Freddie Mac’s HFA Advantage Mortgage®
Master Servicer: US Bank___
Presenter: Tom Ward
April 2018
HFA Advantage Mortgage:
…available exclusively through
participating
State or Local
Housing Finance Agencies
Maximum 97% LTV / 105% TLTV
HFA income limits
All credit fees in price waived
Charter-level mortgage insurance available
NOTE: This document is not a replacement or substitute for the information found in the Freddie Mac Single-Family Seller/Servicer Guide, and/or terms of your Master
Agreement and/or other Pricing Identifier Terms. This document is wholly-owned by Freddie Mac -- US Bank is not responsible for any of the content.
© 2017 Freddie Mac 2Master Servicer: US Bank
Objective / Agenda
HFA Advantage is available exclusively to Housing Finance Agencies
Resources
Underwriting and
Processing Tips
Features and Benefits
General Requirements
Objective: Familiarize you with the benefits, key features and requirements for
Freddie Mac’s low down payment mortgage offering: HFA Advantage
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Key Features: HFA Advantage
• 97% LTV
• No Minimum LTV
• No Minimum Borrower Contribution
• Purchase transactions only
• First-time homebuyers, repeat buyers
• No reserves required (for Loan Product Advisor
evaluated loans)
• Fixed rate
HOME
POSSIBLE
&
HOME
POSSIBLE
ADVANTAGE
Loan Product Advisor®
(no manual underwriting if
LTV > 95%)
Use of alternative automated
underwriting system is permitted
HFA ADVANTAGE
Income Limits
Established
by HFA
• 1- unit primary residence*
(Detached / attached, PUDs, Condominiums)
• All borrowers must occupy the mortgaged
premises as their primary residence
• May not, as of the note date, or the Effective
Date of Permanent Financing for Construction
Conversion and Renovation Mortgages, have
any other ownership interest in any other
residential properties.
*Manufactured homes are not eligible
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Additional Borrower Subsidy
Program
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If your borrower meets specific income limits through this
program, your borrower is eligible to receive additional funds
for down payment assistance or closing costs
Subsidy provided by OHFA based on Area Median Income
(AMI)*
Very Low Income Subsidy: Qualifying income ≤ 50% AMI, an
additional subsidy of $2500 will be granted
Low Income Subsidy: Qualifying income >50% and ≤80%
AMI, an additional subsidy of $1500 will be granted
Additional Borrower Subsidy Program
*Based on percentages of Area Median Income Limits (AMI) as published by Freddie Mac
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Loan Product Advisor Feedback Certificate
Calculate income thresholds using Freddie Mac’s AMI (the K9 message): $83,900:
» 80% AMI Threshold: $83,900 X .80 = $67,120
» 50% AMI: $83,900 X .50 = $41,950
If borrower’s total qualifying
income is less than or equal to
$67,120, borrower is eligible for
additional subsidy of $1500.
If borrower’s total qualifying
income is less than or equal to
$41,950, borrower is eligible for
additional subsidy of $2500.
© 2017 Freddie Mac 7Master Servicer: US Bank
Example Closing Disclosure (CD)
HFA’s Affordable Subsidy must be entered into Page 3 Section L of the CD
Enter HFA’s Affordable Subsidy in the line directly below HFA’s Down Payment Assistance
The HFA’s Affordable Subsidy will be based on which tier the borrower is eligible for -- either $1500 or $2500.
Example: Additional Borrower Subsidy
Borrower’s income is
less than 80% AMI
HFA Down Payment Assistance $6,480.00
Affordable Subsidy $1,500.00
© 2017 Freddie Mac 8Master Servicer: US Bank
Example Closing Disclosure (CD)
HFA’s Affordable Subsidy must be entered into Page 3 Section L of the CD
Enter HFA’s Affordable Subsidy in the line directly below HFA’s Down Payment Assistance
The HFA’s Affordable Subsidy will be based on which tier the borrower is eligible for -- either $1500 or $2500.
