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Mountain West Financial and
Freddie Mac Training –
April 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.
Presenter: Jim Peronto
DRAFT
© 2017 Freddie Mac 22
Loan Product Advisor Functionality
Home Possible and
Home Possible Advantage
Agenda
© 2017 Freddie Mac 33
Guide Chapter 4501
© 2017 Freddie Mac 44
• Purchase/No Cash-out Refinance
• 1- unit primary residence
(Detached/Attached, PUDs,
Condominiums)
• All Borrowers must occupy the
Mortgaged Premises as their Primary
Residence
• 30 Year Fixed Rate
• Temporary subsidy buydown (1-to 2-
unit primary residence only)
General Requirements
• 95% LTV/TLTV/HTLTV
• 97% LTV / 105% TLTV
(Affordable Second® only)
There is no minimum LTV ratio
© 2017 Freddie Mac 55
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
© 2017 Freddie Mac 66
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
© 2017 Freddie Mac 7
Home Possible Income & Property Eligibility Tool
www.FreddieMac.com/homepossible/AMI-eligibility/
© 2017 Freddie Mac 8
Search Results: Zip Code – 22102 (McLean, VA)
© 2017 Freddie Mac 9
Search Results: City – Commack, New York
© 2017 Freddie Mac 10
Search Results: Property Address –
929 Wheelwood Way, Richmond, Virginia
© 2017 Freddie Mac 1111
Offering Identifiers
Guide Chapter 4501
Home Possible
Home Possible
Advantage
© 2017 Freddie Mac 12
Features and Benefits: Mortgage Insurance
Guide Section 4701.1
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
Home Possible and Home Possible Advantage Mortgages
Transaction Type MI Coverage LTV Ratio
>80% & <85% >85% & <90% >90% & <95% >95% & <97%
Fixed-rate term Standard 12% 25% 25% 25%
© 2017 Freddie Mac 13
Number of UnitsMinimum Contribution from Borrower Personal Funds
Reserves
Home Possible Advantage
1-unit primary residence None required None required
Home Possible Mortgages
1-unit primary residence None required None required
Features and Benefits: Borrower Contribution
and Reserves
Guide Chapter 4501
© 2017 Freddie Mac 1414
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
© 2017 Freddie Mac 1515
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
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
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, the Effective Date of Permanent Financing for Construction Conversion and Renovation Mortgages
© 2017 Freddie Mac 1616
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
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
© 2017 Freddie Mac 1717
Features and Benefits:
First-time Homebuyer (cont’d)
FreddieMac.com/creditsmart/tutorial.html
© 2017 Freddie Mac 1818
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
Individual Development
Account (IDA): include matching
funds only if not subject to recapture tax
Community Savings deposited
by the Borrower
Trade equity
Rent Credits
Depository accounts
Sale of Borrower Asset
Cash on hand
Trust disbursement
Pooled funds
Loan secured by
Financial Asset
Credit card charges, cash advances or unsecured line
of credit: to pay fees associated with the mortgage
application process
Other
Borrower Funds
Gifts–Related Person 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 (funds in excess of Borrower’s contribution)
Premium Financing
Unsecured Loan: Originating Lender (Refer to Guide Section 5501.4)
Flexible Sources of Funds
Clo
sing c
ost
s, P
repai
ds
and E
scro
ws
Guide Chapters 5501 & 4501
© 2017 Freddie Mac 1919
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
© 2017 Freddie Mac 2020
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)
© 2017 Freddie Mac 2121
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!
© 2017 Freddie Mac 2222
Loan Advisor Suite – it’s the future of how
we’ll do business together!
© 2017 Freddie Mac 2323
Loan Assignment Function
© 2017 Freddie Mac 2424
Loan Assignment Function
© 2017 Freddie Mac 2525
Loan Assignment Function
© 2017 Freddie Mac 2626
Loan Assignment Function
© 2017 Freddie Mac 2727
New Features and Functionality (All Access
Methods*): Redesigned Feedback Certificate
New design: Move easily within the feedback results without having to scroll and search
Loan results: Highlights the total number of messages and total number by category
Simple design: Quickly identify and integrate results
Actionable messages: Placed into categories, like “Employment and Income,” for faster processing
*System-to-system interface and browser import based on LOS vendor update
© 2017 Freddie Mac 28
Review Results
We are working with our regulator, FHFA,
on a potential future collateral rep and
warranty relief offering.
We’ll keep you posted!
Risk Class: ACCEPT
Representation and warranty relief
for credit reputation and ratios
Risk Class: CAUTION
No representation or warranty relief
Documentation Levels:
StreamlinedFewer documentation requirements than
traditionally underwritten loans for the
Accept risk class
StandardRequires Standard Guide documentation for
higher-risk loans
© 2017 Freddie Mac 2929
Review Results
© 2017 Freddie Mac 3030
Review Results
Resource: Understanding
Loan Product Advisor’s
Determination of Total Funds
to Be Verified job aid
© 2017 Freddie Mac 3131
Review Results: New Data Visualization
© 2017 Freddie Mac 3232
Review Results
© 2017 Freddie Mac 3333
Review Results: Categorized Feedback
Messages
Mes
sages
are
eas
ier
to n
avig
ate
and
loca
te
© 2017 Freddie Mac 3434
Review Results: Cash-to Close Messages
New messages
provide the detail
behind the Asset
Information
section fields
http://www.freddiemac.com/singlefamily/news/2017/0118_lpa.html
For a complete listing of the revised feedback messages related to income and assets:
© 2017 Freddie Mac 3535
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
© 2017 Freddie Mac 3636
Freddie Mac Resources: The Learning Center
www.FreddieMac.com/learn/
© 2017 Freddie Mac 3737
Information
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.
© 2017 Freddie Mac 3838
Thank you for your participation!