Close More Loans with HFA Preferred · 17/01/2018 · HomeReady overview presentation with notes...

Close More Loans with HFA Preferred™

An Overview for MFA Loan Officers

January 17, 2018

© 2017 Fannie Mae. Trademarks of Fannie Mae. 21/17/2018

Seminar guidelines

Please do not place the call on hold at any time.

Place your phone on mute or use our conference features – *6 to mute.

Print a copy of today’s presentation from the File and Print menu.

Ask a question any time –enter questions through the Q&A panel in the lower right corner of the WebEx display.


An important note about today’s discussion

While every effort has been made to ensure the reliability of the session content, Fannie Mae’s

Selling and Servicing Guides and their updates, including Guide Announcements and Release

Notes, are the official statements of Fannie Mae’s policies and procedures and control in the

event of discrepancies between the information in this seminar and the Guides.


Agenda

• Working with HFAs• HFA Preferred™ • Tools and Resources

• Day 1 Certainty™ (D1C)• DU® Validation Service• Property Inspection Waiver (PIW)• Value

© 2017 Fannie Mae. Trademarks of Fannie Mae. 5

Working with HFAsHFA Preferred


Benefits of Homeownership and Financial ChallengesAmericans consistently agree that homeownership provides more financial and lifestyle benefits than renting, though some see financial challenges to getting a mortgage today:

Americans see both financial and lifestyle benefits to owning a house

Most view homeownership as a safe investment with a lot of potential

Renters continue to cite down payment and credit concerns as their biggest obstacles to getting a mortgage today


Who Do Buyers Trust For Information?


So, Here’s What We Know . . .

People still WANT to become homeowners – they view it as a stable and an

opportunity for wealth building

People are confused by the home buying process and believe things that aren’t

necessarily true about what they need to become homebuyers

People look for clear, accurate information from mortgage professionals, real

estate professionals and the media

The desire for homeownership remains strong but getting there is confusing . . .


Working with Housing Finance Agencies (HFAs)

Fannie Mae Partnership with HFAs More than 40 HFAs are collaborating with Fannie Mae to

support affordable homeownership

HFAs bring many valuable attributes A careful, high-touch, mission-motivated approach to

consumers from application through the life of the loan

Why do lenders partner with the HFAs? Potentially earn CRA credits*

Down payment assistance

Support of home buyer education

*Lenders must confirm with their regulators.

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRxqFQoTCLvRzc78psgCFcU3PgodwmMNSA&url=http://activerain.com/blogsview/2305270/understanding-mortgage-insurance-what-does-it-all-mean-&psig=AFQjCNE1wUs8ErCnrhP_tm992jTA8rd3yQ&ust=1443984747751363

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRxqFQoTCLvRzc78psgCFcU3PgodwmMNSA&url=http://activerain.com/blogsview/2305270/understanding-mortgage-insurance-what-does-it-all-mean-&psig=AFQjCNE1wUs8ErCnrhP_tm992jTA8rd3yQ&ust=1443984747751363


What is an HFA Preferred Mortgage?

HFA Preferred is an affordable low down payment mortgage product designed for creditworthy, low- to moderate-income borrowers, with expanded eligibility for financing homes in low-income communities.

With HFA Preferred, loan originators can reach growing market segments and close more loans.

Based on research

A “demographic sea change” affecting the housing market is defined by the rise of the Millennials, increased diversity, and a growing elderly population.

Targeted and goal-oriented

HFA Preferred may help lenders meet their Community Reinvestment Act goals.

Supports sustainable homeownership

Competitive pricing, cancellable mortgage insurance (restrictions apply), and buyer education that positions borrowers for long-term success.


Who does HFA Preferred fit?

Buyers who need flexibility with down payment and income qualification.

Borrowers who meet income eligibility as established by the MFA:


HFA Preferred Product Features

Most flexible 97% LTV option Desktop Underwriter® (DU) or manual underwriting available Simplified pricing with no LLPAs Lowest MI requirement Follow MFA income limits and homebuyer education

requirements Gifts, grants, and cash-on-hand permitted as a source of funds for

down payment and closing costs Borrower may own other property at time of closing Can be used with Manufactured Housing Eligible with HomeStyle® Energy NEW – Flexibilities for borrowers with student loan debt NEW – Income flexibilities available NEW– DTI up to 50% with no compensating factors required


Policy Changes

Selling Guide Announcement SEL-2017-04Student Loan Solutions Student Loan Payment Calculation:

simplified options available to calculate the monthly payment amount for student loans.

Debts Paid by Others: Non-mortgage debt paid by others within the last 12 months will not be calculated in the borrower’s DTI as long as appropriate documentation is collected.

Student Loan Cash-Out Refinance: A cash-out refinance mortgage offers homeowners the flexibility to pay off high interest rate student debt

https://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwi0kpHX3M_TAhWKDiwKHUAfAokQjRwIBw&url=https://www.adorama.com/alc/0014677/article/10-graduation-photography-tips&psig=AFQjCNGaiRaiFYE8XbAPqSg-_97zXJgIlg&ust=1493763434780245





Borrower Income Flexibilities

1. Non-occupant borrower

2. Boarder income



1. Non-occupant borrower

Borrower is on the loan

Non-occupant borrower(s) income is included in qualifying income

Also included are their assets, credit, and liabilities

DU LTV up to 95%; manual underwriting LTV up to 90%

Must meet income eligibility requirements


Non-Occupant Borrower Sample Scenario



2. Boarder income Boarder income (relatives or non-relatives):

– Up to 30% of qualifying income Documentation required:

– Shared residency for the most recent 12-month period– Boarder income for at least 9 of the most recent 12 months (averaged over 12 months).