Example: Additional Borrower Subsidy
HFA Down Payment Assistance $6,480.00
Affordable Subsidy $2,500.00
Borrower’s income is
less than 50% AMI
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HFA Advantage
Additional Features & Benefits
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Features and Benefits
LTV Ratio
HFA Advantage
Mortgage Insurance
Coverage
(Fixed rate only)
Standard
Mortgage
Insurance
Coverage
(Fixed rate,
term > 20 years)
Greater than 80% up to 85% 6% 12%
Greater than 85% up to 90% 12% 25%
Greater than 90% up to 95% 16% 30%
Greater than 95% up to 97% 18%
Mortgage Insurance:
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Check-In
Are the HFA Advantage 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 13Master Servicer: US Bank
Qualifying Income / Income Limits
• Must use income used to
qualify the borrower to
establish that the income
limits are not exceeded.
• HFA will determine income
eligibility based upon their
own income limits.
© 2017 Freddie Mac 14Master Servicer: US Bank
Features and Eligibility:
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 – prior to closing!
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
*…or the Effective Date of Permanent Financing for Construction Conversion and Renovation Mortgages
Purchase Transactions Require:
State or Local HFAs can leverage their own borrower
education programs in lieu of the homebuyer education
requirements per Guide Section 4501.12
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Underwriting & Processing Tips
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Loan Product Advisor
Instructions for Entering a Home Possible Advantage® for HFA (HFA Advantage) loan into Loan Product
Advisor.
Select “Home Possible Advantage for HFA (eligible users only)” in the “Offering Identifier” field within
the “Mortgage Type and Loan Terms” section of Loan Product Advisor. See screen below. If using a
Loan Origination Software (LOS) system, please contact them to verify what field and value to enter.
Some LOS systems may have you enter “251”.
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Underwriting Path: LTV 95.01 – 97%
HFA Advantage LTV ratio of 95.01 – 97%:
No Manually
Underwritten
Mortgages
Optional: Offering Identifier - 251
(Home Possible Advantage for HFAs)
Must be submitted to Loan Product Advisor
» Only Accept Risk Class permitted – no exceptions
» Minimum credit score: 640
» Maximum term: 30 years
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Underwriting Path: LTV < 95%
A Manually Underwritten Mortgage*
At least one borrower must have a
usable Credit Score and an Indicator
Score must be established and must
meet the required limits. An HFA
Advantage Mortgage where none of the
borrowers have a usable Credit Score
is not eligible
Minimum credit score: 660 – purchase
Maximum debt-payment to income
ratio (DTI) is 36%
Minimum reserves requirement: two
months PITIA
*Manually Underwritten Mortgages must meet the requirements of Chapter 4501 and Chapters 5100 through 5500, including but
not limited to, the requirement that each borrower individually, and all borrowers collectively, have an acceptable credit reputation.
HFA Advantage LTV ratio of 95% or less:
May be submitted to Loan Product Advisor
» Only Accept Risk Class permitted
» Minimum credit score: 640
» Maximum term: 30 years
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Loan Product Advisor Feedback Certificate
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Verify the loan was submitted correctly by ensuring the value entered in the “Offering Identifier” field is
showing Home Possible Advantage for HFAs (eligible users only) as shown below:
Loan Product Advisor Feedback Certificate
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Loan Product Advisor Feedback Certificate
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Check-In
Does the Homeownership Education Course need to
be completed prior to closing?
Guide Chapter 4501
Yes! And…the
certificate of completion
must be included in the
mortgage file and must be
dated prior to the Note date
when delivered to the
Servicer
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Loan Product Advisor: Data Entry
• A Grant that does not require a repayment will also be included in the Total Gift Fund field.
• Additional borrower subsidy (grant) should be included in the Total Gift Fund field.
© 2017 Freddie Mac 24Master Servicer: US Bank
Wrap Up
How does it benefit
borrowers?
What are its key
features?
Who does it serve?
How can HFA Advantage be YOUR affordable lending solution?
© 2017 Freddie Mac 25Master Servicer: US Bank 25
Resources
FreddieMac.com\singlefamily\hfa.html
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Contact Information
1-800-FREDDIE (373-3343)
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Please complete the online evaluation before exiting
today’s session
Thank you for your participation!
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