Tracking the Latest News

COVID-19 Resources and Updates

COVID-19 impact on down payment assistance (DPA) programs and first-time homebuyers.

The Down Payment Resource research team is closely monitoring the impact on DPA programs and first-time homebuyers as a result of COVID-19.

Help for Homeowners

Weekly DPA Trends

November 20, 2020 updates

ThankFULL

You, our readers (and particularly those who digest this DPA COVID update each week), are among our most fervent supporters. More importantly, your commitment to acknowledging and addressing affordability issues is of paramount importance to us at Down Payment Resource.

We are not just a bunch of data geeks scouring the country for DPA program details because it’s fun or easy.

We come from product development, housing counseling, GSEs, origination and loan operations. We have all pushed the most difficult products through the pipeline to help the homebuyers most in need of support because it’s necessary. And because it’s the right thing to do.

We speak the language of DPA…fluently.

For your benefit, we strive to build better practices, products, automation, and solutions to make your job fun and easier.

For this opportunity to serve and collaborate with you, we are grateful.

For your support, we are most thankful.

More New DPA Programs

Continuing the theme of debunking the “DPAs are going away” myth, check out even more new DPA programs hitting various markets around the nation.

New Mexico’s largest Community Development Financial Institution, homewise®, announced $10 Million in funding to create the Community Catalyst Fund (CCF). The initial investment comes from Enterprise Bank & Trust and Anchorum St. Vincent to “improve community vitality in northern and central New Mexico,” and is aimed at increasing affordable housing options among other goals, including down payment assistance for homebuyers as well as financial education and other initiatives. Read more HERE.

Community Connection of Northeast Oregon, Inc., is providing up to $15,000 for down payment and closing costs for veteran first-time homebuyers through their Veteran’s Down Payment Assistance Loan Program. The assistance comes in the form of a 5-year deferred loan forgiven at 20% per year as long as the buyer owner occupies the property. The program is available in Baker, Grant, Union, and Wallowa Counties in Oregon.

Nassau County, NY, has partnered with Long Island Housing Partnership to bring back their Nassau County HOME Down Payment Assistance Program. The program provides up to $25,000 for down payment assistance to first-time homebuyers purchasing a home in Nassau County, NY, and is deferred for 10 years and forgivable after 10 years of owner occupancy. Check out their 2020 Guidelines.

The Arlington Housing Finance Corporation in Arlington, TX, announced that it is adding $7,500 in down payment and closing costs assistance that can be used with their Mortgage Credit Certificate Program for eligible first-time homebuyers purchasing a home in the City of Arlington. The assistance is deferred until sale, refi, transfer or payoff. Check out the flexible income and purchase price limits in their guidelines. Lenders, apply to participate. FYI, veterans do not have to be first-time homebuyers.

Contact Down Payment Resource to explore DPA strategies, access state and local programs across your footprint, and bring these increasingly valuable products to your sales force.

November 13, 2020 updates

More New DPA Programs

Our COVID-19 update readers have expressed a keen interest in being informed of new homebuyer programs as they arise. We’re happy to do so, as it helps dispel the myth that DPA is gone or going away. Below are two recent updates, and we anticipate several more in the coming weeks.

Tennessee Housing Development Authority (THDA) announced this week that they have awarded a $500,000 grant to Tennessee’s Community Assistance Corporation (TCAC) that will help with down payment assistance to purchase a new home.

The grant from TDHA will allow TCAC to provide up to $14,999 to cover downpayment and closing costs for eligible first-time homebuyers in Cocke, Hamblen, Grainger, Jefferson, Claiborne and Union counties in East Tennessee. Learn more from TCAC and check out their program flyer.

Elsewhere, the Chautauqua Home Rehabilitation and Improvement Corporation (CHRIC) in New York received another round of funding for their 2020 Homeownership in the City of Dunkirk Program for first time homebuyers. The program provides a grant of $3,375 for down payment and closing costs for eligible buyers purchasing a home in the City of Dunkirk, NY. Read more HERE.

DPA in the Twin Cities

While not all are new programs, the Center for Energy and Environment (CEE) based in the Twin Cities in MN have TEN funded DPA programs in and around Greater Minneapolis and St. Paul. Benefits and guidelines vary by city or neighborhood, but if you’re looking for product expansion in the Twin Cities, take a look at the CEE website.

Down Payment Resource Featured on Redfin.com

We’re thankful to Redfin for helping us spread the word about down payment assistance. In a recent blog post, Redfin helps clear up a few misconceptions when it comes to saving for a down payment and how to qualify for assistance.

Inventory Solutions

We are monitoring several initiatives addressing inventory concerns through redevelopment of blighted homes, 3D printing, manufactured housing and more. Case in point, while not for “new” buyers, we wanted to share a creative program from MaineHousing called the Pre-1976 Mobile Home Replacement Initiative.

The initiative provides income-eligible Maine residents with an opportunity to replace the pre-1976 mobile home they own and occupy as their primary residence with a new ENERGY STAR ® certified manufactured home.

Participants receive an amortizing, interest-bearing MaineHousing first mortgage loan along with $30,000 to assist with the cost of dismantling and removing the pre-1976 home and purchasing and installing an ENERGY STAR ® certified new home on the same site as their existing home.

Read more HERE. We should all be looking for creative inventory solutions, and this is one of many.

November 6, 2020 updates

DPA News: Program Updates

All Invest Atlanta programs are currently funded, including HOME 4.0, VCRI, AAHOP, IMAP and ATL Home Advantage.

CalHFA recently raised their DTI requirements back up to 45% from 43% across all products but for a few manual underwrite scenarios.

Connecticut Housing Finance Authority (CHFA) recently announced an increase of the maximum assistance amount for their Downpayment Assistance Program (DAP) Loan. Effective 11/15/20, borrowers can receive up to $20,000 for down payment assistance instead of $15,000. Additionally, the minimum buyer contribution of $1,000 can now be a gift, max DTI is increased to 45% from 43%, and max CLTV is up from 100% to 105%.

Florida Housing now allows manufactured housing as an eligible property type for several of their mortgage programs. Manufactured housing is a critical piece of the affordability puzzle in Florida (and has been for decades). This development will help combat inventory issues and increase affordability for manufactured homebuyers.

NCSHA Takeaways

The National Council of State Housing Agencies convened for their annual conference last week, and there was a lot of great dialogue. Here are a few key takeaways:

Increases in home prices just since COVID began have been staggering in many markets.
Many otherwise eligible buyers found themselves in need of DPA help, despite having their own funds, just to cover rapidly appreciating prices this year.
That has led some HFA to increase the assistance amounts offered by their DPA programs.
Record HFA purchase volume persists.

Getting through COVID has been a challenge, but many are eyeing marketing strategies to maintain program awareness going forward.

Contact Down Payment Resource to explore DPA strategies, access state and local programs across your footprint, and bring these increasingly valuable products to your sales force.

October 30, 2020 updates

DPA News: New & Revamped Programs

DPA providers, are you looking to revamp and modernize your program?

Participating lenders, are you wondering if DPAs are still viable, or can be made so? Are you looking for affordability solutions?

We keep hearing “local DPAs are going away” and “there’s no money from cities and counties anymore.” Our response…wrong!

Case in point…

Check out what the City of Pleasanton, California, has been doing in recent months. They’ve revamped their DPA program to offer $100,000, up from $20,000. This is happening all over the country. Municipalities are reviewing their DPA programs against market conditions and developing creative solutions to support their communities.

Elsewhere, NeighborhoodLIFT is coming to the Twin Cities with up to $15,000 in down payment assistance. Check in with NeighborWorks Home Partners on November 3rd for more eligibility details.

Still wondering if a DPA has a meaningful impact for new buyers? Shout out to Warrick Dunn and Habitat for Humanity of Metro Denver for helping Crystal into a (furnished) home with down payment help. These programs are life-changing!

MassHousing launched Workforce Advantage (WFA) 2.0 offering up to 5% or $25,000 (whichever is less) in numerous Gateway Cities and the City of Boston. The program increases assistance elsewhere in Massachusetts up to 5% instead of 3% of price, still up to $15,000 (whichever is less). Assistance is a 0%, deferred loan due upon sale.

How COVID has Impacted NextGen Buyers

Cultural Outreach published their 2020 NextGen Homebuyer Report, exploring the impact of COVID on young buyers’ aspirations and preferences. The report explores the impact of increased time at home, remote work, migration patterns and more. Additionally, 68% of prospective buyers cited affordability as their biggest fear in the homebuying process. HousingWire provides an overview. Read up to learn how to meet tomorrow’s buyers where they are, including with financial education.

Speaking of Migration

According to Redfin, many buyers are leaving high-cost markets and seeking less expensive destinations amidst the pandemic. There are likely political and other factors at play, but the evidence is overwhelming. Buyers are leaving expensive cities and seeking more favorable — and affordable — environs.

Are you tracking these patterns?

Where are the growth markets? New states? Smaller metros? Rural markets?

What will municipal budgets look like in the cities being evacuated?

Will DPAs help those renters plant roots in their new locale?

Contact Down Payment Resource to explore DPA strategies, access state and local programs across your footprint, and bring these increasingly valuable products to your sales force.

October 16, 2020 updates

USDA Guaranteed Program Funded

Fiscal Year (FY) 2021 funding for Rural Development’s Single-Family Housing Guaranteed Loan Program is available. The funding is authorized by the “Continuing Appropriations Act, 2021 and Other Extensions Act”. One less headache to deal with!

The COVID-Related Housing Crisis Nobody Mentions

A few weeks ago, we brought up concerns about state and local budgets constrained by the COVID pandemic. In particular, the impact of limited municipal resources on affordable housing programs.

Digging deeper from another angle, Governing.com recently published an article entitled The COVID-Related Housing Crisis Nobody Mentions. The article explores the impact of renters’ struggles to make payments this year and how that trickles down through landlords to reduced property tax revenue, leading to further shortfalls in county and city budgets.

The irony of delaying help for struggling renters is that on the other end of the problem, our own county and city budgets weaken, and our communities and services therein will absorb the consequences.