Important distinction between Rental and Boarder Incomes:

Boarder Income: A roommate has been sharing living quarters with the borrower for the past 12 months and plans to live in the newly purchased home.

Rental Income: The home being purchased is a 1-unit property that has a basement apartment, which includes a functioning kitchen and bathroom, that can be rented out.

© 2016 Fannie Mae. Trademarks of Fannie Mae


Mortgage Insurance Coverage & Premium Plans


Beyond the Rate (Compare FHA and HFA Preferred)

*Restrictions apply. See Fannie Mae Selling Guide for additional details (Sections: B5-6-04, B7-1-02, B-8.1-04)

30-year fixed-rate scenario Purchase price: $150K

FHA mortgageNote rate: 4.375% | LTV: 96.50%

HFA Preferred mortgageNote rate: 4.625% | LTV: 97%

Base First Mortgage $144,750 $145,500

Down Payment $5,250 $4,500

Upfront MIP Rate (%) 1.75% 0.00%

MI Premium (Annual %) 0.85% 0.65%

Financed MI $2,533 $0

Total First Mortgage $147,283 $145,500

Monthly MI $103 $79

Total Monthly Payment $1,224 $1,202

HFA Preferred™Benefits

No upfront MI premium

Ability to cancel MI*

$1,783 in additional equity

$750 Lower down payment

No need to finance MI

When payment neutral, conventional financing = $3,533 long term cost savings and equity


The Big Picture

77%

77% of FHA loans could have gone conventional*

*In late 2015-early 2016, FNMA ran over 50K loans originated through US Bank’s HFA business through a DU simulation. The simulation indicated that over 77% of these loans could have gone conventional from a credit eligibility standpoint, assuming the max LTVs were held at 97%.


Tools and Resources


Tools to Effectively Manage Risk

Desktop Underwriter® (DU) – the leading automated underwriting platform in the industry

Early Check™ – provides access to Fannie Mae delivery edits to assist lenders in identifying and correcting potential eligibility and/or data issues early in their processes and prior to loan delivery https://www.fanniemae.com/singlefamily/earlycheck

Collateral Underwriter™ (CU™) – Proprietary appraisal review application developed by Fannie Mae to support proactive management of appraisal quality.– Gives lenders access to the same appraisal review tool

that Fannie Mae uses, at no additional cost.


DU Demo


Resources to Support YouOffer HOME by Fannie Mae™ https://www.fanniemae.com/singlefamily/homeapp Free interactive consumer app to support access to

homeownership Informs prospective home buyers on the home

buying process Includes dashboards, checklists, financial calendars,

videos and more

Visit the Fannie Mae HFA Webpagewww.fanniemae.com/singlefamily/housing-finance-agencies-public-entities Fact sheets, product comparison, and FAQs Free customizable HFA Preferred marketing

materials at our Marketing Center https://www.fanniemae.com/singlefamily/marketing-center Spanish Language Resource Center

https://www.fanniemae.com/singlefamily/spanish-resources-for-lenders

https://www.fanniemae.com/singlefamily/homeapp

http://www.fanniemae.com/singlefamily/housing-finance-agencies-public-entities

https://www.fanniemae.com/singlefamily/marketing-center

https://www.fanniemae.com/singlefamily/spanish-resources-for-lenders


Digital efficiencies will determine which lenders surge ahead …

…and which get left behind.


Fannie Mae’s Vision for the Future:

Delivering a digital mortgage process – “70 to 10” .

70 days 10 days


Creating a superior borrower experience, driving operational efficiency resulting in reduced origination cycle times and providing freedom from reps & warrants

DU® Validation Service

Freedom from paper-based processes

with validation of income, assets, and

employment through third-party data vendors

• Exceptional point of sale customer experience• Reduced origination cycle time• Freedom from rep & warrant on validated

components

Property Inspection WaiverFreedom from appraisal requirements on eligible refi transactions

• Exceptional point of sale customer experience• Reduced origination cycle time and cost savings• Freedom from rep & warrant on property value,

condition, and marketability

Certainty on Appraised ValueFreedom from reps & warrants on appraised value with the power of Collateral Underwriter®

(CU ™) when the CU risk score is 2.5 or lower

• Appraisal review efficiency• Freedom from rep & warrant on appraised value


How are lenders benefitting from Day 1 Certainty?[We are] “seeing an increase in customer satisfaction driven primarily by ease of use, less paperwork needs, and accelerated turn times.”

“This is a win-win, as the customer’s experience is improved through reduced documentation and accelerated closing dates, while we receive reps & warrants [relief] and operational efficiencies.” -

“Efficient utilization of technology is the highway to lowering origination costs and enhancing customer experience. Fannie Mae's Day 1 Certainty is the vehicle to take [us] down that highway.”


Welcome to the Future

Register with the DU validation service• Income• Employment• Assets

Exercise offers for Property Inspection Waivers

Leverage Collateral Underwriter to manage appraisal quality


Day 1 Certainty Resourceswww.fanniemae.com/day1certainty

Day 1 Certainty™

Close More Loans with HFA Preferred · 17/01/2018 · HomeReady overview presentation with notes...

Documents

Transcript of Close More Loans with HFA Preferred · 17/01/2018 · HomeReady overview presentation with notes...