Freddie Mac plans to offer at least $3 billion in single-family affordable housing bonds. This new bond program will support affordable homeownership and serve historically underserved markets. To underscore this effort, the company is offering approximately $285 million in Uniform Mortgage-Backed Securities backed by loans purchased through its Home Possible program.
“Freddie Mac is committed to creating additional opportunities for families to access quality housing – and we are announcing a major action in support of that goal,” says Michael DeVito, CEO of Freddie Mac. “Through this new, multi-billion-dollar affordable housing bond program, we are providing focused liquidity, stability and affordability designed to bring sustainable homeownership opportunities to lower-income borrowers across the country. This is also intended to give investors a vehicle to invest in underserved communities.”
Freddie Mac’s Home Possible mortgage offers a 3% down payment solution, which helps very low- to low-income potential homebuyers overcome the leading barrier to homeownership: affording a down payment. Home Possible mortgages are only available to families with income at or below 80% of area median income.
“This bond offering is another way Freddie Mac is bringing additional support to the housing market – and are part of our comprehensive effort intended to address longstanding issues of inequality in housing,” mentions Pam Perry, vice president of Single-Family Equitable Housing. “In the future, look for us to expand this offering and strengthen our commitment to this important work.”
In addition to its down payment requirement of as little as 3%, Home Possible offers very low- to low-income borrowers significant additional benefits, including lower mortgage insurance coverage requirements, which enable a lower monthly payment and support affordable and sustainable homeownership. Mortgage insurance is cancelable upon reaching 20% equity, potentially saving thousands over the life of the loan. There are reduced credit fees, which enable a lower borrower monthly payment. Flexible sources of down payments, such as down payment assistance, gifts and sweat equity, can be used for down payment and closing costs.
It encourages responsible homeownership through required education and counseling for first-time homebuyers, which can be fulfilled by products such as CreditSmart Homebuyer U, Freddie Mac’s online, free homeownership education course.
Freddie Mac purchased over 81,000 Home Possible mortgages in the first six months of 2021 and has made homeownership possible for more than 623,000 families through $121 billion in Home Possible mortgages since 2015.
This offering of securities entirely backed by Home Possible loans builds on existing Impact Bonds issuances by Freddie Mac Multifamily, which include Green Bonds, Sustainability Bonds and Social Bonds. Multifamily created Impact Bonds to support the division’s mission-driven work and has issued more than $8.5 billion through these vehicles to date. Separately, Freddie Mac Single Family has issued $425 million in Green Bonds since April 2021.