Mortgage finance giant Fannie Mae just debuted its new "HomePath Ready Buyer Program," which lets first-time homebuyers get up to a 3% rebate of a home's purchase price if they buy a Fannie Mae property, so long as they complete an online homebuyer education course which costs $75.00.
The new HomePath Ready Buyer Program
, as described by Fannie Mae, could create $4,500 in savings on a $150,000 home for first-time buyers, (defined as borrowers who have not owned a home in the prior three years).
In addition to the 3% rebate, Fannie Mae will refund the cost of the homebuyer education course. Still many of the borrowers targeted for the new programs don't earn more than their area's median income
This new program comes after Melvin Watt, director of the Federal Housing Finance Agency, announced last December that Fannie Mae and Freddie Mac would soon start buying mortgage securities backed by 30-year loans with just 3% down payments, which banks largely halted delivering two years ago, instead demanding 20% down.
All part of the Obama Administration's push to make homeownership affordable to a bigger group of borrowers. Watt says the government now wants to expand the opportunity for homeownership to credit-worthy borrowers who have enough income to afford a loan, but have not saved enough for a larger down payment.
Watt has testified the loans are safe due to guardrails like these: Strong credit scores, housing counseling, and private mortgage insurance. Lenders also get protection from legal liability if they sell loans to borrowers who spend no more than 43% of their income on debt, plus the new program will not allow balloon or interest payment only mortgages.
But is this new effort good for taxpayers and the economy, or is this similar to programs that led to the subprime mortgage crisis and housing crash? Is the federal government acting once again like the boozy bartender handing out free drinks at the frat party?
http://www.foxbusiness.com/industries/2015/04/17/fannie-and-freddie-restart-risky-affordable-housing-programs/?intcmp=perspectives-horizontal
The new HomePath Ready Buyer Program
In addition to the 3% rebate, Fannie Mae will refund the cost of the homebuyer education course. Still many of the borrowers targeted for the new programs don't earn more than their area's median income
This new program comes after Melvin Watt, director of the Federal Housing Finance Agency, announced last December that Fannie Mae and Freddie Mac would soon start buying mortgage securities backed by 30-year loans with just 3% down payments, which banks largely halted delivering two years ago, instead demanding 20% down.
All part of the Obama Administration's push to make homeownership affordable to a bigger group of borrowers. Watt says the government now wants to expand the opportunity for homeownership to credit-worthy borrowers who have enough income to afford a loan, but have not saved enough for a larger down payment.
Watt has testified the loans are safe due to guardrails like these: Strong credit scores, housing counseling, and private mortgage insurance. Lenders also get protection from legal liability if they sell loans to borrowers who spend no more than 43% of their income on debt, plus the new program will not allow balloon or interest payment only mortgages.
But is this new effort good for taxpayers and the economy, or is this similar to programs that led to the subprime mortgage crisis and housing crash? Is the federal government acting once again like the boozy bartender handing out free drinks at the frat party?
http://www.foxbusiness.com/industries/2015/04/17/fannie-and-freddie-restart-risky-affordable-housing-programs/?intcmp=perspectives-horizontal