Will municipalities strike affordable housing initiatives precisely when we need them most? We hope not. Resolving the woes of COVID-impacted renters fixes the source of the problem, and the revenue flows through the housing ecosystem back to the counties and cities that need that property tax revenue on time. We all have a vested interest in supporting affordable housing initiatives.

Disproportionate Housing Impact of COVID for Women and Minorities

Recent studies show a disproportionate impact on women and minorities when it comes to housing issues.

An October 2020 Zillow analysis shows women have been more likely to lose or leave their jobs, reduce work hours (and thus income), and face new housing insecurities as they shoulder much of the burden of the pandemic on women-led households and families. We’ve seen years of employment, income, and homeownership gains among women and women-led households. However, there is fear of reversal of those gains if we face any kind of recession, or “she-cession” as Zillow calls it, “because women are more likely than men to work in the industries hardest-hit by the pandemic, [therefore] the unprecedented surge in unemployment is impacting them far more severely.”

At DPR, we’ve worked hard this year not just to expose, but to continue to address and resolve the homeownership gap between white and black households. The Sloan School at MIT recently released their study The Unequal Costs of Black Homeownership exploring the cost side of these disparities. Black homebuyers pay more in “mortgage interest payments ($743 per year), mortgage insurance premiums ($550 per year), and property taxes ($390 per year)” according to the study. Worse, the long-term impact of family and generational wealth amounts to a “total $13,464 over the life of the loan, which amounts to $67,320 in lost retirement savings for black homeowners.” This means no “Bank of Mom & Dad” is available for many black homebuyers.

For even more on the topic, see the Urban Institute’s August 2020 study Before the Pandemic, Homeowners of Color Faced Structural Barriers to the Benefits of Homeownership. COVID isn’t helping.

Given All That…

How does your affordable lending strategy address racial and gender disparities? Does your product strategy and credit policy align with the cash-to-close and qualifying ratio concerns we know are coming with a massive wave of new potential buyers?

We’d love to talk about that strategy with you. Contact us to explore solutions to these issues.

October 9, 2020 updates

Rethinking Risk Assessments of Low-Downpayment Borrowers

During the beginning stages of the pandemic, many lenders backed off of DPAs, HFA programs, and higher-LTV lending. The reasons were myriad: already-surging refi business and consequent staffing challenges, rapid and rampant policy changes, new overlays, loan delivery concerns, an unprecedented forbearance dilemma, and…varying viewpoints on low-downpayment borrowers.

In a recent op-ed featured in Scotsman Guide, our CEO Rob Chrane explores some perceptions — and misperceptions — around high-LTV loan risk. Rob offers fresh insight on homebuyer education, default risk, and the importance of forming a new mindset regarding high-LTV lending and the usage of DPA programs. This is especially important as we look ahead to a purchase market riddled with post-pandemic borrowers trying to overcome employment and income instability in pursuit of their still-rampant homeownership dreams.

Don’t Raid IRAs For Down Payments

The First Time Homebuyer Pandemic Savings Act allows first-time buyers to withdraw from 401k or IRA retirement accounts to assist with the purchase of a home.

The American Dream Down Payment Act of 2020 allows homebuyers and their families to save up to $12,000 per year tax-free for a home down payment.

Our most recent Down Payment Report explores these legislative efforts to provide solutions for the down payment obstacle, but for a brief comparison…

The First Time Homebuyer Pandemic Savings Act allows first-time buyers to withdraw from 401k or IRA retirement accounts under the umbrella of coronavirus-related distributions to assist with the purchase of a home. The Act proposes that up to $25,000 can be withdrawn tax-exempt and penalty-free to be put towards the down payment of a home for new homebuyers. While that sounds attractive, that money has to be paid back — over three years — to avoid penalties. Is that a better short- or long-term down payment solution for post-COVID buyers than a deferred, or better yet forgivable, down payment assistance program or grant? Even if the withdrawal payback didn’t have to be counted in qualifying ratios, the borrower still has to account for it and ensure timely payback or face an as-yet-undefined penalty.

Contrast that with the American Dream Down Payment Act of 2020, which allows homebuyers and their families to save up to $12,000 per year tax-free for a home down payment. The plan is modeled after the 529 college savings plan and our Down Payment Report explores the legislation’s impact with Antoine M. Thompson, National Executive Director of the National Association of Real Estate Brokers.

Imagine coupling that savings with a down payment assistance program! That’s a more tenable path forward for many more buyers, and won’t incur payback provisions or potential penalties like the Pandemic Savings Act. While allowing and encouraging savings toward homeownership, the critical early-stage wealth creation of a 401k or IRA remains intact and the same tax-free benefits accrue to prospective homebuyers.

Read more about these legislative efforts along recent FTHB activity, inventory trends and more in our latest Down Payment Report, and sign up here to receive future issues as they are released.

October 2, 2020 updates

Local DPA Providers Stuck with FHA?

Our team has been hearing desire from local (municipal/non-profit) DPA providers to expand 1st mortgage product access beyond FHA 1st mortgages. Long story short, there is a clear need among these local DPA providers for education about HomePossible, HomeOne and HomeReady.

As many city, county and non-profit programs experience surges in volume (as we’re seeing with housing finance agencies), they feel hamstrung by a reliance on FHA mortgages. While their programs need to be vetted by lenders for Fannie or Freddie community second eligibility, the bigger issue is that these providers don’t know about 3% down Conventional mortgages.

We’ve been providing them with the GSE 2nd checklists so they can see how their programs fit in, and discussing options like calling on local lenders to ask them to participate and offer conventional 3% down financing.

What’s the upside? These DPA providers are pleading for a wider array of mortgage options and have the funds to help buyers with DPA, but they need lenders who will participate, take their buyers, and offer more 1st mortgage options.

Lenders, call your city, county and non-profit DPA providers and see where you can help. There’s business waiting for you!

Product Teams, review your approved DPAs and call on them to see if your 1st mortgage options can help them expand their reach. Check out a few more local programs you haven’t reviewed and launch them!

Lastly, think about this from a qualification perspective. Conventional 1st + DPA = lower loan amount, better MI rates, no UFMIP. That borrower will refer their peers to you!

New DPA Programs

Even amidst COVID, new homebuyer programs are launching and others continue to expand their eligible audience. We’ve see “hero” definitions widened this year, which is a wonderful trend. Here are a few recent examples:

RIHousing Launches 10kDPA

RIHousing launched their new 10kDPA program offering a deferred 0% interest second for $10,000 in down payment assistance. See the RIHousing 10kDPA flyer for more details.

Minimum FICO is 660 and 10kDPA can be used for 1-4 family homes and condos with friendly income and purchase price limits. Nice!

Virginia Housing Community Heroes Program Expands

Virginia Housing teamed up with FHLB of Atlanta to provide the Community Heroes Program to teachers, fire fighters, and law enforcement professionals. The program provides up to an $8,000 grant for down payment assistance between Virginia Housing and FHLB Atlanta.

They recently announced they have expanded the eligible audience for the Community Heroes Program to include all public school employees and health care workers who provide medical care. Well done!

September 25, 2020 updates

No News is Good News

While it seems odd to report, no news is good news regarding DPAs right now.

The new County First Initiative from SC Housing offers $8k in forgivable assistance to rural homebuyers. Georgia Dream increased their income limits effective October 1st. State and local HFAs continue to reserve and fund record volume (see more on that below).

These are positive developments. Most local DPA providers with funds left for 2020 are working hard to reach buyers with those programs, while the few who remain suspended due to COVID are at this point likely waiting it out for 2021 funding.

Nothing groundbreaking from DC impacting homebuyer programs recently! Hopefully we can enjoy some relief for a spell from the onslaught of policy and guidelines changes we’ve all absorbed this year and focus on moving the pipeline.

State and Local Government Budgets

Looking ahead, we’re monitoring two concerns.

First, for states and municipalities, balancing the budget for 2021 will be difficult. It’s that time of year, and without getting into the complexities of running deficits, we have to wonder what will get cut from state and municipal budgets because of reduced revenues. Sales tax streams have been destroyed this year, depressed tourism is crushing many states and cities, property tax shortfalls won’t help, and COVID, wildfires and hurricanes compound the pain and financial strain.

Our concern is that affordable housing initiatives will receive scrutiny with insufficient attention to their short- and long-term value to the states and communities they assist. Our hope and our eyes are on continuity of these programs and services, like down payment assistance.

From a federal perspective, October 1st starts the USDA Fiscal year. Every lender has to decide if they are going to take the risk of loss and continue originating and closing Single Family Guaranteed loans with a Conditional Commitment that states “Subject to receipt of congressionally appropriated funds.” This means a Loan Note Guarantee cannot be given until funding becomes available.

To that effect, our second concern is the ultimate outcome of HUD’s 2021 HOME and CDBG funding. All signs currently point to an increase in funding for 2021 over 2020, but until passed and distributed, we need to monitor carefully and lend our support to these local funding initiatives. Who among you enjoy and leverage DPA layering opportunities and standalone seconds with your core products? And lets not forget the impact of all this strain on employees who have been or will be cut or whose hours will be reduced. Qualifying ratios and cash to close! Tomorrow’s pipeline needs this help.

Inventory vs The HFAs

Sure, inventory is down. Significantly. So why bother with DPAs and prequalifying buyers with them when they won’t be able to find a property, or won’t be able to compete in the bidding wars? Guess what? That’s not a real problem.

State and even local HFAs continue to fund record purchase volume. How? There are no homes to sell? Well, maybe the pace of sale is diluting the true opportunity.

We’re hearing directly from HFAs that they have already funded over 50% more volume this year than last year. To be clear, that’s year-to-date 2020 vs all of 2019, and only through August as of right now. Refi’s. Yes, we get it. But we cannot discount the value and volume HFAs are accounting for.

CLEARLY, there’s enough inventory (moving quickly) to help droves of new buyers, including with down payment assistance, affordable first mortgages, and MCCs.

No excuses. Just results!

