Grow Your Business with Freddie Mac Home Possible...

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Grow Your Business with Freddie Mac Home Possible Mortgages Jenneese Worley, Account Executive, Nadja Vital, Affordable Manager June 9, 2016

Transcript of Grow Your Business with Freddie Mac Home Possible...

  • Grow Your Business with Freddie Mac Home Possible Mortgages

    Jenneese Worley, Account Executive, Nadja Vital, Affordable Manager

    June 9, 2016

  • © Freddie MacMarch 2016 2

    1. Look for better ways to provide greater certainty.

    2. Deliver better solutions to help our customers make more loans at a lower cost.

    3. Provide better supportto strengthen business opportunities.

    Single-Family 2016 priorities

    PresenterPresentation NotesBetter Business Together – Every Day in Every Way.SM

    For the single-family business, those twin goals translate into an enormous opportunity to build better business together, every day in every way.

    Every day and in every way, we are focused on providing our customers with better solutions, better support and better ways to greater certainty.

    In 2016, we are focused on two areas: building better technology and expanding access to credit.

  • © Freddie MacMarch 2016 3

    Loan Advisor Suite…our vision is becoming a reality

    PresenterPresentation NotesAs you’re aware, we’re building a smarter, more efficient suite of applications – Loan Advisor SuiteSM – that will help our customers lower the cost of producing and selling high quality loans.

    Loan Advisor Suite will allow us to provide our customers with insight into their eligibility for rep and warranty relief earlier in the process.

    I’m excited to say our vision for Loan Advisor Suite is becoming a reality later this summer.

    We’ve designed Loan Advisor Suite with lenders for lenders. We’re partnering with both lenders and vendors as we develop the suite.

    We’ve also been working to improve our current tools so we can do better business together now.

  • © Freddie MacMarch 2016 4

    Loan Advisor Suite components

  • © Freddie MacMarch 2016 5

    www.freddiemac.com/loanadvisorsuite

    Sign up for Loan Advisor Suite updates

    Talk to your Freddie Mac representative

    Want more information?

    Click to access theLoan Advisor Suite web page and to sign up for updates

    http://www.freddiemac.com/loanadvisorsuite

  • © Freddie MacMarch 2016 6

    Mortgage rates: Near historic lows

    Home prices: Rising

    Home sales: 2015 best year since 2007

    Home construction: Rising

    Views on homeownership: » Still a good investment» Hope to own – someday

    Employment: Near historic average; little wage growth

    Market Conditions

  • © Freddie MacMarch 2016 7

    2015 First-time Homebuyers

    2015 All U.S. Homebuyers

    Who’s Buying Now?

    Repeat Buyers

    68%

    First-time Buyers

    32% Married Couples

    56%

    Single Women

    18%

    Unmarried Couples

    13%

    Single Men11%

    Source: National Association of Realtors 2014 Profile of Home Buyers and Sellers

  • © Freddie MacMarch 2016 8

    Opportunity: Millennials

    4.6M new Millennial

    homeowners by 2020

    11.7M new Millennial

    homeowners by 2025

    Growth in Millennial Households and Homeowners

    Sources: JCHS of Harvard University – chart depicts middle projection (interpolated): http://www.jchs.harvard.edu/research/publications/baseline-household-projections-next-decade-and-beyond ; Collingwood Group.

    Chart1

    201520152015

    202020202020

    202520252025

    Population

    Households

    Homeowners

    Millions of People

    15.9163293852

    5.5335187137

    27.6465722603

    10.0573196724

    39.1610530751

    17.1587437919

    Goals Perf

    201320132014201320132014

    2015E

    FreddieTarget *FannieFreddieTarget *FannieFRETarget *FannieTarget *FreddieFannieTarget *Freddie

