Perspectives
May 23, 2019

Working Together to Reduce Barriers and Raise Hope

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

Every generation puts their mark on this country. From the Greatest Generation to the Summer of Love to Silicon Valley, our country’s consciousness is continually shaped and reshaped by people and events. For homebuyers, it’s no different. The new generation of our nation’s borrowers is redefining how and where they live, think, work and raise their families. Yet in the face of these changes, one desire remains constant: the American dream of owning a home.

Too often today, that dream is being tested. Affordability presents a growing crisis across the country. For many potential homebuyers, limited housing supply – particularly when it comes to starter homes – rising home prices and wages that haven’t kept pace with housing costs, pose serious challenges. In addition to these economic forces, a constant barrier persists: saving for a down payment.

In fact, today’s renters say that affording a down payment is the biggest roadblock to homeownership, according to a recent report by the Urban Institute. The report finds that more than two-thirds of consumers believe that having enough money for a down payment will be difficult, further dissuading them from pursuing homeownership. Making matters worse, many of these potential borrowers have a misperception of how much they are required to put down. For example, a recent Freddie Mac survey found that one-third of individuals planning to purchase a home in the next three years believe they are required to put 20 percent down, while nearly 25 percent of current renters and homeowners said they did not know how much is required for a down payment. This is a disheartening gap in homeownership education when considering that the average down payment for first-time buyers is closer to seven percent, according to the National Association of Realtors®.

It is critical that all members of the homebuying ecosystem work together to educate the next generation of homebuyers and help them understand that making the leap to owning a home is within their reach.

Given the prevalence of misconceptions about down payments, it is critical that all members of the homebuying ecosystem work together to educate the next generation of homebuyers and help them understand that making the leap to owning a home is within their reach. This is especially important for low to moderate income families, who often face additional barriers, including access to information, trusted advisors, and credit and financing solutions to help meet their unique needs. It will take an innovated and focused effort from across the industry to enact real change and offer impactful solutions that make homeownership more attainable.

At Freddie Mac, we are focused on making home possible by expanding the approach to sustainable affordable housing. In addition to offering three percent down payment mortgage solutions such as Home Possible®, HomeOneSM and HFA Advantage®, we provide the critical components of borrower education and credit flexibilities to qualified homebuyers that bring these programs to life. We recently reached an important milestone for Home Possible – providing $50 billion in total financing to help more than 272,000 families achieve homeownership. These are families that previously may have deferred the dream of homeownership or would never have achieved it at all. And to amplify the impact of this important milestone, nearly 80 percent of these loans went to first-time homebuyers. This clearly demonstrates that these low down payment programs can make a difference to individuals, their families and the communities in which they live.

We believe that borrowers need and deserve education, guidance and solutions to help prepare them for the opportunity to become a homeowner. Whether teaching about the importance of credit, homebuyer responsibility, or providing resources to help borrowers stay in their current homes in the face of financial adversity, Freddie Mac is a trusted partner. Just last year, nearly 200,000 people received homebuyer education while more than 320,000 consumers participated in financial literacy training through our on-the-ground Borrower Help Centers and Borrower Help Center Network.

And while building overall credit and financial literacy is important, overcoming misconceptions and identifying resources to ensure that borrowers are aware of their options is equally paramount. For example, there are nearly 1,295 state agencies and state housing finance agencies nationwide that offer down payment assistance programs to make homeownership more attainable. Yet, 76 percent of borrowers say they are not too familiar or not at all familiar with these programs, according to the Urban Institute.

We are working to change that by leading an industry movement to develop standardized solutions that allow borrowers to easily identify down payment assistance programs while receiving direct support from lenders. Meanwhile, we are equipping these loan officers and real estate professionals with the tools they need to effectively educate borrowers about the homebuying process. In 2018, Freddie Mac trained over 30,000 housing professionals and participated in over 350 outreach events to connect with the housing ecosystem, share insights, train clients, partners, and communities, and offer information on mortgage and resource options.

June is National Homeownership Month, and Freddie Mac is announcing our new approach to affordable lending - All For Home - because we believe that we must all work together to help America’s families realize their dream of homeownership. Through this effort, we will change the face of the affordable landscape by expanding opportunities and leveraging new tools and resources to make home possible.  We will help grow business while strengthening communities with rich insights, education and innovative solutions. And we know that with the collaboration, creativity and focus of the entire ecosystem, we can be successful in building the future of home.

Together. All of Us. All For Home.

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