Page 41 - The GSE Report March-April 2018

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FREDDIE MAC
Freddie Mac implements widespread expansion of 3% down mortgages
More than three years after rolling out 3% down payment mortgages, Freddie Mac is launching a widespread expansion of the program with a new conventional 3% down payment option with no geographic restriction for qualified first-time homebuyers, effective July 29th. The program, called HomeOne, offers conforming fixed-rate mortgages, secured by single-family homes, condominiums and townhouses. Manufactured homes are not eligible for the program. HomeOne mortgages
must be underwritten through Freddie Mac’s Loan Product Advisor, which makes a complete risk assessment, base upon the borrowers’ credit, capacity and collateral.
First-time homebuyers now comprise nearly half of all home purchases, according to Freddie Mac. The HomeOne program positions Freddie Mac to complete directly with FHA, which requires only 3% down on some mortgages.
“Freddie Mac’s HomeOne mortgage is part of the company’s ongoing efforts to support responsible lending, provide sustainable homeownership and improve access to credit,” Danny Gardner, SVP of single-family affordable lending and access to credit at Freddie Mac. “The HomeOne mortgage will provide our customers the flexibility they need to help borrowers anywhere in the country achieve the milestone of homeownership and overcome the common down payment resource hurdle. HomeOne is a great solution for aspiring homebuyers to grab that first rung of the property ladder and enjoy the financial and social benefits of participating in homeownership.” (Housingwire, Ben Lane, 04/26/18)`
Freddie Mac rolls out lender paid mortgage insurance pilot program
Freddie Mac and Arch Capital are piloting a new form of risk sharing—Integrated Mortgage Insurance (IMAGIN)—to in an effort to increase investors’ appetite for low down payment mortgages, raising concerns about GSE charter creep. Freddie argues the pilot does not exceed the boundaries of its federal charter.
In the pilot, lenders will sell to Freddie Mac low down payment mortgages that have private mortgage insurance provided by a panel of insurers and reinsurers, managed by Arch Mortgage Risk Transfer (MRT), a subsidiary of Arch Capital.
“IMAGIN is an alternative structure for lenders to obtain charter-compliant credit enhancement solutions and to bring additional sources of private capital to support low down payment lending,”
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