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Perspectives
July 05, 2017

When the Ecosystem Works as It Should

Danny Gardner
By
Danny Gardner, VP Single-Family Affordable Lending and Access to Credit

Spoiler alert: After a string of disappointments, a Houston-based teacher and single mom bought a home for herself and her two sons. This outcome shows what's possible when the housing industry and the community collaborate to benefit homebuyers.

The homebuying process thrives – business is more sustainable – in a supportive, interconnected lending environment. What I call an "ecosystem," where real estate professionals, housing organizations, community groups, lenders, and other stakeholders work together to promote the flow of business and help expand responsible homeownership. But the economic crisis threw the ecosystem out of whack. This story shows why it needs to be revitalized.

The teacher, Layanna, had been looking actively into buying a home for about a year. Among her efforts, she did research and opened an Individual Development Account, a matching-grant program that helps a potential buyer save for a down payment.  But she kept hitting walls.

One day Layanna’s real estate agent, Kim Barnes, and her pastor discussed how they might promote homebuying in the community. When the pastor brought it up at church, about 40 people approached Kim, saying that they were serious about wanting to become homeowners and hoped that she could help them.

We are intentional about reaching out to the ecosystem, connecting resources to promote sustainable ownership. The homebuyer has a support network.

Tamela Hartsfield, Freddie Mac

Kim contacted Tamela Hartsfield, a member of my team who supports the Houston area, about sponsoring a series of homeownership seminars. The two had developed a relationship after meeting at National Association of Real Estate Brokers (NAREB) events; Kim is president of the Houston Black Real Estate Association, the local NAREB chapter. Being able to connect and deliver support like this is a big reason why parts of my team are regionally focused. They live and work in the regions they cover; they know them and are committed to keeping them strong.

Tamela immediately got in gear. She leveraged her relationships across the housing industry and Freddie Mac to help Kim build a robust program on what it takes to buy and keep a home, including the wide array of resources available to first-time homebuyers. She connected Kim with the not-for-profit Southeast Texas Housing Finance Corporation (SETH) and PrimeLending, which co-sponsored the series. Kim brought the presenters on board – housing professionals representing the various aspects of buying and owning a home. Tamela also arranged for Freddie Mac’s CreditSmart® financial-literacy course to be taught.

Education and access to resources and programs got her to her dream of homeownership. Everyone in the community was willing to give their time and expertise.

Kim Barnes, real estate agent

Layanna attended the seminar and completed the CreditSmart course. Now she was ready to take another run at buying a home, with Kim still providing support as her agent.

Kim helped Layanna make the most of available products and programs. PrimeLending stepped up. The loan officer, Steve Baker, worked with Kim to deliver the best outcome for Layanna. He knew that Freddie Mac's Home Possible® mortgage was right for Layanna for two main reasons. It allows for a down payment as low as 3 percent and Freddie Mac’s automated underwriting system, Loan Product Advisor®, evaluates debt-to-income (DTI) ratio more flexibly than other systems do, which allowed Layanna’s student debt challenge to be overcome. And completing CreditSmart counted as the first-time homebuyer education that Home Possible requires. Steve further assisted Layanna with a closing-cost assistance grant; in return, the bank earned Community Reinvestment Act (CRA) credit.

Kim also connected Layanna with SETH at Tamela's suggestion. And it paid off. Layanna qualified for a program that provides a yearly tax credit.

Although this loan had a lot of moving parts, it was not hard. I am very happy to have been part of helping Layanna. I wish more people were aware of the resources available. These loans are a huge benefit to the community.

Steve Baker, loan officer

With everyone’s support and her own commitment, Layanna became a homeowner about 90 days after completing the church's homeownership seminar. Out of pocket, she paid earnest money and appraisal and inspection fees. She has a cushion for emergencies and home maintenance.

By the time you read this, a man who participated in the church's program will have closed on his new home, too. Others may follow. The church is anxious to offer another series.

It's the homebuying process and lending ecosystem at their best: Housing professionals and communities collaborating to support and guide potential homebuyers toward sustainable homeownership – and to keep business growing throughout the industry.

Freddie Mac is uniquely positioned and willing to serve as a catalyst to help the ecosystem function as it should. We touch every point in the housing industry, are involved at the community level, and support education and outreach. And we are committed to making the most of the company's experience, expertise, and relationships to help turn hopes of homeownership into realities, strengthen communities, and promote business growth across the housing industry.

"Owning my home means pure happiness because being able to provide more stability and a better sense of security to my family means the world to me. Moving forward at the right time truly became a prayer answered and a blessing openly received."

Layanna, homeowner
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