Together, We Can Make a Strong Impact on Affordable Lending
Freddie Mac continues to sharpen our focus on making home possible. Our mission: To serve the nation’s homebuyers by providing liquidity, stability and affordability to the housing market.
Critical to meeting our mission is the ongoing collaboration with our clients.
As Mike Dawson, vice president, Freddie Mac Single-Family Affordable Lending Strategies and Initiatives, puts it: “Our lender and banking clients are our collaborative partners in making homeownership more affordable, sustainable and equitable for very low-, low- and moderate-income and first-time borrowers, as well as diverse and historically underserved communities.
We welcome the opportunity to discuss how we can continue to partner with our clients in making a strong impact on affordable lending. In the meantime, take a look at the range of affordable-rich products Freddie Mac offers that fit any borrower scenario:
Freddie Mac Home Possible® and Freddie Mac HFA Advantage®
As our flagship affordable product, Home Possible provides ample credit flexibilities, including a down payment as low as 3%. Home Possible can be combined with other low down payment financing options, such as a CHOICEHome® Mortgage, which offers conventional site-built financing for real-property, factory-built homes.
Similarly, HFA Advantage® was created specifically for housing finance agencies (HFAs), a powerful resource for lenders serving low- to moderate-income aspiring homebuyers, including first-time homebuyers.
We’re always looking for ways to improve HFA Advantage. Recently, we enhanced it to better support your affordable lending efforts, including:
- The addition of manufactured housing and 2- to 4-unit properties.
- The inclusion of non-occupant co-borrowers.
- Expanded credit risk assessments in Loan Product Advisor® (LPASM).
- The ability to offer the HFA Advantage mortgage – or rerun existing loans – to more borrowers due to recently updated area median income (AMI) values.
You can be recognized for excellence in originating Home Possible® and HFA Advantage® mortgage loans through our annual Home Possible RISE Awards® program. Check out the Home Possible RISE Awards® Winners Playbook, recognizing 2021 performance and see how you can participate going forward.
Accessory Dwelling Units (ADUs)
The ongoing housing shortage calls for creative solutions to make additional homes available. ADUs have become a popular way for homeowners to provide an independent living unit for extended family members or to rent out to others, all within the footprint of their existing property.
We now allow ADUs on more property types and permit income from a rented ADU on a one-unit primary residence to be used to qualify the borrower. Best of all, ADUs can be included on any Freddie Mac mortgage, not just a limited selection of offerings – giving you maximum choice for sound, responsible financing.
Manufactured and Rural Housing
Under the guidance of the Federal Housing Finance Agency (FHFA), our Duty to Serve efforts bring mortgage industry stakeholders together to make it easier to finance manufactured housing and housing in high-needs rural areas easier, while preserving the affordability of these homes over time.
Freddie Mac’s shared equity programs provide supplemental homeownership opportunities for very low-, low- and moderate-income households.
Mortgage financing options like community land trust (CLT) mortgage and mortgages secured by properties subject to income-based resale restrictions enable financing at below-market rates. Flexible financing helps buyers in high-cost cities and surrounding areas purchase a home while building and maintaining wealth.
And we should mention that you can now deliver CLT mortgages through the Guarantor execution option instead of only through fixed-rate cash execution. That means greater flexibility in loan delivery.
Making Home Improvements
For homeowners who want to make energy efficient or other updates to their home, there are plenty of affordable financing options from Freddie Mac:
CHOICERenovation® and CHOICEReno eXPress®
CHOICERenovation enables financing for large-scale renovations and allows you to deliver the loan to Freddie Mac before renovations are complete (with prior approval).
CHOICEReno eXPress enables financing for smaller-scale renovations and allows you to deliver the mortgage to Freddie Mac before renovations are completed, without recourse and without pre-approval when certain requirements are met.
Additionally, your borrowers can combine a CHOICERenovation or CHOICEReno eXPress mortgage with one of our low down payment products to finance large and small home improvements, such as repairing the foundation, installing or repairing a new roof, upgrading kitchen appliances and more.
For certain parts of the country, colder months are approaching. Use the GreenCHOICE Mortgage to finance home improvements that ensure comfort during the fall and winter.
GreenCHOICE can be combined with most of our other offerings and borrowers can access lower interest rates and financing up to 15% of the as-completed value of the property. Borrowers can use loan proceeds to finance energy- and/or water-efficiency home improvements, save on utility costs, pay off higher interest rate debt used for green home renovations and even save on taxes.
Refinancing for Increased Savings
Refi PossibleSM and Home Possible both offer refinance mortgage solutions that help very low-, low- and moderate-income borrowers continue to find opportunities to reduce their mortgage principal, reduce their interest rate, increase their savings, improve their financial wellness and aid in building generational wealth.
Research and Consumer Education
Freddie Mac’s Economic & Housing Research group develops excellent research articles and insights that look at a wide swath of issues around affordability.
Recent research articles cover such topics as: how higher prices have changed consumer spending; what borrowers do when a mortgage application is denied; migratory patterns in pursuit of affordability; and co-borrowing for first-time homebuyers, to name a few.
“Additionally, you can find joint research we’ve conducted with such industry organizations as NAHREP, AREAA and LGTBQ+ Real Estate Alliance to help inform on future borrower opportunities.”
Speaking of first-time homebuyers, one new way you can measure affordability is through the Freddie Mac First-Time Homebuyer Affordability Map (FFTHAM), which helps evaluate the local affordability for future borrowers based on their credit characteristics and income distribution. Go directly to the map here; and read related research here.
When it comes to educating consumers, you or others in your lending network can recommend the Freddie Mac CreditSmart® suite of educational resources. CreditSmart provides lower-income borrowers with the skills and knowledge to assist them through every stage of their financial capability and homeownership journey. Developing informed and empowered consumers through education goes to the heart of our mission.
Hispanic Homeownership Month may have recently come to a close, but National Native American Heritage Month is around the corner. Both demographics are primed for financial literacy programs like CreditSmart® Homebuyer U. This free, self-paced, online educational course covers the key learning principles of homebuyer preparedness and satisfies education requirements for HFA Advantage, Home Possible and HomeOne® mortgages
What’s In It for You?
“We’re continuing to focus on our mission of making homeownership affordable, sustainable and equitable for credit-worthy borrowers,” says Mike Dawson, “driven by our unwavering commitment to meeting our affordable housing goals and addressing the challenges of inequity in housing.”
As the housing landscape continues to evolve, Freddie Mac is here to help you stay on top of the challenges by helping you prepare your business for the future and originate a mix of affordable products that best serve your borrowers.
Want to know more about the steps and eligibility to originate our affordable products? Contact your Freddie Mac representative or the Customer Contact Support Center (1-800-FREDDIE).