September 11, 2020 updates

DPR Homeownership Program Index

Our Q3 2020 DPR Homeownership Program Index (HPI), published this week, shows there are over 1,100 housing agencies providing over 2,300 programs and 81% of them are funded and available. Many are deferred and/or forgivable, as reported last week, and only about 2% remain suspended due to COVID. Check out the report for more detail on the state of DPAs and the impact of COVID.

Rates, Refis and Renters: Planning for the Pendulum Swing

Did you miss yesterday’s webinar co-hosted with MGIC? We discussed specific implementation strategies to ensure continuity and purchase success, as the pendulum swings back to purchase business in the near future. Purchase demand is rampant and growing among Millennials and renters. COVID-19’s impact on interest rates, housing inventory, refinance pipelines, and fulfillment staffing requires attention be given to the needs of the next wave of buyers to ensure success. View the recorded webinar.

Mitigating Risk of a Coming Foreclosure Crisis

According to CoreLogic, the COVID pandemic may lead to a foreclosure crisis as delinquency rates rise. ATTOM Data confirms recent foreclosure filings are up. This, coupled with purchase demand (see above), underscores an all-too-often overlooked and preventative solution…housing counseling and homebuyer education courses.

Studies from NeighborWorks, Urban Institute and others have shown across various timeframes and market conditions that these services significantly reduce mortgage delinquency and foreclosure by ensuring consumers are better educated about credit, finance, home ownership and money management…how to avoid pitfalls that lead to the loss of a home.

You may be thinking “these reports are outdated.” Fair enough, some go back over 10 years, but if we’re facing a foreclosure crisis that remotely resembles what the industry went through 10+ years ago, we need to be mindful of what we learned and put the counseling and education partnerships and best practices in place to help stave off a crisis.

September 4, 2020 updates

2% of DPAs Still Suspended Due to COVID-19

There are still over 40 DPAs temporarily suspended, specifically because of COVID-19. Primary causes are either GSE policy changes impacting ability or the desire to offer particular products/features. Social distancing and shutdown protocols may also be limiting agencies’ capacity to launch a DPA.

As reported in late May and early June, we began to see a small few local DPA providers re-open or re-launch their programs to their respective markets. Since then, the “second wave” of COVID-19 and ongoing concerns about hosting traditional, in-person events are preventing these remaining programs from pursuing operations.

We will continue to monitor at DPR, but currently the news is “no news” regarding getting these last few DPAs out to the public.

Master Servicer Overlays

As mentioned last week, we’ve seen a small few HFAs rescind their COVID-related FICO overlays and drop back to 620. Hopefully, more will follow soon. On the topic of overlays, we have NOT seen or heard any hints that other COVID-related FHA/GSE overlays will be lifted any time soon:

Employment re-verification
2 months cash reserves
Verification of business
Rental income reduction
Restrictions on appraisal waivers

We’re stuck with these and a few more overlays through at least October or November.

Advance Programs from Federal Home Loan Banks

For member institutions, the Federal Home Loan Banks provide liquidity for DPAs and many other affordable lending and community development initiatives. The FHLB response to COVID includes advance programs from all 11 FHLB districts with discounted costs or other benefits to help member banks address the economic impact of COVID in their respective jurisdictions.

August 28, 2020 updates

FICO Overlays

We’ve seen a few programs begin to reduce their COVID-19 FICO overlays back to 620. We’re keeping our database up-to-date and monitoring all programs to see if others follow.

FHFA Delays Adverse Market Fee

You’ve surely heard by now, but good news this week as FHFA delayed implementation of the new “adverse market fee” until Dec 1st.

FHA Extension Notice

FHA published Mortgagee Letter (ML) 2020-28, which extends the alternatives for re-verifying a borrower’s employment and/or conduct appraisal inspections while observing social distancing practices associated with COVID-19. The extension is effective immediately for cases closed on or before October 31, 2020, and for appraisal effective dates on or before October 31, 2020.

Spending, Saving and Down Payment Help

Refinances may continue for months to come, but at some point soon we all need to be thinking about the return of the purchase market. Where will we find our buyers and borrowers, and what challenges will they face? Without further stimulus, consumers are spending less – including at the grocery store – and carefully monitoring their budgets. Are they also leveraging credit? What will their ratios look like come homebuying time? And how many are offsetting loss or reduction of income with savings from reduced or eliminated commutes because of remote work?

These struggles point to qualifying ratio and cash-to-close challenges we’ll need solutions for, and purchase pipeline growth will come in large part from implementing those solutions now and being prepared to educate and serve buyers – especially first-time buyers – as they weigh the advantages or buying a home versus renewing leases. Not surprisingly, low inventory and struggles to find affordable homes during the pandemic are leading many buyers to consider expanding their budget for a dream home, in part to take advantage of low rates.

At Down Payment Resource, we perform a Declined Loan Analysis for lenders, and they have shown that applying a DPA to an otherwise income- and credit-qualified loan reduces the LTV on average over 5%. Ratios and cash to close are both addressed (reduced) as a byproduct. Line up solutions!

Contact us if you’d like to explore a Declined Loan Analysis and the benefits of recouping sunk fulfillment costs, closing the gap on loans declined for ratios or cash to close, and expanding your referral network through closed loan apps.

Deferred & Forgivable

Our latest DPR Homeownership Program Index will be published soon and will offer more insight into the state of DPAs right now, but we are often asked about common benefits or the “best” type of program and wanted to share some new metrics with you.

1,451 DPA programs, about two thirds of DPAs, include payment deferral for some period of time.
983 DPA programs, or nearly half, are partially or fully forgivable.
858 DPA programs, well over a third, are both deferred and forgivable

August 21, 2020 updates

House Then The Car (HTTC)

We were proud to participate in NAREB’s Super Series Tuesday, where we discussed down payment assistance with their House Then The Car (HTTC) campaign managers. NAREB has established a goal of producing 2 million black homeowners in the next 5 years, and we discussed what that will take — including combating misperceptions about mortgage qualification and down payment requirements — and how DPA programs will help us get there. Listen to the event and help raise awareness of DPAs as we look ahead to a more educated pipeline of homebuyers! Most importantly, take note of their passion for borrowers with a unique path to homeownership.

Delinquencies

The Mortgage Bankers Association released its Second Quarter National Delinquency Survey which showed an increase in the delinquency rate from the first quarter. While the share of mortgages in forbearance declines, we need to be mindful of the impact of COVID-19 and other concerns of homeownership retention rates and what we can do to ensure the continuity of ownership and the success of owners.

MBA COVID-19 Member Call

RSVP for the next MBA COVID-19 Member Call, taking place on August 24th. This series occurs on a bi-weekly basis and features MBA leadership as they discuss developments from Congress, updates from regulatory agencies, and how our industry — both the residential and commercial/multifamily sectors — affects and is affected by the broader economic picture.

August 14, 2020 updates

FHFA’s New Adverse Market Refinance Fee

Did you lock your refinances yet? Let’s address the elephant in the room…

On August 12, 2020 Fannie Mae and Freddie Mac released lender letters announcing an Adverse Market Refinance Fee. The Adverse Market Fee will impose an additional 50 basis points on both cash-out and non-cash-out refinances effective with deliveries on or after September 1, 2020. Many housing finance industry trade groups are calling on the GSE’s conservator, FHFA, to roll back this fee.

Coverage is rampant, but we’ll point you to MBA President Bob Broeksmit’s statement and blog post, the MBA’s joint statement with other industry partners, and the Mortgage Action Alliance’s Call to Action to start.

Weigh in with your Senator and your Representative.

Forbearance Declines, but Delinquencies Are Up

Per MBA, the share of mortgage loans in forbearance declined for the 8th straight week. That’s good news, but according to CoreLogic, delinquency rates are rising.

NCSHA Awards for Program Excellence

NCSHA announced that entries for their 2020 Awards for Program Excellence are now posted for the benefit of the affordable housing community. Along with NCSHA, we encourage you to dig into these state HFA programs for best practices you can replicate in your work. The entries cover the following and include HFA responses to the coronavirus pandemic (found under Special Achievement):

Management Innovation

Special Needs Housing

The award recipients will be announced in conjunction with NCSHA’s 2020 Conference & Showcase on October 27–29, 2020.

TSAHC On The House Podcast

Texas State Affordable Housing Corporation (TSAHC) continues to pump out more episodes of their new On The House podcast. This is great education for consumers, and a thoughtful approach to building tomorrow’s purchase pipeline. Share your outreach efforts!

FreddieMacCONNECT 2020

Register for free for FreddieMacCONNECT 2020 on October 6-7, 2020. The virtual event will provide education and insights from Freddie Mac leaders on the state of the industry and our collective role in moving housing forward in this challenging environment.

Live Webinars for Industry Professionals

Loan Officers and lenders, join us for our upcoming webinar: Rates, Refis & Renters: Planning for the Pendulum Swing, hosted by MGIC. Low rates are currently fueling refi business, yet we know there’s pent up demand among renters and first-time homebuyers. Join us as we explore post-COVID-19 expectations and strategies for purchase pipeline growth. In particular, let’s review the education and down payment needs of the next wave of first-time homebuyers.

For more information on upcoming webinars, please visit our Education page.

August 7, 2020 updates

NALHFA Annual (Virtual) Conference

The National Association of Local Housing Finance Agencies (NALHFA) held their annual conference last week. The spirit of cooperation among HFAs and their supporting partners was evident.

Key Takeaways:

Everyone agrees that keeping existing owners in their homes is critical for stability.
Renewed focus on automation (Fannie Mae) and outreach (Freddie Mac) to streamline and educate.
Expect many HFAs to retain both MRB (bond) and TBA funding channels to ensure they can access the best rates possible at any time.
It’s becoming apparent that forbearance claims early on were expressions of consumer caution, keeping all doors open for possible assistance. Claims have slowed, payments are and have been increasingly made. The month of May looked good, June even better, but still more potential volatility to come.

