MReport November 2017

TheMReport — News and strategies for the evolving mortgage marketplace.

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44 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION Homebuilder Recognizes Link Between Student Debt and Homeownership LENNAR HOMES PLANS TO HELP MILLENNIALS PAY OFF THEIR HEAVY STUDENT DEBT TO GET THEM INTO A HOME. FLORIDA // Many in the hous- ing industry have scratched their heads when it comes to figuring out whether millennials are inter- ested in homeownership and, if so, how to get them into the market more than they are currently. One of the biggest roadblocks has been the generation's inability to provide a down payment, but one homebuilder may have found the solution. According to an article by CNBC, Miami-based Lennar Homes plans to help millennials pay off their heavy student debt to get them into a home, but it's not charity. When individuals pur - chases a Lennar home, they can receive a payment up to $13 thou- sand or 3 percent of the amount of the home from Lennar's subsidiary Eagle Home Mortgage. The Federal Reserve Bank of New York reported that student debt is at an all-time high of $1.34 trillion. Eagle Home Mortgage President Jimmy Timmons said in a statement that particularly with millennial buyers, even though they want to be homeowners, they don't feel like they can move forward. "Our program is designed to relieve some of that burden and remove that barrier to owning a home," Timmons said. However, with the details of the plan not yet released, Seeking Alpha offered speculations on how a program such as this could be successful. Simply put, Lennar's goal is to sell homes, and if mil - lennials don't qualify because of not meeting the "income-to-debt service ratio," that becomes a prob- lem. If Lennar pays off the debt, but then adds it into the mortgage, then the problem is dissolved. "Simple example: Imagine a millennial with $13,000 in student loan debt at 5 percent with 10 years to maturity," the report said. Despite the interesting theory, Lennar said its assistance to a buyer's student loan debt wouldn't affect the home's purchase price or add to the mortgage loan's balance. "No matter what, you have to make sure you understand the transaction you'd be entering," said Theodore "Ted" Daniels, Founder and President of the Society for Financial Education and Professional Development, a nonprofit that teaches financial literacy, to CNBC. Crowdfunding for a Mortgage MILLENNIALS REGULARLY COMPILE THEIR WEDDING REGISTRIES AT LOCATIONS LIKE BED BATH & BEYOND, BUT WHAT ABOUT REGISTERING FOR A MORTGAGE DOWN PAYMENT? TEXAS // Mortgage lender CMG Financial, headquartered in Frisco, Texas, recently revealed their new platform HomeFundMe, which is essentially a crowdfunding website like GoFundMe that goes toward a down payment on a home without fees, but with the backing from the government- sponsored enterprises Fannie Mae and Freddie Mac. According to an article by CNBC, prior to HomeFundMe, down payment assistance could only come from family members, employers, community nonprof - its, and churches as long as they had significant documentation. Lenders needed to be sure buyers weren't borrowing for the down payment because that would mean they were adding debt on top of their mortgage payment, making them less likely to be able to make their mortgage. This unique idea is another way to assist millennials, who have openly said they are inter - ested in homeownership, be able to put action to thought. Student loan debt is at an all-time high, and with high rent costs and low savings, the down payment on a house has kept homeownership seemingly out of reach for the generation. "You're going to spend $250 on a coffee making machine? If that $250 goes to a down payment of your home, at the very least, I im - prove your quality of life and the second thing I do is I give you, today, some tax deductibility," said Christopher George, CEO of CMG Financial, to CNBC. Additionally, prospective home - owners can attend free credit education classes and apply for grants of up to $2,500. Once they have done that, the platform will match donations at $2 for every $1 raised, up to $2,500. "Folks that go to counseling tend to be more informed, and they also tend to be better bor - rowers," George said. CMG has looked into the pro- gram regarding advertising dollars and believes that it's something they would otherwise spend either through the internet or social media, so they've put their money where they think it has its best use. "Our tagline is, 'Fund your way home,'" George said. "We think homeownership still is very sensible and, done correctly, is a good idea to step forward toward wealth, stability, and quality of life." "Folks that go to counseling tend to be more informed, and they also tend to be better borrowers." —Christopher George, CEO of CMG Financial LOCAL EDITION ORIGINATION

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