    LIP21.80%23%23.80%LIP21.00%23%23.50%22.80%23%LIR24.30%20%24.10%LIR26.50%20%26.40%

    VLIP5.50%7%6.00%VLIP4.90%7%5.70%5.90%7%LAS14.00%11%12.30%LAS15.50%11%13.60%

    LAD20.00%21%21.60%LAD20.20%18%22.70%Xx%TBDLAD21.60%21%20.00%LAD22.70%18%20.20%

    LAS12.30%11%14.00%LAS13.60%11%15.50%14.00%14%VLIP6.00%7%5.50%VLIP5.70%7%4.90%

    LIR24.10%20%24.30%LIR26.40%20%26.50%22.20%27%LIP23.80%23%21.80%LIP23.50%23%21.00%

    Goals Perf

    Freddie

    Target *

    Fannie

    Households

    Freddie

    Target *

    Fannie

    HH - Age groups

    Fannie

    Target *

    Freddie

    Millennials

    Fannie

    Target *

    Freddie

    Sheet3

    JCH - Middle Projection

    201520202020

    Asian/Other8.39.4

    Black15.616.8

    Hispanic16.418.8

    White Non-Hispanic84.886.6

    125.1131.6

    0.265625

    Sheet3

    Asian/Other

    Black

    Hispanic

    White Non-Hispanic

    JCH - Middle Projection

    2015202020152020

    Age15_19757764Age15_190.80.8

    Age20_245,4965,258Age20_3426.126.9

    Age25_299,66310,067Age35_4421.222.2

    Age30_3410,90311,558Age45_5423.622.1

    Age35_3910,60011,426Age55_6423.925.0

    Age40_4410,61810,725Age 65+29.734.8

    Age45_4911,30010,848

    Age50_5412,29311,258

    Age55_5912,57112,512

    Age60_6411,33812,498

    Age65_699,68710,894

    Age70_747,0519,058

    Age75_795,1076,305

    Age80+7,8688,526

    Total125,254131,695

    Age15_19

    Age20_34

    Age35_44

    Age45_54

    Age55_64

    Age 65+

    JCH - Middle Projection

    2013201520202025

    Population8586.089.092.0

    Households15.927.639.2

    Homeowners5.510.117.2

    Households2013201520202025

    TotalAge15_19760757764783

    Age20_245,5435,4965,2585,248

    Age25_299,3249,66310,0679,685

    Age30_3410,74210,90311,55812,087

    Age35_3910,24510,60011,42612,142

    Age40_4411,02710,61810,72511,570

    Homeowner HH

    2013201520202025

    Under 251.31.31.31.3

    25-358.38.58.88.8

    35-4413.012.813.314.2

    2013201520202025

    Under 251,310,7591,299,9891,258,2311,261,164

    25-358,302,6398,467,0598,799,0898,815,749

    35-4412,951,25112,827,21013,295,08714,163,662

    45-5417,046,68516,673,54315,438,08015,096,950

    55-6417,740,18618,369,86319,086,02918,128,507

    65-7412,534,55113,651,68016,202,36017,955,540

    75+9,958,58910,289,63011,754,30714,350,071

    Population

    Households

    Homeowners

    (millions)

    Numbers to be firmed-up

    Population

    Households

    Homeowners

    (millions)

    Numbers to be firmed-up

  • © Freddie MacMarch 2016 9

    Opportunity: Minority and Immigrant Households

    Source: U.S. Census Bureau

    Perc

    enta

    ge C

    hang

    ePopulation Growth Rates

  • © Freddie MacMarch 2016 10

    Changing Demographics

    Asian Millennial Homebuyers Hispanic Millennial Homebuyers

    Higher educational levels Strong enthusiasm for homeownership

    Higher-than-average annual household income & median household wealth

    Access to credit is primary barrier to homeownership in the current market

    Often ask elders for financial help; multi-generational households not uncommon

    More likely than non-Hispanics to live in multi-generational households

    Many pay all cash; those who finance tend to make surprisingly large down payments

    Tend to make small down payments (≤5%)

    Language is primary barrier to home ownership; ~90% speak a language other than English at home

    Many lack accurate information about the home buying (down payments, FICO)

    Account for 5% of Millennials Account for 20+% of Millennials

    Forecast: 18% of new U.S. households 2015-2025

    Forecast: 40% of new U.S. households 2015-2025

    Source : NAHREP 2014 State of Hispanic Homeownership Report; AREEA Working With Asian Home Buyers by Michelle Hofmann, June 2013; U.S. Census

  • © Freddie MacMarch 2016 11

    Urban Legend Truth“A 20% down payment is required” You can get a mortgage loan with ≥3%;

    average ~15%; 40% put down ≤10%“FHA is the place for low down payment mortgage loans”

    Freddie Mac has a range of low down payment products to meet your needs

    “I only may use my savings for a down payment”

    You may be eligible for down payment assistance; gifts & grants are OK, too

    “My credit history isn’t good enough” The lender ultimately decides, but Freddie Mac accepts FICO scores of ≥660

    “I don’t know where to start – the buying process is complicated”

    Not-for-profit, HUD-approved, housing counseling agencies help for free; Freddie Mac offers free CreditSmart® financial education

    “I don’t make enough money to own” In fact, you might – check with a lender or other housing professional

    “Student debt is the reason few younger adults buy homes”

