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“HFAs Can Play a Bigger Role in
Take Center Stage,”
“Dispelling Lending Myths,”
Tonya Todd is senior vice president of strategic products at
Mountain West Financial Inc. She joined the Mountain West
team in 2012 as leader of affordable-housing programs and is
responsible for the company’s involvement in downpayment-assistance programs. Todd also works closely with nonprofit
organizations and housing-finance agencies to develop lending products. Prior to joining Mountain West, Todd spent
almost nine years on Bank of America’s affordable housing
team. Reach her at firstname.lastname@example.org.
Help yourself by helping homebuyers find the right financing programs
By Tonya Todd
There are a lot of mortgage options avail- able today: 30-year and 15-year terms, adjustable or fixed interest rates, lender- paid mortgage insurance and no mortgage
insurance, and low-downpayment programs. The list
goes on, so where do you begin?
Mortgage originators eat, sleep and breathe mortgages and must understand the guidelines of a wide
range of mortgage programs and products. They must
be familiar with the little nuances of how to structure
the best loan option for varying scenarios that borrowers bring to the table.
It takes a special and dedicated originator, however, to grasp and understand the requirements of the
many homeownership-assistance programs that exist
today. If that’s the case for many mortgage originators,
then how can a potential first-time homebuyer possibly understand the options available in the market?
Although prospective homeowners have the internet
at their fingertips to search for answers to their home-buying questions, there is so much information out
there that it can be confusing and quite overwhelming. Homebuyers may be exposed to misleading information as well that makes them believe they need
to have a 20 percent downpayment, for example.
That misinformation can lead some to just abandon
the idea of purchasing a home in favor of continuing
There are thousands of wonderful homeownership-assistance programs available across the nation. Mortgage originators don’t need to master the nuances
of all them — just 10 to 15, give or take, depending
on the geographic area they serve. Of the numerous options available, most of the downpayment-assistance programs are available only in specific local
areas, such as a city, county or neighborhood, while a
smaller percentage are available to homebuyers on a
As mentioned, one of the biggest myths impeding
renters from becoming homeowners is the perceived
need for a 20 percent downpayment. Myths can only
be overcome through education, and it is the obligation of all housing industry professionals to enlighten
people about the opportunities and assistance out
there that can help make homeownership a reality for
them. For many families, a home can be purchased
with little or no money out of pocket by tapping
options such as community second mortgages, grants,
matched-savings programs, and below-market-rate
and employer-assisted housing programs.
Technology advances have made many resources
available to mortgage originators and others that can
be very useful in educating homebuyers about the
various home-purchase assistance options available.
The online platform DownPayment Resource (DPR),
for example, is on the leading edge of this technological evolution.
DPR currently tracks around 2,500 homeownership-assistance programs around the country — and makes
the information accessible to mortgage professionals
as well as the public. DPR connects with more than
1,300 housing-finance agencies nationwide each
month to ensure the platform’s program parameters
According to DPR’s website, more than 87 percent
of homes in the U.S. are currently eligible for one of
their homeownership-assistance programs, and that
the most frequent downpayment-assistance program benefit totals $10,000. A quick search of the DPR
platform turns up homebuyer-assistance programs
offered by a wide variety of government-sponsored
housing-finance agencies as well as proprietary programs created by individual lenders.
If you think these programs are only for very low-income families, think again. Many homeownership-assistance programs serve moderate-income families
and/or targeted populations, such as displaced homemakers, members of the military, first responders
or teachers. DPR’s database includes a number of
affordable-housing programs targeting community-service workers, including educators, police officers,
firefighters and health care workers.
Other programs in the DPR database feature benefits for military veterans, active-service military and
surviving spouses. What’s great about these programs is that they can typically be layered with zero-downpayment Department of Veterans Affairs loans
so that the closing costs are covered by the assistance.
Understanding the programs
One of the most common homeownership-assistance programs is the community second mortgage. Typical features of this type of program are
deferred payments, low interest rates and small to large
amounts of assistance via a second lien on the property. Some community second-mortgage programs
include forgiveness of interest or principal or may
even offer the option of a third-lien position.
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