Industry Voice: Serving the Needs of Extended-Income Households with HomeReady
By Michael Conley | May 31, 2016
Our recipe for success with HomeReady® mortgage:
- Find an eligible, creditworthy borrower, or two if available.
- Add one pinch of extended household resources.
- Add a dollop of underwriting flexibilities.
- Mix until evenly blended.
- Cook at medium processing temperature until approvable.
This is the new and exciting recipe we’re envisioning with HomeReady.
It’s a recipe intended to enable and empower originators like us to help approve more low- to moderate-income borrowers. In particular, it’s a recipe that’s going to be a potential boon to families that live in extended households.
My hope is that by following this recipe I can approve a family that contacted me recently.
I say family because even though there are two applicants, it’s obvious from the outset the whole family feels invested in the outcome. A basic background sketch: The applicants are a retirement-age husband and wife of Latino descent, first-generation immigrants, and Spanish language dominant.
They are the parents of several English speaking adult children and the grandparents of some thoroughly Americanized young adult grandchildren.
They possess an excellent credit history. The applicants have paid off on their personal vehicles, but they are current co-signers on three car loans because some of their children and grandchildren needed their help to obtain financing.
The applicants are selling their original family home in a major urban area. They hope to buy a newer home in the suburbs – one large enough to provide temporary or long-term shelter for any family members who may need it.
An underwriting scenario like this would traditionally have stumped a loan originator. How could you have qualified applicants who wanted a larger, more expensive house yet were on a fixed income and carrying three car loans on their credit report?
HomeReady mortgage may be the answer for this family. My applicants have already shared with me that at least one working family member will be joining them in making the move. Because HomeReady permits non-borrower household income to help my applicants qualify with up to 50 percent debt to income, I can potentially help approve them for as much house as they need even with the multiple car loans.
Altogether, this family represents a classic extended household that is economically diverse and also economically cooperative. Exactly the type of extended family I imagine Fannie Mae had in mind when it devised the HomeReady mortgage program.
Because HomeReady provides flexibilities we've never had before, we are doing everything we can to get the word out to our neighbors in our lending area. We are advertising in local newspapers, sending email blasts, and paying for circulars for mailbox delivery and Sunday newspaper insertion.
Even though all these marketing avenues are important and effective in their own way, the most powerful marketing we can do is educating our local real estate agents about HomeReady.
Unlike the typical loan originator who is either working in an office or on the road visiting referral partners, the real estate agent is more likely to be the point of first contact with potential homebuyers.
We share the marketing materials available on Fannie Mae’s website to help real estate agents learn about HomeReady and to get the word out that extended households are now welcome to apply with more optimism than ever.
And our real estate colleagues in turn help share that information with their friends, family, and neighbors who contact them with questions about the home-buying process.
As the word about HomeReady continues to get out, let's put on our origination aprons and get cooking! There are new customers to serve – now we can sit down and do business.
Michael Conley is a loan officer with Lake Mortgage in Merrillville, IN.
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