Affordable Seconds^®

Product Features

• Eligible Mortgage Products

  For non -Seller-funded Affordable Seconds, the first lien mortgage must be:

  • A fixed-rate mortgage or an ARM with an initial fixed-rate period of five years or greater.
  • A purchase transaction or a "no cash-out" refinance.
  • Secured by a 1- to 4-unit primary residence.

  For Seller-funded Affordable Seconds, including Sellers that are credit unions or CDFIs, the first lien mortgage must be:

  • A Home Possible^® Mortgage
  • A fixed-rate mortgage or an ARM with an initial fixed-rate period of five years or greater.
  • Submitted to Loan Product Advisor^® in accordance with Chapter 5101 and receive a Risk Classification of Accept
  • A purchase transaction
  • Secured by a 1-unit primary residence
  • A retail mortgage
• Maximum TLTV Ratios

  Non -Seller-funded Affordable Seconds

  • Multiple Affordable Seconds may be used, but within TLTV limits.

  Seller-funded Affordable Seconds

  • Multiple Affordable Seconds may be used, but within TLTV limits. The maximum TLTV for a Home Possible Mortgage is 105%.

   

• Special Requirements

  • The Affordable Seconds must not be funded by the property seller or another interested party to the transaction, except as provided in Guide Sections 4204.2 (a)(i)(B) and 4204.2 (a)(i)(C).
  • The Affordable Seconds cannot be a Home Equity Line of Credit (HELOC).
  • The terms of the Affordable Seconds must not require a balloon payment that becomes due before the maturity date or payment in full of the first lien mortgage.
  • The interest rate of the Affordable Seconds must not be more than 2% higher than the interest rate of the first lien mortgage.
  • With respect to the Affordable Seconds, interest accruals that are added to principal balance may not at any time during the term of the first lien mortgage increase the TLTV ratio beyond the maximum TLTV allowed for the first lien mortgage.
  • Scheduled payments on the Affordable Seconds
    • If monthly payments on the Affordable Seconds are required and begin before the due date of the 61st monthly payment under the first lien mortgage, such monthly payments must be included in the borrower's monthly housing expense-to-income ratio and monthly debt payment-to-income ratio.
    • If monthly payments on the Affordable Seconds begin on or after the due date of the 61st monthly payment under the first lien mortgage or if repayment of the entire Affordable Seconds is due only upon sale or default, the amount of the Affordable Seconds monthly payment may be excluded from both ratios.
  • For special requirements relating to Affordable Seconds secured by properties subject to income-based resale restrictions or by properties subject to equity sharing agreements, see Guide Section 4204.2(b).
    • See Guide Section 4204.2(b)(ii) for limits on the share of appreciation to which the Agency or subsidy provider may be entitled.
• Credit Fees

  Credit Fees in Price may apply based on the individual characteristics of the mortgage. See Guide Exhibit 19 for details on applicable fees. The Secondary Financing Credit Fee in Price will not be assessed on a mortgage with an Affordable Seconds that meet the requirements of Guide Section 4204.2.

• Delivery Requirements

  See Guide Section 6302.34 for delivery instructions for mortgages with secondary financing, including Affordable Seconds.