Fannie Mae discussed their latest Mortgage Lender Sentiment Survey, which identified top ranked challenges cited by mortgage executives arising from COVID-19:

44% Understanding post-forbearance options
36% Loan eligibility clarity
34% Supply Chain Disruption

Lumber, Suburbs and Affordable Homes

Are more affordable homes on the way? The National Association of Home Builders (NAHB) indicated that’s their goal at the NALHFA conference. Lumber shortages and buyers escaping to the suburbs to avoid the pandemic are driving demand for more homes. Will we finally see some relief for affordable inventory soon?

MBA COVID-19 Member Call

Join the MBA’s bi-weekly COVID-19 Member Call on Monday, August 10th at 2pm ET, and here the latest on the impact of COVID-19 on the real estate finance industry.

The Magic of a Mortgage Credit Certificate (MCC)

An MCC provider offered a compelling perspective on MCCs recently, and we wanted to share. With affordability concerns, COVID-related stress on personal finances, and an eye to a burgeoning purchase pipeline on the horizon, we’re all looking for solutions to help fuel purchases.

Put simply, MCCs provide a tax credit (not a deduction) of typically up to $2,000 based on the amount of mortgage interest paid each year, for the life of the loan. Lenders and real estate agents often struggle to understand how MCCs work and their value to homebuyers, leaving homebuyers hard-pressed to uncover these opportunities on their own.

Disclaimer: This is neither tax advice nor an APR or net present value calculation, but rather an illustration doubling as a call to action. And the calculations are done on the fly on an old-school HP 12C.

Imagine a $150,000 home purchased at a 3.125% interest rate on a 30-year loan – a likely first-time homebuyer scenario today. The owner will pay about $643/mo (P&I). An MCC offers the owner (Mortgage Credit Certificate holder) a $2,000 tax credit which is worth $167/mo. Obviously, the buyer still has to pay $643/mo, but the effective net payment accounting for the value of the MCC is about $476/mo.

That’s equivalent to an interest rate of less than 1% so long as the owner receives the full $2,000 MCC credit for some number of years. In fact, a 1% rate in the same scenario would incur about a $482 monthly payment.

And the buyer may still be able to claim the rest of the mortgage interest paid each year as an income tax deduction.

That’s magic for the owner. We support MCCs!

July 31, 2020 updates

2020 Income Limits

As many of you are probably aware, income limit changes are in full swing. HFAs, municipal, and non-profit DPA providers are rapidly adopting 2020 limits even into July. Stay abreast of the updated limits, as access to DPAs expands to (mostly) higher incomes.

Local Housing Finance Agencies

We spoke to the Florida Association of Local Housing Finance Authorities (FL ALHFA) recently about the state of DPAs in Florida and around the nation. FL ALHFA members are working tirelessly to bring awareness to their programs, record low interest rates and DPA opportunities. Many also have MCCs and all seek candid dialogue about how best to partner with the real estate and lending communities to shed light on their programs and expand adoption. They are also working with local municipalities to find more and improved partnership opportunities to achieve affordable lending and housing goals. Talk to your HFA partners, state and local, and let’s all work together to navigate a unique market and educate more eligible, prospective buyers.

First-Time Homebuyer Pandemic Savings Act

Loaded with useful data and insights, Clever.com published their 2020 Millennial Home Buyer Report earlier this year. One survey indicated Millennials expected to acquire their down payment primarily through either their own savings or from homebuyer assistance programs. Tapping into retirement assets was among the least popular answers.

This week, the National Association of Realtors (NAR) pledged their support for the First-Time Homebuyer Pandemic Savings Act, which would allow a penalty-free and tax-exempt distribution of retirement asset funds if used for a down payment on the purchase of a home, extending tax exemption to the first $25k of a similar provision of the CARES Act.

We must beg two questions. First, is the long term consequence of depleting retirement assets — even if tax- and penalty-free — a practice we as an industry want to promote to first-time homebuyers as the path to homeownership? And second, although this option may be appropriate for some, shouldn’t we first be exploring down payment assistance (DPA) programs, mortgage credit certificates and other existing homebuyer programs that offer better upfront and long term value for first-time homebuyers?

Grants, deferred loans, forgivable loans, tax credits…this is a better path forward, particularly coming out of the COVID-19 pandemic when personal finances are already stressed enough. Let’s promote down payment assistance programs and leave 401k and IRA funds alone to keep earning and building wealth IN CONJUNCTION with homeownership.

July 17, 2020 updates

HOME and CDBG Funds

Many states are rolling out COVID-19 housing relief programs. There’s an undeniable need. As it relates to purchase and DPA programs, and as municipalities begin planning for HOME and CDBG allocations this fall, it’s important to track funding status and even forecast expectations for next year.

Many of these relief programs are leveraging CARES Act and Emergency Solutions Grant (ESG) funds, but may also use any remaining HOME Investment Partnerships Program funds and/or Community Development Block Grant (CDBG) funds.

Any impact on DPAs will likely begin to trickle down later this year in the form of constrained DPA budgets. While we won’t try to predict the impact on program benefits or guidelines, we’ll be monitoring.

The good news? The House Appropriations Subcommittee has been hard at work on (and has passed) a bill that would significantly increase HUD funding for housing programs, most notably HOME and CDBG. Read NCSHA’s analysis for more.

State Housing Initiative Program (SHIP)

Florida mortgage lenders who participate in SHIP-funded DPA programs should know that funding for 2020/2021 is up in the air after Governor DeSantis slashed millions of dollars from various affordable housing initiatives. We will continue to follow the story and distribution of SHIP, CARES Act and other funds as Florida weighs COVID relied and affordable housing policy. Learn more from the Florida Housing Coalition, Orlando Weekly, Tampa Bay Times, and Miami Herald for various analyses and perspectives.

NeighborWorks Survey: National Housing and Financial Capability

This week, NeighborWorks America released a new affordable housing and financial capability survey, exploring priorities, goals, hesitations and setbacks among prospective homebuyers. Affordability is clearly of paramount concern, and is exacerbated by several of the impacts of COVID-19 (i.e. financial strain). Review the survey HERE and explore great infographics about consumer priorities and goals as compared to the challenges our future clients face.

Borrower Preferences Impacted By COVID

Last week, HousingWire released a new white paper “How COVID-19 has shaped borrower preferences in 2020”. While not related to down payment assistance programs (yet), it’s worth a peek.

The Down Payment Report

In this month’s Down Payment Report, we interviewed Stockton Williams, Executive Director of the National Council of State Housing Agencies (NCSHA), who shared his views on the impact of COVID-19 on state housing finance agencies. Check out the June/July report for the full interview and other pressing issues regarding down payment programs and first-time buyers.

July 10, 2020 updates

Rates, Refi’s and Renters

Rates have dropped to yet another historical low. No news there. There’s still much more equity out there to be tapped, and think of how many more households just became refi-eligible in the last couple weeks?

The COVID-19 pandemic has led to reduced interest rates and kept them low. And while lenders manage capacity for continued refi business, what’s on sale? Purchase leads.

We’re hearing more and more that lenders are quietly going back to their purchase lead sources and looking at short- and long-term leads to begin regrowing their purchase pipeline. Smart move! Revisit and revitalize those referral partnerships, too. We know there’s significant pent-up demand for purchase business, especially among renters who are would-be FTHBs just waiting for the pandemic to end and inventory to come back.

Good time to start preparing for when the pendulum swings back to purchase.

DPAs and A Second Wave

Some local DPA providers, who suspended their programs due to COVID-19, were beginning to re-open. However, the recent surge in cases may be a cause for concern with these providers. We’ll continue to monitor the situation, but for now, we’re still hovering around 2% of all programs (mostly municipalities) temporarily suspended due to COVID-19. For HFAs, it’s business as usual.

The Down Payment Report

MBA COVID-19 Member Call

MBA’s next bi-weekly COVID-19 Member Call on Monday, July 13th, at 2pm ET features MBA leadership as they discuss developments from Congress and updates from regulatory agencies. Learn more and register HERE for COVID-19 Impact on Residential and Commercial/Multifamily Housing Finance Member Call with MBA Leadership.

Wells Fargo – Freddie Mac Economic Forum

Join industry leaders from Wells Fargo and Freddie Mac for an exclusive event to hear about current trends and factors that are impacting the U.S. economy and the housing sector. In this session, you’ll also learn more about housing initiatives and resources designed to support current and future homebuyers and inform strategies to grow your market. Space is limited, and you must register by July 13.

July 2, 2020 updates

We continue to receive positive and encouraging feedback from our Housing Finance Agency (HFA) partners. HFAs have absorbed a lot of change in the past few months, and have worked diligently to remain open and support lenders, buyers and real estate professionals.

“In light of the recent economic downturn, Minnesota Housing has listened to lenders’ concerns and made several changes as a result. We’ve streamlined our process by eliminating several forms and we’ve sped up the purchase and securitization timeline in order to reduce lenders’ exposure to the risk of forbearance. The vast majority of participating lenders continue to promote our programs because they recognize that our down payment and closing cost loans make homeownership possible for their buyers and help them build strong referral networks.” – Kasey Kier, Assistant Commissioner for the Single Family Division, Minnesota Housing

“Mississippi Home Corporation stands ready to support lenders who participate in our programs and lend a helping hand to those who are purchasing homes during this time. Our programs help make home ownership affordable for home buyers by offering competitive financing and down payment assistance. We could not accomplish our mission as a State Housing Finance Agency without the lenders who work with us. Throughout the years we have developed strong partnerships with many lenders and welcome the opportunity to work with both old and new to help grow your business. There is no doubt that this has been an uncertain time— making it more important now than ever that we work together to finance safe, decent, affordable housing for working families.” – Scott Spivey, Executive Director, Mississippi Home Corporation (MHC)

Stockton Williams, Executive Director of the National Council of State Housing Agencies (NCSHA), discussed the COVID pandemic and its impact on HFAs and lenders in an interview in this month’s Down Payment Report.

