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which allow homeowners to borrow for energy upgrades and to make other home improvements, respectively. HomePath is a program that allows buyers to
purchase homes that are in foreclosure. HFA Preferred
is a loan program available exclusively to housing-finance agencies that serve low- and moderate-income borrowers.
Freddie Mac’s programs include Home Possible and
Home Possible Advantage, which allow for flexibility
in mortgage transactions involving high loan-to-value
ratios. Open Access allows borrowers to refinance even
if their property values have declined.
One way to keep a handle on the changes for both
Fannie and Freddie is to go each of their websites and
sign up for their news releases. The GSEs will e-mail
changes and updates to their underwriting guidelines
and new program releases.
The mortgage industry is heading into uncertain
times, especially in relation to loan volume. When
slowdowns occur, the GSEs and government programs
tend to loosen underwriting guidelines to maintain a
level number of loans.
Successful originators should be staying on top of
the evolving lending environment and developing
strategies to better serve borrowers. One of the best
ways to do that is to pick a specialty program from
either the GSEs or government-backed loan programs,
learn the ins and outs of the niche and circulate word
about your expertise in the area through blogs, video
tutorials and e-mail blasts.
Originators tend to remain in that comfortable box
of traditional lending when making presentations to
their clients. If the market begins to shrink (hopefully
that is not the case), look to open up other areas to
maintain or expand your level of business. There are
millions of military veterans in the U.S., for example,
and an originator who understands the deep details
of one or more VA lending programs could help themselves and their community. n
“When slowdowns occur, the GSEs and
government programs tend to loosen
underwriting guidelines to maintain
a level number of loans.”
buyer puts in some of the labor to build the home.
Streamlined Assist Refinance Loans allows homeowners with low or no equity to refinance their loans.
Conventional loans are offered through lenders who
sell the loans to the government-sponsored enterprises (GSEs) Freddie Mac and Fannie Mae, which
compete with each other for that business. That
competition should benefit the borrower by creating
liquidity in the mortgage market that allows lenders to
make more home loans and to offer a broader range of
Both Fannie Mae and Freddie Mac offer standard loan
programs. Both have their own automated underwriting systems to determine credit risk and whether a loan
meets eligibility requirements. Fannie Mae’s is called
Desktop Underwriter. Freddie Mac’s is Loan Prospector.
Like the government agencies, the GSEs offer a wide
number of specialty loans. Fannie Mae and Freddie
Mac are offering low-downpayment loans that compete with FHA loans. Fannie Mae’s HomeReady allows
people to put down as little as 3 percent for a home
purchase and allows buyers to cancel mortgage insurance once home equity reaches 20 percent. Freddie
Mac’s is scheduled to start its 3 percent downpayment
HomeOne Mortgage in late July.
Other specialty programs offered by Fannie Mae
include HomeStyle Energy and HomeStyle Renovation,