Fannie Mae previews affordable mortgage product
WASHINGTON (8/28/15)--Fannie Mae has a new mortgage offering called HomeReady Mortgage, designed for creditworthy, low- to moderate-income borrowers. It allows expanded eligibility for financing homes in designated low-income, minority, and disaster impacted communities.
The agency shared a preview of the new offering with CUNA Strategic Services and noted it is based on feedback from its lending partners, who requested simplicity and certainty from mortgages. Fannie Mae is a CUNA Strategic Services strategic alliance provider.
HomeReady Mortgage will offer these features for lenders:
Up to 97% financing for a home purchase with no first-time buyer requirement;
Improved, simplified pricing, with standard risk-based loan-level price adjustments (LLPA) waived for loan-to-values of more than 80% with a credit score of equal to or more than 680. The LLPA cap of 150 basis points applies for loans outside these parameters;
Simplified execution so lenders can commingle standard and HomeReady loans into mortgage-backed securities (MBS) pools and whole loan commitments; and
- Flexible underwriting, including a new feature that supports extended-family households by considering income from a non-borrower household member as a compensating factor in Desktop Underwriters to allow for a debt-to-income ratio above 45% or 50%.
For borrowers, HomeReady will offer accessible and sustainable financing as well as the ability to use flexible sources of funds for down payments and closing costs, with no minimum contribution required from the borrower’s own funds for single unit properties. An online course will provide the required homeownership education to help homebuyers prepare for buying and the responsibilities of homeownership.