According to Mr. Williams, “the last several months have been a tumultuous time for the mortgage finance system and everyone who is involved with providing housing lending. There have been lenders who have pulled back from originating loans for low- and moderate-income borrowers for a variety of reasons, including general economic stress, or pivoting to do more business in refinances since rates are so low. There is also a lot of concern, which, frankly, state HFAs share, about some of the actions FHFA, FHA, Fannie, and Freddie have taken and not taken. Those have all contributed to uncertainty in the markets.”

The good news though, as Mr. Williams put it, is that “more often than not, we are hearing that state housing finance agencies are doing as much or more business than they were at this time a year ago, and in a number of cases, they are doing more. A handful of state HFAs have even told us that they have had record production in recent months.”

Read the full interview in our June/July 2020 issue of The Down Payment Report.

New Mortgage Forbearance FAQ

HousingWire, in partnership with Freddie Mac, introduced a new Mortgage Forbearance FAQ resource to assist lenders during forbearance conversations with their clients. The page includes links to additional COVID-19 and forbearance resources from Freddie Mac and HousingWire, and Freddie Mac will be continuously updating the FAQs with the latest news and information on forbearance.

DPAs: Big Picture

Temporarily suspended DPAs crested at over 2% of all programs recently, but this week we saw that decline for the first time in months as municipalities begin relaunching their programs. More local DPA providers continue to express hope that July will be the reopening date, though the possibility (or presence) of a second wave of COVID-19 cases in some states will need to be monitored.

Over 82% of all programs are currently funded and active, and another 3% of programs are taking names on waitlists.

DPAs: Local Response

We’ve been wondering how municipalities would respond to COVID-19 with regard to affordable housing and lending.

The City of Newark announced they are injecting $1MM into their Live Newark Program, which now includes forgivable DPA loans, repair assistance, and additional DPA money for City employees.

The Massachusetts Housing Partnership (MHP) expanded their ONE program to create the ONE+Boston Program with help from City of Boston Funds. The program offers heavily discounted mortgage rates, no mortgage insurance, and a DPA grant to help expand homeownership access to low- and moderate-income first time homebuyers.

Wells Fargo – Freddie Mac Economic Forum

June 26, 2020 updates

Reflecting on the Impact of COVID-19

Deep and widespread: the two most common descriptions we hear of this COVID-19 pandemic. Lenders have scrambled to balance resources to absorb refinance volume and prevent or manage forbearance claims. Prospective buyers have largely sidelined themselves. The Fed has intervened to stabilize bond and secondary markets. We still have a lot to work through. This is just the tip of the iceberg.

Is more stimulus coming and can that impact purchase activity for renters on the cusp?
Can lenders organize staff strategically to accommodate continued refinance business while purchase volume comes back?
And if the stars align and all of those factors work out in our favor, how will we address housing inventory shortages? Particularly affordable housing.

Purchase Apps Rising…Quickly

Purchase demand has clearly been pent up. And the flood gates are opening. According to Michael Fratantoni, Chief Economist at the Mortgage Bankers Association, purchase app volume is 20% ahead of this time last year. Fratantoni also expects low interest rates to continue to spur more overall mortgage demand in 2020 than we’ve seen since 2006, including increased purchase business. Many lenders are sharing supporting stats confirming this trend.

Economic Trends and Housing Recovery

Our CEO, Rob Chrane, moderated a live webinar this past Wednesday with Sam Khater, Vice President and Chief Economist at Freddie Mac, as well as Laurie Goodman, Co-Director of the Housing Finance Policy Center at Urban Institute. The webinar was packed with data and insights looking back at the COVID pandemic as well as solutions looking ahead at recovery in housing and the broader economy. If you missed it, we have the slide presentation available, and a recording of the hour long webinar will be available next week.

NAR’s 5-Point Plan to Increase African-American Homeownership

As we reflect on the impact of the COVID pandemic and plan for recovery, we must acknowledge the disproportionate impact of COVID on African Americans in parallel with the likewise disproportionate homeownership rates among African Americans.Last week, Lawrence Yun, Chief Economist at the National Association of REALTORS® (NAR), laid out a 5-point plan for increasing African-American homeownership. Pay attention to #3!

1. Build more homes to increase supply.

2. Build more homes in Opportunity Zones.

3. Increase access to down payment assistance.

4. Strengthen FHA’s loan program.

5. Expand alternative credit scoring models.

COVID has caused disarray. Buyers want back in. All buyers. This isn’t the first time we’ve heard that down payment assistance will lead us through a recovery. It’s obvious. It’s clear. It’s necessary. Support your HFA, your local DPA providers, and the homebuyer education providers and housing counselors shepherding renters to your doorstep.

To that point, we held our first-ever live webinar for consumers today. We’re working hard to educate the next wave of homebuyers. Down Payment Assistance and the Path To Homeownership was a smash hit!

June 19, 2020 updates

As we’ve mentioned in past weeks, we’re seeing consistent, positive messaging from our Housing Finance Agency (HFA) friends and partners.

“The COVID-19 pandemic has required industry guidelines, operations, and policies to change quickly. Colorado Housing and Finance Authority (CHFA) has shifted to a remote working environment. However even in this environment, CHFA has experienced no gaps in funding and is committed to remaining an available, operationally predictable, financially stable partner with our lenders.

CHFA continues to accept, process, and purchase home mortgage loans daily. We continue to average $15M in daily reservations, continue to perform our program compliance review within one business day, and purchase loans quickly upon complete loan file delivery.

We are committed to fulfilling our mission and making affordable homeownership available to our community.”

– Paige Omohundro, Business Development Manager, Home Finance Colorado Housing and Finance Authority (CHFA)

“The North Carolina Housing Agency remains open for business and continues to offer its full suite of products for qualified buyers. These include the NC Home Advantage Mortgage™ with down payment help up to 5% of the loan for first-time and move-up buyers, the NC 1st Home Down Payment that offers $8K down payment help for first-time buyers and military veterans, and the NC Home Advantage Tax Credit that allows eligible first-time buyers and military veterans to save up to $2K on their federal taxes. We appreciate the efforts of those lenders who continue to offer our programs to help North Carolinians get into new homes. Home buyers can contact our office at 1-800-393-0988 if they need help finding a participating lender. “

– Connie S. Helmlinger, APR. Manager of Public Relations and Marketing, NC Housing Finance Authority

Here’s a webinar you don’t want to miss.Join us on June 24th as Rob Chrane, CEO at Down Payment Resource, Sam Khater, Vice President – Chief Economist at Freddie Mac and Laurie Goodman, Co-Director, Housing Finance Policy Center at the Urban Institute, discuss the current economic and housing market trends, impact on access to credit, and outlook for the prospects of a recovery in housing and the broader economy.

Mortgage Credit Certificates (MCCs)

This week, a few housing finance agencies (HFAs) announced they will be winding down their MCCs later this year or next year. As interest rates continue to decline and demand rises for bond-funded first mortgages and down payment assistance, it appears some HFAs are reallocating bond funds to meet increasing mortgage and DPA demand. It’s an unfortunate catch-22 as MCCs are a wonderful, life-of-loan tax benefit for homebuyers, especially as mortgage interest deductibility grows further out of reach for many homeowners, but perhaps capacity for more bond-funded mortgage volume at record low interest rates is an understandable value trade-off. Can the industry craft a solution to keep MCCs available without sacrificing mortgage and DPA capacity? We’re all ears at DPR!

Hardest Hit Fund

A few states have reopened their Hardest Hit Fund to assist renters and homeowners, and there’s still some HHF money out there for down payment assistance.

Local DPAs

As we call on municipalities and local non-profits recently, July is shaping up as a target month for many to accomplish two milestones: 1) get COVID-related grant programs out the door and into the market officially and completely, and 2) re-open suspended DPAs or reallocate resources to administer them at full capacity. This is good news in many markets more heavily impacted by COVID. Support your local DPA providers! There’s a lot of DPA money floating around with cities, counties, and local non-profits that’s been slow to market or on hold for several months. Keep tabs on those programs.

FHA Webinar

FHA announced an upcoming webinar on June 23rd, 2020, at 1pm Eastern. Register HERE for “Social Distancing and its Effect on the Housing Industry”. The webinar will explore HUD’s role in helping homeowners in the midst of COVID-19 and the innovative concepts the industry is utilizing to maintain social distancing.

June 12, 2020 updates

As we all continue to monitor and manage to the impact of COVID-19, we at Down Payment Resource want to ensure the message of our Housing Finance Agency (HFA) friends and partners is heard, and that the value of their programs to your business and ultimately to the prospective homebuyer is foremost in our minds.

In that spirit, here’s more from our HFA partners.

“The Michigan State Housing Development Authority (MSHDA) is up and running to promote homeownership across the state. We saw a slight decline in new reservations during our state shut down, yet as soon as the Realtors were allowed to again show property to potential buyers our production began to rise.

The Homeownership Division is still seeing significant volume coming into our office and many of these files are requesting Down Payment Assistance. Our program is used by all lenders and on the majority of our files. Buyers just need that extra help with assets to close and we can be that help!

On April 2, 2020 in response to the ongoing COVID-19 pandemic, MSHDA announced to our lenders a temporary moratorium on the Early Payment Default (EPD) policy. This moratorium is being extended until June 30, 2020. EPD are a delinquency in the first 30 days after purchase by MSHDA.

This moratorium will be applied to homeowners that can document the cause of hardship related to the coronavirus pandemic, providing proof of layoff or underemployment. All homeowners facing a hardship must immediately contact our loan servicer, Loan Care, who will partner with our MSHDA servicing area to waive the EPD repayment requirement. This waiver only applies to closed MI Home Loan transactions.” – Mary Townley, Director of Homeownership Division, Michigan State Housing Development Authority (MSHDA)

“At Idaho Housing and Finance Association, we recognize the unique challenges faced by lenders during the COVID-19 crisis. While we certainly understand lenders’ caution, we’ve taken concrete steps to minimize their burden while staying true to our commitment to sustainable homeownership by providing homebuyer education programs like Finally Home! as well as pre- and post-purchase counseling.” – Susan Semba, EVP of Homeownership Lending, Idaho Housing and Finance Association (IHFA)

Live webinar: Economic Outlook and Housing Trends

Join us on June 24th as Rob Chrane, CEO at Down Payment Resource, Sam Khater, Vice President – Chief Economist at Freddie Mac and Laurie Goodman, Co-Director, Housing Finance Policy Center at the Urban Institute, discuss the current economic and housing market trends, impact on access to credit, and outlook for the prospects of a recovery in housing and the broader economy.

