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Freddie Mac Develops New Test for Determining Affordable Housing Eligibility

July 15, 2013

In an effort to help Freddie Mac better identify more affordable housing loans, we recently developed a new Affordability Test, that helps our Sellers estimate the number and percentage of specific units per property that meet very low-income (VLI) or low-income (LI) eligibility parameters. These parameters are based on a specific county’s median family income thresholds as determined by the U.S. Department of Housing and Urban Development (HUD). We’re strongly encouraging Sellers to use the new test to help identify these transactions.

Much like our existing Refinance Test, this new Affordability Test is an Excel tool that Sellers can use on their own to help determine specific loan parameters prior to underwriting. The input required for the test includes:

  • State in which the property is located
  • County in which the property is located
  • Number of units per bedroom type
  • Monthly rent & utilities payment per bedroom type

Unlike our Refinance Test, however, the new Affordability Test does not produce pass/fail results and has no bearing on whether Freddie Mac will buy the loan. It is important to note that:

  • The results are preliminary estimates of affordable housing units and final results will be determined solely by Freddie Mac.
  • Final results may be different from the preliminary estimates calculated by the test.
  • The test does not apply for senior housing properties with services, substitutions, forward commitments, and subordinate liens.

User Guide and Test Training Now Available

To provide you with additional guidance on the use of the test and evaluation of its results, we have also developed an Affordability Test Desk Reference and scheduled Web-based training. The training provides detailed information on test data inputs, reasons to use it, and test results. Please register for one of the following two sessions:

Date: Tuesday, July 23
Time: 2:00 p.m to 3:00 p.m.ET
Session number: (1 of 2)
Register for July 23 Session

Date: Thursday, August 1
Time: 2:00 3:00 p.m.
Session number: (2 of 2)
Register for August 1 Session

If your property is showing a significant number of units that may meet affordable housing parameters, please contact your underwriting representative to discuss next steps.

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