Home Possible® Mortgages: Playing a responsible role in providing liquidity, stability, and affordability to the mortgage market

The mortgage lending environment has changed dramatically, with rising delinquency rates, softening home prices, and tightening underwriting standards. First-time homebuyers and low- to moderate-income borrowers as a market segment have been affected by these industry trends.

But there are sensible home loans available to these borrowers. Home Possible Mortgages, Freddie Mac's flagship affordable lending products since 2005, are playing even a larger role in providing a competitive, flexible financing option for many potential borrowers and supporting Freddie Mac's mission of providing liquidity, stability, and affordability to America's homeowners.

Home Possible overview

Using Home Possible Mortgages with first-time homebuyers can help fuel the mortgage system and help you meet your Community Reinvestment Act (CRA) obligations. Moreover, they provide you with an easy and convenient way to expand your reach to first-time homebuyers and low- to moderate-income borrowers with benefits that include:

• Flexible credit terms
• Zero to low down payment options
• Interest rates comparable to the prime conforming rates available with other conventional loans
• Additional flexibility for individual borrower needs with reduced mortgage insurance to 20%, secondary financing options and closing cost funding options.

Pricing and credit terms continue to support first-time homebuyers and low- to moderate-income borrowers

• Freddie Mac's August 1 delivery fee rate modification announcement [PDF 90K], effective for Freddie Mac settlements starting November 1, is consistent with our objective to ensure our requirements and pricing reflect current market conditions and to meet the needs of first-time homebuyers and low- to moderate-income borrowers.
• We are maintaining current delivery fee rates for purchase transaction Home Possible Mortgages for borrowers at or below 80 percent of the applicable area median income (AMI) and also for purchase transaction Home Possible Mortgages secured by properties located in Hurricane Katrina/Rita eligible disaster areas originated on or before December 31, 2007 for which there is no AMI requirement.
• With this approach, we are meeting the dual needs of managing market risks while preserving vital opportunities for first-time homebuyers, low- to moderate-income borrowers purchasing a home, and those purchasing properties located in eligible disaster relief areas.

Home Possible Mortgages can help you meet your CRA obligations

• If you are subject to the Community Reinvestment Act, you should consider Home Possible Mortgages as one lending option because they are designed to serve first-time homebuyers, low- to moderate-income borrowers, and borrowers purchasing or refinancing property in underserved census tracks.
• Freddie Mac's new schedule of postsettlement delivery fee rates provides different delivery fee rates for Home Possible Mortgages based on the borrower's income. Purchase transaction mortgages originated to borrowers with an income that does not exceed 80 percent of the applicable AMI will have lower delivery fees than mortgages with income greater than 80 percent of the applicable AMI. Purchase transaction Home Possible Mortgages secured by property in Hurricane Kartina/Rita impacted areas do not have an AMI requirement if originated on or before December 31, 2007, and also receive a reduced postsettlement delivery fee rate.
• Leverage Home Possible Mortgages to support your efforts under the CRA lending test, which includes a review of geographic distribution of loans and borrower income. Home Possible Mortgages are a very specific product to be identified to regulators as one tool for contributing toward a strong CRA rating.

Home Possible Mortgages supports market liquidity, stability and affordability

Home Possible Mortgages are Freddie Mac's mission in action because we continue to maintain stability and liquidity for conventional conforming mortgages through these flexible mortgage products. As the market experiences a retraction in sources of liquidity for low down payment products, with Home Possible Mortgages we will continue to expand opportunities for affordable lending.

Home Possible Mortgages also strengthen Freddie Mac's mission of ensuring an available supply of financing that supports affordable workforce housing in our communities. Home Possible Mortgages offers higher debt-to-income ratios and other underwriting features to help teachers, police, firefighters, healthcare professionals, educators, and members of the armed services afford homes in the communities where they serve.

Home Possible Mortgages come alive with a customer testimonial

Central National Bank in Kansas is a success story in expanding affordable lending opportunities to first-time homebuyers with Home Possible Mortgages. In Wichita, a young single social worker was determined to buy her first home. With very little cash and good credit, she was approved for a Home Possible Mortgage and was able to realize homeownership for the first time.

Drew Schafer, loan officer at Borrower's Choice Mortgage, also attests to the success of Home Possible Mortgages: "I need flexibility when working with clients, especially first-time homebuyers. Home Possible Mortgages have given me that and more – which is why I've been getting more business with this offering. I know how to bring the customer in the door, and Home Possible helps me bring them to the closing table."

For more information about Home Possible Mortgages

• Contact your Freddie Mac representative or (800) FREDDIE
• Visit our online Home Possible Resource Center
• Check out Home Possible borrower scenarios that reflect recent enhancements to Home Possible Mortgages
• Visit The Learning Center for easy-to-print resources and training opportunities for Home Possible Mortgages
• Leverage the Home Possible online marketing kit to easily promote this offering to your customers