Real Estate Professionals said, "Successfully increasing home ownership rates among Hispanics requires the industry to develop affordable loan products with flexible underwriting that are supported by effective bilingual outreach and counseling. With the Home Possible Mortgage Suite, Freddie Mac is doing a great job of integrating all of these essential components." | 
