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.
Weekly DPA Trends
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 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
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.
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.
- • How will forbearance play out and impact servicing? Reports continue to indicate that more borrowers than expected continue to make their mortgage payments through forbearance. However, costs mount for servicing operations as payments are missed and advances are made to cover them.
- • Can employers regain traction and budget to bring the unemployed workforce back onto payrolls? And soon enough to prevent deeper financial distress and possibly compel homeownership?
- • Will interest rates remain this low long enough to sustain recovery and compel home purchases?
- • 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.
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.
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 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:
- • Deliver our packages
- • Provide our groceries
- • Care for our loved ones in long-term and nursing home facilities
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 firstname.lastname@example.org 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 email@example.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 firstname.lastname@example.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
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
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.
Down Payment Resource is available for media interviews on topics related to down payment assistance, first-time homebuyers and affordable housing.
Please contact Melinda Harris at email@example.com.
Real Estate and Lending Professional Resources
Down Payment Resource live trainings
March 2020 Down Payment Report
NCSHA COVID-19 Resource page
NALHFA COVID-19 Resource page
National Housing Conference (NHC) COVID-19 Resource page
Fannie Mae Resource page
Freddie Mac Resource page
Mortgage Bankers Association Resource page
Learn how we help our business partners connect homebuyers to down payment help they need to buy a home.