MReport August 2019

TheMReport — News and strategies for the evolving mortgage marketplace.

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10 | TH E M R EP O RT TAKE 5 rowers. We do this through the integration of third-party financial technology into our Loan Product Adviser. The technology makes it simple for lenders to simply scan tax documents provided by borrowers. In the future, we'll also be working through other sources of third-party income that we can draw from in order to make other income calculation efficiencies for our customers and for families. M // What other homebuyer trends do you think will be important over the next decade? GARDNER //By 2025, we an- ticipate, approximately 70% of all new homeowners to be of a diverse background, and over half of that emerging population will be Hispanic. Why is that impor- tant? Given our shortage of inven- tory in the country today, we are already starting to see trends of what I would call "densification," or multiple generations living under one roof. Sometimes that can be done under an existing structure, but other times it will require modification of the home to accommodate multiple genera- tions within that same household. Freddie Mac recently released CHOICERenovation, an update to our renovation mortgage guide- lines, which will make it easier for lenders to use the product to help consumers acquire, refinance, or modify a property. Lenders will be able to sell us back those loans prior to the completion of the renovation, so they can have more immediate liquidity and lend to more families. We also recognize that there's an ever-growing population of people over the age of 65 who are remaining in their single-family homes, choosing to age-in-place. They, too, may want to cohabitate with their families, as opposed to previous generations past when they might have moved into some type of assisted care facility. A down payment is another factor. Home prices continue to grow, but wages have not kept pace. We are starting to see wages grow now, as well as a flattening of home price apprecia- tion at the aggregate level, how- ever, there's so much pressure on the demand for entry-level hous- ing stock that you're continuing to see that portion of the market grow year-over-year. Consumers are going to need more flexibility and solutions with their down payments. M // What lessons should lenders and servicers take away from initiatives such as Freddie Mac's Borrower of the Future program? GARDNER //We are living in an ever-changing environment, with demographic-economic changes and social changes happening with consumers throughout the country. Freddie Mac is one of the largest investors in mortgages in the United States, and we have a fair amount of internal data. We want to use that information, as well as what we can access in partnership with other sources, to start identifying the trends in the marketplace and consider how they're going to impact the future homebuyer. We want to share that informa- tion with the industry, and our customers in particular, so that we can be aligned with them on D anny Gardner leads Fred- die Mac's Single-Family Affordable Lending and Access to Credit business. In this role, he is primarily respon- sible for fulfilling Freddie Mac's community mission to provide sustainable homeownership edu- cation and financing to families who are traditionally underserved by the market. MReport spoke with Gardner about some of the more overlooked areas in the mortgage lending and servicing industry. M // How is Freddie Mac working to meet the needs of non- QM, self-employed, and other borrowers who don't fit into the traditional box? GARDNER // The lenders that I've spoken with tend to use some of the non-QM products. They are largely oriented to the self- employed, so we recognize that is a prevalent challenge. Historically, it always has been in mortgage lending, due to the complexities of each individual's situation and the way they may translate their busi- ness activity to their tax return activity. Recent studies indicate self- employment will be as high as 40% of the U.S. population by the year 2050. That will be the number of consumers in the country who have some form of self-employment income, so it is clearly a current and emerging need in the marketplace. We also think about the so-called "gig" economy. I'm fascinated about how families supplement their income through any number of part-time gigs that they take on to create a total household income. I can only imagine the challenges that this presents when they are attempting to finance the pur- chase of a home. Freddie Mac recently launched our Asset and Income Modeler, and the first phase of what we call "AIM." AIM is solely dedicated to helping with the origination of self-employed bor- Affordability, Technology, and the Future DANNY GARDNER, SVP OF AFFORDABLE LENDING AND ACCESS TO CREDIT FOR FREDDIE MAC, SPEAKS TO MREPORT ABOUT ADDRESSING THE NEEDS OF UNDERSERVED BORROWERS.

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