Freddie Mac has introduced new standardized mortgage documents that increase clarity, consistency and accessibility of down payment assistance (DPA) programs nationwide.
The documents can be used by lenders working with housing finance agencies (HFAs) at the state, city, county and local levels to eliminate confusion and misinterpretation of DPA programs. Currently, these forms vary greatly.
“Saving for a down payment continues to be the largest barrier to homeownership for lower-income and first-time homebuyers,” says Danny Gardner, single-family senior vice president of mission and community engagement at Freddie Mac, in a release. “We know that standardization has increased efficiency, lowered costs and improved many areas of the mortgage industry. By embracing standardization and creating a set of industry-wide documents, we are providing clarity and consistency that will enable more lenders to help more individuals and families leverage down payment assistance programs across the country.”
Historically, subordinate lien documents for various DPA programs have been HFA-specific and worded differently, leaving room for confusion when interpreting terms and payment plans. Through standardization, Freddie Mac is helping to bring efficiency to the loan manufacturing process, creating time and cost saving opportunities across the industry.
This greater visibility will also help increase the number of lenders interested in participating in DPA programs as well as the number of individuals and families able to access them.
“This effort by Freddie Mac compliments NCSHA’s HFA1 Affordable Homeownership Lender Toolkit online resource, which enables home mortgage lenders to partner more efficiently with state housing finance agencies in providing mortgage loans and down payment assistance to lower-income home buyers,” says Stockton Williams, executive director of the National Council of State Housing Agencies.
The new documents can be viewed on Freddie Mac’s website.
Photo: Nathan Dumlao