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Fannie Mae Revamps Affordable Loan Program

fannie-maeFannie Mae is revamping its affordable loan program to offer creditworthy borrowers with low and moderate incomes the opportunity to obtain a mortgage, according to a Tuesday announcement. 

"Our priority is a safe, responsible balance between expanded access to mortgage financing and the long-term viability of today’s mortgage loans—limiting risk to lenders, investors, homeowners, and taxpayers," Fannie Mae said. "Our goal is straightforward: to work with lenders to make mortgages more accessible, affordable, and sustainable."

The HomeReady mortgage program, boasts a new feature for lenders designed to automatically identify eligible loans through Fannie Mae's Desktop Underwriter. In addition, the program will utilize the GSE's suite of risk management tools for greater certainty and efficiency. HomeReady reflects extensive research and lender input, and will replace Fannie Mae’s MyCommunityMortgage.

“HomeReady will help qualified borrowers access the benefits of homeownership with competitive pricing and sustainable monthly payments,” said Jonathan Lawless, VP for Underwriting and Pricing Analytics at Fannie Mae.

Fannie Mae's HomeReady Goals:

Accessible: Helping creditworthy homebuyers qualify for a mortgage

Affordable: Limiting the up-front and monthly costs of mortgages

Sustainable: Supporting the long-term success of homebuyers

Fannie Mae also announced that for the first time, it will accept and consider income from a non-borrower household member to determine an appropriate debt-to-income ratio for the loan. The GSE believes that this will help multi-generational and extended households qualify for an affordable mortgage.

According to Fannie Mae research, these extended households usually have as stable or more stable incomes than other household at similar income levels.

First-time and repeat homebuyers can purchase a home using HomeReady with a down payment of as little as 3 percent, the announcement said.

The program requires all borrowers to complete Framework, an online education course that will prepare them for the home buying process and provide additional support for maintaining homeownership.

“We are also confident this mortgage option will create business opportunities for lenders serving the changing demographics and borrower needs seen in today’s market. The combination of our risk management safeguards and an innovative online education tool will put HomeReady borrowers in a strong position to succeed in homeownership.”

Fannie Mae will  begin accepting loan deliveries for HomeReady in late 2015.

Click here to read more about Fannie Mae's HomeReady program. 

About Author: Xhevrije West

Xhevrije West is a writer and editor based in Dallas, Texas. She has worked for a number of publications including The Syracuse New Times, Dallas Flow Magazine, and Bellwethr Magazine. She completed her Bachelors at Alcorn State University and went on to complete her Masters at Syracuse University.

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