Grow Your Business with Freddie Mac Home Possible...
Transcript of 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
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© 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.
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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.
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Loan Advisor Suite components
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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
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© 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
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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
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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
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Opportunity: Minority and Immigrant Households
Source: U.S. Census Bureau
Perc
enta
ge C
hang
ePopulation Growth Rates
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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
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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
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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
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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)
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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
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Or
• Responsible underwriting guidelines
• Greater data standardization & validation
• Free Loan Prospector
• Sustainable mortgage products
Greater Certainty
+Source: Freddie Mac
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Secret #4: Take Advantage of Targeted Resources
A Few of Many
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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
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© 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