June2016 - Chase[ing] the Dream

TheMReport — News and strategies for the evolving mortgage marketplace.

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TH E M R EP O RT | 21 FEATURE ous military campaign to many, but knowing is indeed half the battle. Or maybe even more. One's mortgage choice cannot be too informed. "Education is the most impor - tant first step," says Newton. PHFA's counselors assist bor- rowers in developing budgets, setting financial goals, analyzing and repairing credit, and determin- ing how much of a home they can afford. Then they connect the pro- spective mortgagors with the more than 80 lending partners through- out the state of Pennsylvania to identify the PHFA first-mortgage program that works best for them. "I strongly believe that pre- purchase education from a trusted non-profit advisor is a sound way to tackle home-buying challenges and dispel uncertainties grounded in home-buying myths," Gardner says. Freddie Mac created the Home Possible mortgage to provide low down-payment (5 percent) op - portunities for borrowers with less than perfect credit. About a year ago, Home Possible Advantage was launched enabling borrowers with- out perfect credit to put down as little as 3 percent for a conforming, conventional mortgage, with the possibility of full payment cover- age from gifts or grants. To qualify for these products, borrowers can earn up to 100 percent of their area median income or higher in high- cost markets. Gardner says lenders have reacted "very positively" to the Home Possible loan program. "Quicken [Loans] and other leading lenders are using Home Possible Advantage to test their own approaches to affordable housing finance that I believe our industry will be able to learn from," he adds. Freddie Mac products, partner - ships and platforms are predicated on improving financial access and consumers' knowledge base. To further its goals of housing liquidity, stability, and affordability, the 46-year-old GSE works with trusted non-profit organizations like Easter Seals and many real es - tate industry groups. "Not only are we out there educating them and their constituents, but we're also providing a whole suite of tools like our Credit Smart financial literacy curriculum and our online information for both consumers and our partners," Gardner says. "Lenders have reacted positively to our expanded financial coach - ing efforts and to our continued growth with housing counseling," says Rodriguez of NeighborWorks America. "We strongly believe that informing consumers about the mortgage process by linking them with a trained housing counselor is good business for lenders." Having partnered with financial institutions for years, NeighborWorks America boasts an impressive outreach program in the name of housing afford - ability. In fiscal year 2014 alone, 108,500 customers were counseled and educated through its exten- sive network, and over 28,000 more people have received finan- cial coaching during the last two years through NeighborWorks organizations. "Since the housing market has begun to turn around, and mortgage rates remained histori - cally very low, we've increased our emphasis on building the business base of our nonprofit network," Rodriguez says. "Some of the funding to train our organizations to be more efficient when working with lenders has come from the lending community itself." In order to attract more clients to the housing counseling program and move them more easily into the final mortgage process, NeighborWorks America has helped its network of more than 240 nonprofit organiza - tions invest "significant amounts of money" in upgrading their technology platforms. Essential to boosting the nonprofit partners and leveraging private sector capital, NeighborWorks America announced in March that it will distribute more than $60.5 million in flexible grants to the network in 2016. Call to Action I n this era of the Consumer Financial Protection Bureau, there is still a long way to go for people to be truly protected and prepared, especially regard- ing the biggest purchase of their lives. Consumer confidence is a common economic term, of course, but maybe consumer knowledge should be as well. "The media has done a great job in explaining how costly homeownership has become in many markets," says Rodriguez at NeighborWorks America. "Where it has not done so well is educating consumers on the ways to poten - tially overcome those cost barriers. Low down-payment mortgages are evolving, sources of down-payment assistance are growing. There are hundreds of millions of dollars in assistance available, and most people don't know about it." In a recent homeownership survey, NeighborWorks found that 70 percent of consumers are not aware of down-payment assis - tance programs for middle-income homebuyers, a deficiency Newton at PHFA also broached. The targeted outreach and mes - saging by the public and private players in the mortgage industry must continue to improve as well. HLP constitutes an impressive example given that more than 6,000 non-profit HUD-certified housing counselors at more than 1,100 agencies nationwide use its web-based system to submit foreclosure alternative applications to approximately 2,000 registered mortgage company users. Gardner at Freddie Mac speaks of the critical role that each player in the housing community should play, including real estate profes - sionals, housing finance agencies, originators, servicers, the govern- ment and the GSEs. "There is an urgent need to re- store and strengthen the affordable lending ecosystem that connects aspiring homebuyers with the institutions and non-profits created to help them realize their full potential as successful homeown - ers," he says. "Since the health of this ecosystem will have a major impact on the future of the hous- ing market, it is the focus of all our outreach efforts." BRIAN A. LEE is an Atlanta-based freelance writer and former editor of Western Real Estate Business magazine. Although a big fan of mortgage and housing content, the Wake Forest and University of Georgia graduate considers his top moment in journalism a one-on-one interview with baseball legend Hank Aaron in 2009. "I strongly believe that pre- purchase education from a trusted non-profit advisor is a sound way to tackle home- buying challenges and dispel uncertainties grounded in home- buying myths." —Danny Gardner, VP of Single Family Affordable Lending and Access to Credit, Freddie Mac

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