FHA Live Webcast

FHA is hosting a special webcast on Tuesday, June 16, 2020, at 3pm ET. Entitled Supporting Homeownership: An Interagency Discussion Regarding the COVID-19 National Emergency for National Homeownership Month, the discussion will focus on the COVID-19 responses of FHA, USDA, and VA. Learn more HERE and register HERE.

Expanding “Hero” Definitions

South Carolina State Housing Finance and Development Authority (SC Housing) recently launched their annual Palmetto Heroes Program. Of note, and related to COVID, SC Housing had expanded their list of qualified homebuyers to include those who:

Well done, SC Housing! Will this develop into a broader trend? We hope so.

Volume & Turn Times

We continue to receive updates regarding high reservation, loan app and file submission volume from HFAs. This may impact turn times in some cases, and as such we’re seeing HFA operations amended to ensure optimal pipeline management, but it’s also good to hear consumers are getting down payment assistance and pushing forward with home purchases!

USDA COVID Policies

We provide links to Fannie Mae’s and Freddie Mac’s COVID update pages at the bottom of this page. You can view USDA’s COVID update page HERE as well.

Lastly, we continue to monitor for changes to income limits. As HFAs adopt 2020 limits, we’re aggressively updating Down Payment Resource to ensure DPA searches yield results for all who may be eligible.

June 5, 2020 updates

HFAs, EPD, Forbearance & LLPAs

A primary driver for lenders’ recent reluctance to participate in Housing Finance Agency (HFA) programs has been early payment default (EPD) and forbearance policies. We skipped this topic last week, and while other concerns are related or are likewise noteworthy, we wanted to dig back into this topic.

First, here’s some encouragement directly from housing agencies:

“It’s business as usual at the Commission. Now more than ever, homebuyers need housing finance agency programs. Although some lenders placed a temporary pause on our programs, the vast majority are now back as they recognize the benefits to homebuyers and recognize HFA programs as a great referral source. In order to help our partners, the Commission along with our loan servicers stepped up the purchasing process to securitize loans prior to the borrower’s first payment. We appreciate our wonderful partners.” — Lisa DeBrock, Homeownership Director, Washington State Housing Finance Commission

“The recent economic uncertainty has made down payment assistance more important than ever. While we recognize some lenders have had to suspend their participation due to current market conditions, DPA programs and their master servicers are doing everything they can to mitigate the risks to lenders and ensure programs continue to be available to home buyers.” — Joniel LeVecque, Homeownership Programs Director, Texas State Affordable Housing Corporation

These sentiments are shared among the many HFAs we’ve spoken to in the past few weeks. We would also like to note that not a single HFA has closed or paused business during the COVID-19 pandemic, even if the availability of product and pricing options has varied due to market and policy fluctuations.

Some HFAs have begun to explore more flexible arrangements regarding forbearance, in an effort to keep lenders active with their programs. In particular, HFAs are trying to work with their master servicers and participating lenders on flexibility with loan level pricing adjustments (LLPAs) and purchase timelines related to loans that enter forbearance.

HFAs themselves have made few changes to their programs that were not required of them by Fannie, Freddie, HUD or their master servicers. Self-imposed overlays may not be the best solution for lenders, though we realize the broader the lender’s footprint, the more complex the management of HFA operations becomes.

Anecdotally, we’re also hearing that — at least through the month of May — HFA borrowers who entered forbearance were by and large still making their payments. We’ll see if this trend continues and what this means for the months ahead.

Some advice for HFA participating lenders: Contact your HFA partners and talk to them about their policies regarding EPD, forbearance, loan delivery and LLPAs. Ultimately, it’s the prospective borrower who loses if we don’t explore all of the available options.

Minimum FICO

We’ve seen a few DPA providers begin to relax their temporarily increased FICO requirements. We’ll continue to monitor this development and update our database accordingly.

Local DPA Providers

In addition to HFA programs, there are many municipal and nonprofit programs out there for lenders to explore and utilize as well.

We continue to see more city, county, nonprofit, and other “local” DPA providers, whose markets were most severely impacted by the pandemic, beginning to slowly move back to normal operating procedures. Programs that were temporarily suspended are being made available again and turn around times are improving.

As of last week 81% of all DPAs were actively funded and available, and less than 2% had temporarily paused their programs due to the pandemic.

New On The House Podcast

Texas State Affordable Housing Corp (TSAHC) recently launched their new On The House podcast. While not necessarily COVID-related, the topics covered are timely and relevant as we look ahead to a burgeoning purchase market and ponder solutions to issues facing our industry. You can view the first few episodes HERE.

Mortgage Brokers

We are seeing a lot of interest from mortgage brokers regarding access to DPA programs, as they and the industry seem to be coalescing around the notion that solving for down payment is going to be a major driver of purchase business in the near future. All DPA providers should be exploring the best ways to ensure mortgage brokers and correspondents have access to their DPA programs.

FHA Update

On Thursday, June 4th, FHA issued Mortgagee Letter (ML) 2020-16 providing temporary guidance on Mortgage Endorsements for Mortgages in Forbearance. This ML informs mortgagees of temporary endorsement processes that will allow mortgages to be endorsed for insurance if the mortgages have closed in accordance with FHA requirements, but the borrower has requested or has been granted a forbearance post-closing due either directly or indirectly to the COVID-19 National Emergency. Read the Press Release.

Fannie Mae Update

On Wednesday, June 3rd, Fannie Mae announced updates to their FAQs for COVID-19 selling policies to provide additional information about purchasing and refinancing loans for borrowers with a forbearance, loans that come out of forbearance before sale to FNMA, and more. View the FAQs.

For deeper detail on policies impacted by COVID-19 across the broader industry, see the Mortgage Bankers Association’s (MBA) COVID-19 Single Family Policy Tracker.

May 29, 2020 updates

Interest Rates and Buyer Preparation

As you’ve probably heard by now, interest rates have been going down. We hinted last week that we were beginning to see this trend among Housing Finance Agency (HFA) products, and that trend continues.

On a related note, we’re hearing from many lenders that purchase lead and loan application volume is up — perhaps way up — from recent months and even Q42019. This begs the question…is a purchase wave close?

Keep tabs on HFA programs and the many other Down Payment Assistance (DPA) options out there. The consensus seems to be that solving for down payment is going to be critical to injecting momentum into the purchase pipeline for the industry.

HFA Training & File submissions

Many HFAs are announcing lender training webinars, in particular on file submission processes and requirements. As file submission turn times occasionally fluctuate, and in an effort to keep the pipeline moving forward without delay or disruption, these training sessions are designed to provide a refresher or update on policies and procedures related to pre- and post-closing file submissions. We encourage participating lenders to attend!

A Note on Local DPA Providers

Every state and local HFA has remained open for business through the COVID-19 pandemic. As you likely know, we at Down Payment Resource (DPR) track all of the local (municipal, local non-profit, local housing authority, etc.) DPA providers and their programs as well.

COVID-19 responses caused many municipal and non-profit offices to send staff home to work remotely, or in some cases even close their doors temporarily. We’ve tracked and reported on the impact this has had on some local DPA providers and their ability to continue to offer their homebuyer programs. We’re happy to report we’re now seeing more municipalities begin to catch up and even open up in many states.

Fannie Mae (FNMA) Updates

FNMA Lender Letter LL-2020-03 was updated this week to outline additional requirements for borrowers using self-employment income to qualify.

May 22, 2020 updates

Some Good News

This week we saw a number of Housing Finance Agencies (HFAs) announce lower interest rates on bond-funded 1st mortgage products — some are hovering around or even below 3%.

While TBA-funded programs may not be as impacted or restricted in terms of minimum FICO, income limits or calculation methods, and other requirements, early payment default (EPD) and forbearance concerns still rule the news for lenders providing HFA products.

EPD/Forbearance

The Federal Housing Finance Authority (FHFA) announced their forbearance payment deferral plan last week, which enables servicers of Fannie Mae and Freddie Mac loans to add missed payments onto the end of the loan at sale, refinance or maturity.

Fannie Mae announced changes to both Lender Letter LL-2020-03 and Lender Letter LL-2020-06 related to COVID.

Some lenders are pausing participation in HFA programs, particularly due to tight loan delivery schedules and EPD/forbearance risk between closing and loan purchase. To help mitigate that risk, this week many HFAs issued clarification and tips regarding loan delivery, offered best practices, and scheduled loan delivery tutorials and webinars. A few HFAs lifted their daily reservation caps, file submission timelines are being streamlined, and some HFAs announced they are working with their master servicers to expedite loan pooling frequency to help their lender partners.

Below are some of the loan delivery best practices communicated this week:

Deliver loans as quickly as possible after closing, preferably within 5 business days.
Ensure verbal employment re-verifications (VVOEs) and income verifications are present.
Remember the 2nd mortgage assignment and related endorsements.
Confirm gross and net 2nd mortgage amounts are disclosed on the first mortgage LE/CD, if applicable.
Train operations and fulfillment staff to ensure they understand current and changing requirements.

A Holistic View

Big picture, 81% of all homebuyer programs nationwide are currently funded and accepting applications. Just under 2% are temporarily suspended due to the impact of COVID-19. Every state and local housing finance agency, along with more than 1,000 city, county, and nonprofit DPA providers, are open for business and working together to serve homebuyers.

May 15, 2020 updates

Overview & Trends

While HFAs continue to react to COVID-related agency and master servicer policy changes, several HFAs announced reduced interest rates over the last week. Additionally, while not COVID-related, 2020 income and purchase price limits are rolling out fast now.

Among local DPAs, some municipal and nonprofit providers said that the companies that provide required inspections are closed during COVID, potentially delaying closing for an otherwise funded and available program.

