Fannie Mae recently announced its new HomeReady mortgage that will replace MyCommunityMortgage, Fannie’s previous affordable lending product. This new product will allow both first-time and repeat homebuyers to purchase a home using HomeReady with a down payment of as little as 3%.
The latest product is designed to help creditworthy borrowers with lower and moderate incomes access to an affordable, sustainable mortgage.
“HomeReady will help qualified borrowers access the benefits of homeownership with competitive pricing and sustainable monthly payments,” said Jonathan Lawless, vice president for underwriting and pricing analytics at Fannie Mae.
“We are also confident this mortgage option will create business opportunities for lenders serving the changing demographics and borrower needs seen in today’s market.
While this will still be a small percentage of Fannie’s portfolio overall, this update will still help lenders find borrowers who are getting skipped over.
Also, in more good news for lenders, Fannie Mae’s pricing is more favorable and simplified for lender use, and eliminates or caps standard loan level price adjustments.
As for borrowers, they will be required to complete an online education course to prepare them for the homebuying process and provide post-purchase support for sustainable homeownership.
The education course, called Framework, is provided by the Housing Partnership Network and the Minnesota Homeownership Center, and is based on the requirements of the HUD Housing Counseling Program and the National Industry Standards for Homeownership Education and Counseling.
Additionally, the lending requirements borrowers simplified.
Fannie will provide more details to lenders in the coming weeks through a Selling Guide announcement, with HomeReady guidelines anticipated for Desktop Underwriter inclusion in late 2015. Fannie Mae anticipates accepting loan deliveries under the HomeReady guidelines in late 2015 as well.
HomeReady will be available to borrowers at any income level for properties in designated low-income census tracts, and to borrowers at or below 100% of area median income for properties in high-minority census tracts or designated natural disaster areas.
For properties in remaining census tracts, HomeReady borrowers must have an income at or below 80% of AMI. Approximately half of census tracts will be subject to the 100% AMI limit or have no income limit.
What are your thoughts on this new program? Will it open up the market to additional buyers? We’d love to hear from you!
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