Posted on 04/28/2018 5:09:28 PM PDT by SeekAndFind
New HomeOne mortgage has no geographic or income restrictions.
It’s been more than three years since Freddie Mac rolled out a conventional mortgage that only required a 3% down payment for certain borrowers.
The program, which is designed for qualified low-and moderate-income borrowers, saw reasonable progress over the last few years, with Federal Housing Finance Agency Director Mel Watt telling Congress last year that Freddie’s 3% down program (along with a similar one from Fannie Mae) was continuing to grow.
But now, Freddie Mac is about to supercharge its 3% down program and launch a widespread expansion of the offering.
Freddie Mac announced Thursday that it is rolling out a new conventional 3% down payment option for qualified first-time homebuyers. What makes this program different is that there are no geographic or income restrictions.
The new program, which is called HomeOne, puts Freddie Mac in direct competition for mortgage business with the Federal Housing Administration, which also only requires 3% down on some mortgages.
According to Freddie Mac, this new offering is not replacing its Home Possible 3% down mortgages. Rather, the program is meant to complement the Home Possible program, which will still be available to low-and moderate-income borrowers.
Freddie Mac said that the new mortgage is designed for first-time homebuyers, who currently make up nearly half of all home purchases.
According to Freddie Mac, a HomeOne mortgage must be underwritten through its Loan Product Advisor, which makes a complete risk assessment based on several factors as it relates to credit, capacity and collateral.
Additionally, the HomeOne mortgage is offered only for conforming fixed-rate mortgages that are secured by a 1-unit primary residence. And, at least one of the borrowers must be a first-time homebuyer.
When all the borrowers are first-time homebuyers, at least one borrower must participate in homeownership education in order to qualify for the mortgage.
The loan can also be used for single-family homes, condos, and townhouses. Manufactured homes are not eligible.
“Freddie Mac’s HomeOne mortgage is part of the company’s ongoing efforts to support responsible lending, provide sustainable homeownership and improve access to credit,” Danny Gardner, senior vice president of single-family affordable lending and access to credit at Freddie Mac, said in a statement.
The HomeOne mortgage will provide our customers the flexibility they need to help borrowers anywhere in the country achieve the milestone of homeownership and overcome the common down payment resource hurdle,” Gardner continued. “HomeOne is a great solution for aspiring homebuyers to grab that first rung of the property ladder and enjoy the financial and social benefits of participating in homeownership.”
In conjunction with making the HomeOne announcement and due to HomeOne’s ability to increase access to credit for first-time buyers, Freddie Mac said that it will be making some changes to the Home Possible program in order to “sharpen its focus” on low-and moderate-income borrowers.
Specifically, Home Possible income limits will be capped at 100% of area median income for properties in designated high-cost areas, designated disaster areas and minority census tracts, except for low-income census tracks, which will continue to have no limits.
According to Freddie Mac, the new HomeOne mortgage will be available beginning July 29, 2018. The income changes for Home Possible will go into effect on the same day.
This is one of the SOBs that put our economy into bankruptcy.
Bingo.
so HERE WE GO AGAIN!
1. creating yet ANOTHER real estate economic crash, and
2. with it, likely the entire economy (like last time they did this krap to us)
bilking the poor taxpayers each and every time to “bail out the economy”.. its like milking a cow... the politicians milk us over and over and over and over and over and over and over and over and over and over again. These crooks need to be sent to Guantanamo (right after ObamaHIlLIARYSorozNazi and companny)
Jeff Daniels and Jim Carrey have jumped back into the mortgage business I see.
It worked so well for destroying The Stupid Party in 2008.
They can certainly try the same production again in 2020.
Yup! GOP making sure they defeat trump - even by destroying the USA economy to do it.
In other words, the borrowers do not have to pay the money back.
A small downturn in local house prices can place a 97% mortgage in serious trouble.
This was the start. NINJA loans and similar, along with negative amortization balloon loans of 1-5 years really detonated it, but before that came these products.
No, that can put the home upside down, but as long as borrower can easily afford the monthly payments, its not a problem. Where we/you/people run into issues with these loan down loans is they also tend to have lower credit and are not very much able to afford the payment.
Just because he's *able* to make the payments doesn't always mean he's *willing* to.
A lot of people in 2008 and above walked away from houses they could afford the payment on simply because they owed more than the House was worth. With a 97% mortgage it doesn’t take much of a downturn to put you under water.
During GW Bush’s time, believe it or not, both he and McCain tried to oppose widespread risky borrowing standards.
But pushback came from Barney Frank, who assured us it would be fine.
It will be my hope that Trump, Cruz and other responsible forces will resist repeating the cycle.
That the man keeps returning to his wife every night!
Er, sorry.
It’s NOT really a 97% mortgage.
It’s a 103% mortgage.
The transaction price has about a 6% commission embedded in it. The real estate commission does not increase the market value of the house in the event of a downturn in housing prices.
Where your reasoning falls apart is in the fact that there is a certain amount of inevitable turnover in the housing market. Job loss, illness, death in the family, divorce, etc. There are many reasons why a family may have to move and sell their house.
If they are upside down they lose everything.
A long enough period of this feeds on itself, depressing home prices for years and leading to ruin for many well-intentioned families.
3% down is ridiculous.
As a real estate investor, I have taken advantage of the dips to buy properties and can now withstand and even profit from the crashes that always follow this kind of program, but I will confess I am a fat cat getting fatter.
For example, let's say a family is currently making $75,000 a year, or $60,000 a year after taxes. They've saved up $55k and are looking to buy a home that's around $250k. They will buy about $5k worth of housing items after closing on the house.
Option 1: They put 20% down ($50k), combined with the $5k home furnishings have no savings and their monthly payment is around $1,350/mo all in assuming 4.375% 30 yr fixed, $3500 property tax and $750/yr in insurance. A big recession hits, home values drop 20% and main breadwinner losers their job so their income is $25k/yr, they have no equity and they can't afford the monthly payments.
Option 2: They put 3% down, and with PMI, their payments are about $300/month higher. Same recession hits. They are upside down and still are cash flowing negative, but they have $42,500 left, which would by itself cover around 2 years of mortgage payments, while the main breadwinner looks for a job.
I completely agree on average a low downpayment loan is more risky but there are scenarios where it makes sense.
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