Some small cities/non-profits are furloughing staff, potentially impacting availability of programs due to lack of staff to process DPA transactions. We’re monitoring the near-term and long-term implications and trends.

Conversely, we continue to hear from many municipal and nonprofit DPA providers that consumers are still buying houses through their DPA programs.

Federal Housing Administration (FHA): On May 14, 2020, FHA published Mortgagee Letter (ML) 2020-14, Extension of the Effective Date of Mortgagee Letter 2020-05, Re-verification of Employment and Exterior-Only and Desktop-Only Appraisal Scope of Work Options for FHA Single Family Programs Impacted By COVID-19. The Mortgagee Letter announces an extension of the effective date of the guidance contained in ML 2020-05, which provides flexible alternatives for re-verifying a borrower’s employment and conducting appraisal reviews while physically-distancing during the Presidentially-Declared COVID-19 National Emergency.

As outlined in ML 2020-14, FHA’s extension of appraisal guidance is effective immediately for appraisal inspections completed on or before June 30, 2020. The extension of re-verification of employment guidance is also effective immediately for cases closed on or before June 30, 2020.

Freddie Mac (FHLMC): Freddie Mac Bulletin 2020-15 announced the terms of COVID-19 Payment Deferral and elaborated on the differences from a standard payment deferral.

Fannie Mae (FNMA): Fannie Mae issued Lender Letter LL-2020-07, COVID-19 Payment Deferral, on May 13, 2020. Servicers will use this new workout solution to help homeowners impacted by COVID-19 financial hardships return their mortgage to current status after up to 12 months of missed payments. Designed to be simple and efficient for both servicers and borrowers, this solution moves the amount of the missed payments to the end of the loan.

Fannie Mae Lender Letter LL-2020-02, Impact of COVID-19 on Servicing, has been updated to address reclassification of MBS mortgage loans in the 2007 Trust Agreement, property inspections during forbearance plans, foreclosure and bankruptcy moratorium extension, and post-forbearance workout options update.

The COVID-19 temporary appraisal flexibilities have been extended through June 30. Lenders and appraisers can find details on the temporary appraisal guidance, video tips for using the flexibilities, FAQs, and more resources on Fannie Mae’s Appraisers page.

US Bank: See Seller Guide Update SEL-2020-039 updated May 11, 2020, regarding Mortgage Loans in Early Forbearance. See SEL-2020-034 for original notice. For additional information and requirements associated with appraisal flexibilities, please see US Bank Seller Guide Updates 2020-021, 2020-022 and 2020-032.

May 7, 2020 updates

This week, we aren’t seeing as many new updates from DPA providers. HFAs continue to make some program updates regarding DTI and credit score as a result of Fannie Mae announcements. A few small DPA providers also noted that any typical program revisions or changes may be delayed due to COVID-19. As always, we’ll continue to monitor and capture those changes as they are released.

Fannie Mae: Temporary policies extended to June 30: Fannie Mae updated the Impact of COVID-19 on Originations Lender Letter (LL-2020-03) to extend the temporary policies to June 30, and added topics on unemployment benefits as qualifying income, furloughed borrowers, suspension of representation and warranty relief for employment validation through the Desktop Underwriter® (DU®) validation service, sale of loans aged six months or less, and more. Fannie Mae also updated Lender Letter LL-2020-04 to extend the temporary appraisal flexibilities until June 30.

Forbearance Updates

Wyoming Community Development Authority (WCDA): On May 4, WCDA announced they will continue to purchase qualifying loans and will not enforce the early default penalties for loans requesting Forbearance during the COVID-19 pandemic.

The loan must be originated and closed in compliance with applicable law, the WCDA Seller Guide, PL Form 105-Mortgage Purchase and MCC Issuance Agreement, and underwritten to established guidelines. The loan must be insured or guaranteed. The borrower must attest to or otherwise inform WCDA he or she has suffered financial hardship caused directly or indirectly by COVID-19 and is requesting forbearance. Lenders are asked to have the borrower contact WCDA with any concerns regarding forbearance.

Agency Updates

Texas Department of Housing & Community Affairs (TDHCA): Effective May 1, 2020, TDHCA has suspended the Fannie Mae HFA Preferred Program until further notice. See the revised TDHCA Lender Guide.

Pennsylvania Housing Finance Agency (PHFA): Issued their 2nd Quarter Interim COVID-19 Programs Update for lender partners.

Washington State Housing Finance Commission (WSHFC): Effective with reservations beginning May 18, 2020, FHA/VA/USDA Home Advantage loans with DTI ratios between 45.01% and up to 50% will no longer be serviced by Lakeview Loan Servicing and will be switched to Idaho Housing & Finance Association (IHFA). These loans will also require a 660-credit score to be eligible under the program, for all borrowers. The minimum credit score for FHA/VA/USDA Home Advantage loans at or below 45% DTI remains unchanged at 620 and will continue to be serviced by Lakeview Loan Servicing. No other Home Advantage Program loans will be impacted by these changes. No changes are being made to House Key Opportunity program loans.

Alabama Housing Finance Authority (AHFA): Effective beginning the week of May 11, 2020 AHFA will resume their bi-weekly, Wednesday — Friday, purchase schedule.

May 1, 2020 updates

As HFAs and other DPA providers adapt to rapid change, we are seeing some program tweaks, temporary overlays, pricing adjustments, and adjustments to changing agency and master servicer policies. However, we have seen little impact on the overall availability of homebuyer assistance programs. Most DPA providers are open for business virtually. A small few programs have paused their application or reservation process, and we’re tracking those with our newly added “Temporarily Suspended” funding status indicator, currently representing less than 1% of the total programs. We applaud HFAs and DPA providers for their diligence and commitment to continuity.

US Bank: Early Forbearance: On April 27, 2020, U.S. Bank Home Mortgage—HFA Division released Seller Guide Update SEL-2020-034 announcing updated policies related to mortgage loans in early forbearance.

Fannie Mae: Update to COVID-19 Impact on Servicing Lender Letter: Fannie Mae updated Lender Letter LL-2020-02, Impact of COVID-19 on Servicing, reinforcing their commitment to limit servicer advances of principal and interest to four consecutive missed monthly payments for qualifying mortgage loans. Fannie Mae is evaluating operational changes that will become effective for August 2020 remittance activity, and will provide additional guidance in the coming weeks. Read Fannie Mae LL-2020-02.

Agency Updates

Utah Housing Corp: Due to current market conditions and increased risk to Utah Housing associated with NoMI loans, Utah Housing is suspending its conventional NoMI Loan program effective for all Mortgage Purchase Agreements (MPA) requested on or after June 1, 2020.

Minnesota Housing: To help lenders calculate Minnesota Housing program eligibility income, Minnesota Housing has added a COVID-19 Income Guidance Coversheet to the Start Up Eligibility Income Worksheet and added clarifying guidance to the Start Up Eligibility Income Worksheet on the following income and deductions:

Employer notice for ending additional pay
Unreimbursed job-related expenses
Adoption assistance/subsidy for children with special needs
Gambling losses

Chenoa Fund/CBC Mortgage Agency: Due to the many risks associated with the current economic environment, beginning May 4, 2020, CBC Mortgage Agency will require a Mortgage Insurance Certificate on all FHA loans prior to purchase.

HFA Temporary Overlays

Delaware State Housing Authority (DSHA): Effective May 4, 2020, DSHA is making a temporary restriction on all Government (FHA, VA, and USDA) loans: Maximum Debt to Income Ratio (DTI) of 45% for borrowers with FICO scores below 700. The DTI restriction does not apply for borrowers with FICO scores of 700 or above.

Household income limits for all DSHA Homeownership Loan Programs and Foreclosure Prevention Programs are increasing. Review the most recent Program Notice found on the Lenders Resource Website for most recent program guidelines as well as effective program income limits.

Texas State Affordable Housing Corporation (TSAHC): Effective May 4, 2020, all government loans reserved with TSAHC on or after May 4, 2020, with total DTI’s greater than 45%, will be required to have a minimum 700 representative credit score. Please check our website and lender portal daily and bookmark TSAHC’s new COVID-19 resources page specifically for participating lenders.

Golden State Finance Authority (GSFA): Effective for all GSFA Platinum Program reservations made on or after April 27, 2020, FHA loans will require a minimum FICO of 660. GSFA Platinum Program Term Sheets have been updated. See the GSFA Platinum Participant Guide.

April 23, 2020 updates

Increased HFA Volume

Longer turn around times: Maryland Department of Housing and Community Development announced on their April 22 rate sheet “that due to the increase in volume, our turnaround times have changed. Current turnaround time for initial review is 48 hours and conditions is now four business days.” While the turn times are longer, it’s important to note that they are open for business, serving their partners and customers, and volume is up.

Forbearance Updates

FHFA Announcement: On April 22, FHFA announced that Fannie Mae and Freddie Mac will purchase qualified loans in forbearance to keep lending flowing. The loans included in the plan are purchase loans and rate and term refinances only; no cash out refinances may be delivered while in forbearance. Loans are also subject to loan-level price adjustments (LLPAs).

Fannie Mae Forbearance Policy Update: Fannie Mae will temporarily accept delivery of loans in forbearance that meet specific eligibility requirements and with payment of a loan-level price adjustment, as described in Lender Letter LL-2020-06. Loan Delivery and EarlyCheck™ and their business rules were updated to support the delivery of loans in forbearance due to COVID-19.

ServiSolutions Forbearance Compliance Update: Effective immediately, upon delivery to ServiSolutions, a Lender Forbearance Attestation will be required for all loans submitted for purchase as of April 21, 2020, including existing pipeline. See the Lender Forbearance Attestation document and contact Lisa Treece at ltreece@ahfa.com for more information. Note: AHFA will not hold up any of the purchases for this week but need lenders to e-sign and send them in going forward.

