Freddie Mac to lower barriers to disbursing certain loans in November


Freddie Mac on November 15 will drop down payment conditions on principal residences for borrowers with incomes up to 80% of the median surface who take out mortgages secured by properties of 2 to 4 units. In addition, Freddie is relaxing the guidelines for pre-fabricated housing loans.

For homes with 2 to 4 homes, the maximum loan-to-value ratios were limited to 85%, unless second-tier products difficult to obtain on the private market were purchased, in which case the total LTV limit. was 95%. The change increases the limit to 105% for borrowers receiving down payment assistance from a subsidized source such as a state housing agency, while ensuring that, at a minimum, borrowers are required to pay. funds equivalent to at least 3% of the loan amount. Borrowers without subsidized down payment assistance will have a maximum LTV of 95% after the new requirements take effect.

The pending changes to underwriting through Freddie’s Home Possible program are aimed at fulfilling goals recently announced by the Biden administration. affordable housing goals, which aim to create wealth through low-cost, owner-occupied 2-4 unit properties prefabricated houses more achievable.

“For 2-4 units you needed a large down payment unless you had a second lien which was often impractical to obtain, so that made a pretty big difference,” said Daniel Jacobs, Managing Director of TruLoan Mortgage in Charlotte, North Carolina. , a lender active in the Southeast and Midwest. “It allows people to build wealth by taking advantage of additional income generating units when they buy a home.”

Freddie will also modify the LTV calculations used for manufactured homes with less than a year of seasoning to give borrowers better access to relatively lower rate financing that the government sponsored company provides for loans constituting a. Property.

The change will allow the appraised value of the land and the newly installed home to be used to determine the LTV, even if a loan does not yet have one year of seasoning. Currently, before reaching the one-year milestone, a complicated formula in which land acquisition costs are factored in is used to lower the valuation.

“It makes it much, much easier for people looking for manufactured homes to get conventional financing,” Jacobs said.

The new underwriting guidelines apply to loans settled on or after November 15.

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