Important Guidance on Implementing Home Possible® Mortgages Homeownership Education Requirements

Today's market brings renewed focus on First-Time Homebuyer education that helps borrowers make responsible and informed home financing decisions. In our February 21, 2008 Single-Family Seller/Servicer Guide (Guide) Bulletin, we announced that we will require homeownership education for First-Time Homebuyers for purchase transaction Home Possible Mortgages with Freddie Mac settlement dates on and after June 1, 2008. We believe that implementing this homeownership education requirement is an important part of our ongoing efforts to improve borrowers' ability to achieve a successful homeownership experience.

Since our announcement, many customers have asked for additional guidance on acceptable homeownership education courses for Home Possible Mortgages, to meet the requirements in our February 21, 2008 Bulletin as noted below:

• For purchase transaction Home Possible Mortgages, when all borrowers are First-Time Homebuyers, at least one qualifying borrower must participate in a homeownership education program before the Note Date.
• We require a copy of our Guide Exhibit 20, Homeownership Education Certification, or another document with comparable information, to be retained in the mortgage file.
• We do not require a specific format or curriculum for homeownership education and do not require a review or approval of the program by Freddie Mac.

While we continue to rely on originating lenders to determine the most appropriate homeownership education for their borrowers, we have determined that education provided consistent with the National Industry Standards for Homeownership Education and Counseling and online homeownership education programs that have been developed by mortgage insurance companies are acceptable.

Upcoming changes to requirements

In an upcoming Guide Bulletin, we will further update our Home Possible requirements with additional guidance to assist lenders in implementing the First-Time Homebuyer education requirements. The upcoming Guide Bulletin will include the requirements listed above and specifically reinforce:

• Homeownership education must be provided by a party not directly involved in the sale of the property.
• The homeownership education must be conducted by someone not directly involved in the loan origination, processing or approval process.
• Homeownership education programs may use different formats and require different lengths of time to complete. The following are acceptable:
  • Internet (online) homeownership education programs that have been developed by mortgage insurance companies.
  • Homeownership education programs that meet the standards of the National Industry Standards for Homeownership Education and Counseling
  • Programs using Freddie Mac's CreditSmart® financial education curriculum, provided modules 1, 2, 7, 11 and 12 are included.

We are providing this information to you now ahead of an update to our Guide so you can begin to assess appropriate options for your organization. Below we've outlined additional sources of homeownership education that may be of assistance to you as you seek appropriate outlets to fulfill our requirements.

Guidance on additional sources for homeownership education

National Industry Standards for Homeownership Education and Counseling

Freddie Mac does not review programs for approval nor do we specify a minimum course time or specific course content. We do recommend utilizing a comprehensive curriculum containing the minimum core content specified by the National Industry Standards for Homeownership Education and Counseling. Those topics include the following:

• Assessing Readiness to Buy a Home
• Budgeting and Credit
• Financing a Home
• Selecting a Home
• Maintaining a Home and Finances
• Budgeting for Homeownership
• Sustaining Homeownership and Avoiding Delinquency

The National Industry Standards for Homeownership Education and Counseling were created in 2007 through a broad based advisory council involving industry organizations. More information can be found at www.homeownershipstandards.com.

Freddie Mac CreditSmart resources

CreditSmart is Freddie Mac's premier financial education curriculum, designed to help consumers learn how to build and maintain better credit, and prepare for successful long-term homeownership. The curriculum is comprised of twelve stand-alone modules.

Several CreditSmart modules can be combined and deployed as live, instructor-led sessions by your organization to meet this requirement:

• CreditSmart Module 1: Your Credit and Why It Is Important
• CreditSmart Module 2: Managing Your Money
• CreditSmart Module 7: Thinking Like a Lender
• CreditSmart Module 11: Becoming a Homeowner
• CreditSmart Module 12: Preserving Homeownership: Protecting Your Home Investment

You'll find more information on implementing an instructor-led CreditSmart curriculum online on FreddieMac.com. CreditSmart is available in English, Spanish, Chinese, Korean, and Vietnamese.

Online homeownership education from mortgage insurers

Many mortgage insurers offer online and telephone homeownership education programs that will be acceptable for meeting the Home Possible homeownership education requirements, including:

• AIG United Guaranty's The Road to Home Ownership®
• Genworth Financial's homebuyer education series
• MGIC's Buyers Ed program
• PMI's homebuyer education
• RMIC's pre-homeownership education course

However, as discussed below, Freddie Mac's Internet (web-based) Homeowner Readiness Check is not acceptable.

Homeownership education providers

Government entities such as state housing finance agencies and county community development departments are a good source of information on homeownership education. In addition, many affiliates/members of national organizations such as those below provide homeownership education and counseling:

• NeighborWorks® America
• Housing Partnership Network
• National Council of La Raza
• National Urban League
• Local Initiatives Support Corporation's (LISC)
• The Enterprise Foundation
• National Coalition for Asian Pacific American Community Development

There are many other regional, state, and national organizations that provide this type of education.

Other helpful resources

• Freddie Mac's Homeowner Readiness Check is available on our web site. While this online tool does not fulfill the homeownership education requirements for Home Possible Mortgages, it can be used to supplement a borrower's learning and complement more detailed homeownership education.
• The Department of Housing and Urban Development lists non-profit organizations with HUD-approved counselors. We recommend that this HUD designation be considered along with other factors when deciding if a specific homeownership education program is sufficient.

We continue to support and encourage homeownership education, believing that well-informed and well-prepared homeowners are on the right path to obtaining and maintaining their homes.

For more information about Home Possible Mortgages

• Review Chapter A34 and Section 17.13.1 of the Freddie Mac Single-Family Seller/Servicer Guide.
• Visit our online Home Possible resource center.
• Visit The Learning Center for easy-to-print resources and training opportunities for Home Possible Mortgages.
• Contact your Freddie Mac Account Manager or (800) FREDDIE.

Plus, make sure to check out English and Spanish marketing materials you can download and customize to promote Home Possible Mortgages products.