South Carolina Housing Forbearance Policy: Given the seriousness of the COVID-19 situation and the impact on the economy, SC Housing is providing relief to lending partners that implement additional safeguards and practices. Effective for all closed loan files delivered to SC Housing on or after May 1, 2020, SC Housing will not consider COVID-19 forbearance plan as an early payment default, provided the lender obtains the following documentation: verbal verification of employment (VVOE) 24 hours prior to closing in addition to documentation of employment income and Borrower(s) execute a COVID – 19 Certification at closing attesting that COVID-19 has not impacted the employment status of the borrower or the ability to make a mortgage loan payment in a timely manner. See a sample document and contact mortgage.production@schousing.com to learn more.

Temporary FICO Overlays

Lakeview Servicing FICO Overlay: On April 22, Texas State Affordable Housing Corp (TSAHC) announced a temporary overlay for all government loans reserved on or after May 4, 2020. Total DTI’s greater than 45%, will be required to have a minimum 700 representative credit score. Learn more on TSAHC’s COVID Page.

HFA Policy Updates

Pennsylvania Housing Finance Agency (PHFA): Update to appraisal policies added to their PHFA COVID FAQ page.

State of New York Mortgage Agency (SONYMA) Loan Delivery Policy: To accommodate lenders unable to ship original mortgage documents during this time, SONYMA will not require the original Note and Recapture Notification & Mortgagor’s Affidavit to be delivered prior to loan purchase. However, Lenders must still upload other required documentation to BlitzDocs.

April 17, 2020 updates

Local DPA programs: While some municipal and non-profit DPA providers are pausing (temporarily suspending) their DPA programs, we’re seeing a majority of local DPA providers – certainly outside of COVID-19 hot spots – remain open for business (virtually) and accepting applications. Remote work may slow the application process in some cases, but many are doing all they can to support their pipeline of homebuyers as well as their real estate and lending partners. The Down Payment Resource database now includes a new program funding status called “Temporarily Suspended” to reflect this status of any agencies/programs.

Verification of Employment (VOE): Many HFAs, like Georgia Dream, provided a notification regarding the ability to use temporary flexibilities and alternatives to the verbal VOEs and the guidance on the use of IRS Transcripts per Fannie Mae and Freddie Mac.

Key HFA Updates

MassHousing added two additional updates to their 2020.04 and 2020.05 Announcements regarding FHA insured mortgage products with DPA features and temporary underwriting flexibilities for Fannie Mae, Freddie Mac. MassHousing will temporarily suspend DPA on FHA insured loans for new locks effective April 7. The MHM FHA mortgage without DPA will still be available during the suspension.

Virginia Housing Development Authority (VHDA) announced Loan Level Price Adjustments (LLPAs) will apply to the VHDA Fannie Mae Reduced MI Program when qualifying income exceeds 80% of Fannie Mae limits.

New Hampshire Housing Finance Authority announced updates April 14 regarding underwriting, forbearance and the Home Flex Plus option, including a new requirement that the lender verbally reverify each borrower’s income just before closing. It was followed by a revision on April 16: “To make it easier for lenders, we have revised the required lender certification concerning the forbearance issue. This required certification is Attachment B in that Lender Notice. If you have any questions, please contact Ignatius MacLellan at 603.310.9270 or imaclellan@nhhfa.org.”

CalHFA: In anticipation of the Qualified Mortgage (QM) patch expiring and volatility in the Capital Markets, CalHFA announced that effective for all loans rate locked on or after May 1, 2020, the maximum total Debt-to-Income (DTI) ratio for all eligible borrowers for a CalHFA loan cannot exceed 43%, regardless of the automated underwriting decision or compensating factors.

Washington State Housing Finance Commission (WSHFC) announced an expansion to their HomeChoice Downpayment Assistance Program. All eligible households at or below 100% area median income (AMI) may receive up to $15,000 in assistance. Previously, the maximum loan amount under the HomeChoice program was tiered ($15,000, $12,500, or $10,000) and served borrowers with incomes at 50% and below, 50% – 80%, and 80% – 100% of AMI respectively.

Minimum credit score increases: Alabama HFA’s AL Step Up program minimum FICO will be 640, but Mississippi Home Corporation (MHC) Smart Solution program credit score remains a minimum of 620.

Missouri Housing Development Corporation’s (MHDC) loan servicing company, ServiSolutions, adopted a new Minimum Credit Score policy of 640 on MHDC loans they will purchase.

Purchase Policy: Georgia Dream Purchase Policy Update: Georgia Department of Community Affairs provided clarification on their purchase policy, specifically regarding note delivery and purchase timelines as well as non-purchase of closed loans and delinquent loans.

Chenoa Fund Forbearance Announcement: Chenoa provided clarification on COVID-19 Forbearance Agreements and Early Payment Default Penalties. For all FHA loans locked on or after February 2, 2020, CBC Mortgage Agency will not charge an EPD penalty to a correspondent if a borrower enters into a forbearance agreement due to COVID-19 during the contractual EPD period provided that following the forbearance period the borrower resumes on-time payments and is determined to qualify for a partial claim under Mortgagee Letter 20-06. On all conventional loans and FHA loans locked prior to February 2, 2020, assessment of EPD penalties will be handled on a case by case basis. For loans scheduled to be sold to CBC Mortgage Agency, to avoid any potential complications with a loan purchase, correspondents must consult with CBC Mortgage Agency prior to initiating a forbearance agreement with a borrower.

April 10, 2020 updates

Early Payment Default / Repurchase / Forbearance: We’re watching this closely as guidelines change or are clarified/confirmed.

New Hampshire Housing announced that they are working on a lender notice regarding forbearance under the CARES Act, but for now they are requesting lenders take steps to reduce shared risk. New Hampshire Housing’s April 8th Lender Notice discusses this briefly along with a temporary suspension of the Home Preferred program.

The Colorado Housing Finance Agency (CHFA) communicated their Early Payment Default policy in detail to lender partners Thursday, April 9 and lenders can check with their CHFA business development rep for more. CHFA also confirmed they continue to accept, process, and purchase home mortgage loans and they are still seeing $10M-$15M in daily reservations.

State Housing Initiatives Partnership program (SHIP): Many SHIP administrators in Florida are still open for business (remotely) and accepting applications. Remote work may slow down the process in some cases, but most SHIP administrators with funds are still open to new applicants.

HFA Virtual Updates: Louisiana Housing Corporation (LHC) hosted a remote update call this week with their staff on camera to reassure their partners they are open for business. Congrats to LHC for their creative and proactive update session!

New Temporarily Suspended DPA category: In the Down Payment Resource database, we added a new program funding status called “Temporarily Suspended” to reflect this temporary status of any agencies/programs who are closed and not accepting applications only due to COVID-19. We will add alerts and notes to any impacted programs to capture the latest news and policies.

FHA Insured Mortgage Products: MassHousing will temporarily suspend down payment assistance on FHA insured loans for new locks effective April 7th. Accordingly, MassHousing will temporarily not price or accept locks for the FTHB FHA and WFA FTHB FHA mortgage products on or after the effective date.

Fannie Mae Reduced MI Program: Virginia Housing Development Authority (VHDA) announced that that new loan applications dated on and after April 10, 2020, Fannie Mae’s Loan Level Price Adjustments (LLPAs) will apply when qualifying income exceeds 80% of Fannie Mae’s Published AMI Limit until further notice.

Other important announcements from Washington D.C.:

USDA Rural Development announcement: USDA Implements Immediate Measures to Help Rural Residents, Businesses and Communities Affected by COVID-19.
FNMA Lender Letter 2020-03: Guidance on a number of important topics related to or in response to COVID-19.
Freddie Mac Bulletin 2020-5: Guidance on a number of important topics related to or in response to COVID-19.
FHA Mortgagee Letter 2020-05: Guidance on a number of important topics related to or in response to COVID-19.
2020 HUD Income Limits: Posted and effective as of 4/1/2020. We are watching for adoption of 2020 limits across agencies and programs.

April 6, 2020 updates

US Bank announces FHA loan overlays

Effective April 6, US Bank, a master servicer of Housing Finance Agency (HFA) programs, implemented three overlays to FHA loans through Housing Finance Agencies:

Elimination of manual underwriting
Elimination of FHA Streamline refinance
For FHA loans with a FICO < 660, 1-month reserves and 6-months current employment history required.

Chenoa Fund suspends conventional DPA programs

Chenoa Fund will temporarily suspend its conventional DPA programs due to Fannie Mae’s policy regarding loans in forbearance. All conventional loans locked prior to the end of business Monday, April 6 will be honored. Any conventional loans registered but not locked by the end of business today will be canceled. This announcement does not affect any of Chenoa Fund’s FHA offerings.

April 3, 2020 update

Fannie Mae suspends HFA Preferred Risk Sharing program

A few state housing finance agencies have notified their partners that on Tuesday, March 31, Fannie Mae suspended its HFA Preferred Risk Sharing program. Rates for HFA Preferred Risk Sharing mortgages are typically slightly higher to offset the no-MI benefit. HFAs state that the HFA Preferred program with MI option remains unchanged. We are monitoring HFAs for this announcement and so far have heard from Minnesota Housing, WHEDA in Wisconsin and Springboard CDFI that they have suspended Risk Sharing reservations.

March 26, 2020 update

Impact to rates, rate locks and yields

We are seeing mixed reactions, but market volatility and sudden liquidity are clearly impacting rates, rate locks, and yields. Among state and local HFAs, we are seeing some hit pause on certain products or pricing options, but they are all working diligently to keep their doors and lock desks and operational staffing running at their fullest remote capacity. Last week was particularly difficult in terms of the issues noted, and while we can’t predict next week, we are confident that HFAs are doing all they can to support lenders and borrowers and most will continue to offer programs to homebuyers.

March 20, 2020 update

Transition to online homebuyer education and counseling

At Down Payment Resource, we are updating our database as soon as changes are announced. Here are a few early trends:

Migration of homebuyer education and counseling to online platforms only.
Delays in processing of DPA program applications due to remote work and staff shortages.
Interim accommodations for eClosings and eSignatures in some cases.
Suspension of rate locks, reservations and availability of certain DPA program or pricing options.

Full message from Down Payment Resource CEO, Rob Chrane.

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