Say Yes! To Borrowers in Underserved Areas

You have recently met Gloria Fox, who is considering purchasing a home in an Underserved Area of the city where she lives. Here is what you know about Gloria:

She is a union member at the manufacturing plant where she works.
The home Gloria has seen is listed for $50,000.
Her income as a supervisor is $37,000 per year, which you verify is higher than the area median income for the property location.
With what little she has left over from her paycheck each month she has been able to accumulate $1,500 in her savings account.
Gloria pays her bills on time and has been renting a small apartment for the last five years.

Here is how you can say 'yes' to Gloria

Use $500 in her savings account for the minimum Borrower Contribution towards the down payment.
Refer Gloria to a non-profit housing organization to apply for a first time homebuyer assistance grant to help cover the rest of the funds needed for the down payment, closing costs and prepaid expenses to purchase the home.
Have Gloria attend a first time homebuyer counseling workshop offered by the organization.

Although Gloria's income is above the median area income, you are able to qualify Gloria for Freddie Mac's Home Possible^SM 97, because the property is located in an Underserved Area. The total loan-to-value ratio with secondary financing can go to 105 percent to help Gloria with the additional funds needed for the down payment and closing costs. You recommend a 7/1 ARM to initially lower your client's monthly mortgage payment.

Freddie Mac's Home Possible 97 Mortgage helps you:

Provide more options for your borrowers looking for financing for more property types, including 2- to 4-unit properties and Manufactured Homes*.
Increase your loan volume for more low-to moderate-income borrowers and other underserved borrowers, such as minorities and immigrants, helping you meet your Community Reinvestment Act requirements.
Increase your loan production and stay competitive in today's changing market with financing options, including fixed-rate and 5/1(2/2/5 caps), 7/1 and 10/1 ARMs Note: Manufactured Homes not permitted with a 5/1 ARM.
Leverage technology for easy implementation. Use Loan Prospector^®, Freddie Mac's automated underwriting system, for streamlined borrower assessment.

For your borrowers, Freddie Mac's Home Possible 97 Mortgage provides:

Low-down payment requirement, with a down payment requirement as low as 3 percent.
Flexible sources of funds for the down payment, closing costs and prepaids, making it easier for more borrowers to get into the home of their dreams.
Options for borrowers with No Credit History, as long as the borrower with No Credit History has no reported derogatory credit incidences and at least one borrower whose income or assets are used for qualification has a minimum number of payment references from specific sources (Tradelines and Noncredit Payment References).

* The maximum LTV for Manufactured Homes may be 85% to 95%. For LTV above 90%, the Mortgage must receive Loan Prospector Accept risk class. Refer to Guide Chapter H33 for additional requirements for Manufactured Homes.