    It may be a factor but often isn’t

    “I was rejected once, so can’t buy” Find out why – fix issues if you can, try again & you might be approved this time

    Secret #1: Dispel Myths

  • © Freddie MacMarch 2016 12

    Borrower Profile Key Features Borrower Benefit• First-time homebuyers• Repeat homebuyers • Residents of underserved areas

    • New immigrants• Very low-, low-, & moderate-income households

    • Maximum LTV/TLTV: • Home Possible Advantage® -97%/105%

    • Home Possible® -95%/95%

    • Eligible income of ≤100% area median income (more in high-cost areas)

    • No income limit in underserved areas

    • Temporary subsidy buy-down allowed

    • HFA AdvantageSMoffering

    • Low down payment• No minimum borrower contribution of own funds

    • Flexible down payment & closing cost funding options

    • No reserves required on 1-unit owner-occupied properties

    • Education available to borrower for free

    • Build equity faster than with others’ loan

    Secret #2: Understand and Use Home Possible® Offerings

  • © Freddie MacMarch 2016 13

    Criteria Home Possible Home Possible Advantage

    Eligible mortgages • 15-, 20- & 30-year fixed• 5/1, 7/1 & 10/1 CMT- and

    LIBOR-indexed ARMs• Construction conversion and

    renovation mortgages

    • 15-, 20- & 30-year fixed• Construction conversion &

    renovation mortgages

    Occupancy Primary residence SameProperty type 1-4 units: single-family, condos,

    planned unit developments, manufactured hsg (1-unit only)

    1 unit: single-family, condo, planned unit developments

    Underwriting method Loan Prospector® or manual SameOther income Boarder income (1-unit properties)

  • © Freddie MacMarch 2016 14

    Secret #3: Renew the Lending Ecosystem

    Mortgage-ready

    first-time homebuyer

    Potential Homebuyers

    Potential borrowers

    Homeownershipeducation

    Credit, financial

    & homeowners

    hipeducation, sources of

    down payment

    assistance

    Housing Counselors/Others

    Trusted Sourcing Channels

    Mortgage-ready

    borrowers

    Real estate professionals Employers Housing

    counselingagencies

    Lenders & brokers with 1st-

    time buyer focus

    Permanentrenters

    Former homeowners who rent due

    to foreclosures

    Attract Marketing Judicious

    outreach

    Serve Underwriting using

    responsible lending Sustainable mortgage

    products Successful, long-term

    homeownership

    Prepare Training Education Counseling Down payment

    assistance

    +

    Or

    • Responsible underwriting guidelines

    • Greater data standardization & validation

    • Free Loan Prospector

    • Sustainable mortgage products

    Greater Certainty

    +Source: Freddie Mac

  • © Freddie MacMarch 2016 15

    Secret #4: Take Advantage of Targeted Resources

    A Few of Many

  • © Freddie MacMarch 2016 16

    Join us

    September 21-23, 2016

    Gaylord Resort & Convention Center in Washington, D.C.'s National Harbor

    More details www.FreddieMac.com/CONNECT2016

    PresenterPresentation Notes

    We’re excited to announce that this year’s annual customer conference will be bigger, better, and have a fresh look and new opportunities for customers.

    We’re combining the conferences held in previous years for Sellers (Customer Symposium) and Servicers (Service Conference) into one event.

    Join us September 21-23 at the Gaylord Resort and Convention Center – Washington D.C.

    Visit our website – FreddieMac.com/CONNECT2016 for more information about the event.

    You can also sign up to receive updates as conference details are announced, including early bird registration specials and session information.

    We’re doing better business together by connecting our customers to Freddie Mac people, technology, education, industry insights and many other opportunities at the conference. Hope to see you at the customer summit in the fall.

    http://www.freddiemac.com/CONNECT2016

  • © Freddie MacMarch 2016 17

    A Better Freddie Mac …and a better housing finance system

    For families...innovating to improve the liquidity, stability and affordability of mortgage markets

    For customers...competing to earn their business

    For taxpayers...reducing their exposure to mortgage risks

    Grow Your Business with Freddie Mac Home Possible MortgagesSingle-Family 2016 prioritiesLoan Advisor Suite…�our vision is becoming a realityLoan Advisor Suite componentsWant more information?Market ConditionsWho’s Buying Now?Opportunity: MillennialsOpportunity: Minority and Immigrant HouseholdsChanging DemographicsSecret #1: Dispel MythsSecret #2: Understand and Use �Home Possible® OfferingsSide-by-Side ComparisonSecret #3: Renew the Lending EcosystemSecret #4: Take Advantage of Targeted ResourcesJoin usSlide Number 17