Freddie Mac wants to standardize and streamline down payment assistance (DPA) programs.
Historically, various DPA programs have employed specific, disparate documentation, causing confusion when interpreting terms and payment arrangements.
“Saving for a down payment continues to be the largest barrier to homeownership for lower-income and first-time homebuyers,” said Danny Gardner, single-family senior vice president of mission and community engagement at Freddie Mac. “We know that standardization has increased efficiency, lowered costs, and improved many areas of the mortgage industry. By embracing standardization and creating a set of industry-wide documents, we are providing clarity and consistency that will enable more lenders to help more individuals and families leverage down payment assistance programs across the country.”
Freddie Mac has developed these standardized subordinate lien documents in collaboration with Fannie Mae and state housing finance agencies (HFAs). By year-end, these documents will be accessible for at least 19 states, followed by availability in the remaining states and the District of Columbia.
This standardization effort complements the National Council of State Housing Agencies' (NCSHA) HFA Affordable Homeownership Lender Toolkit, an online resource facilitating mortgage lenders' efficient partnership with state HFAs to offer mortgages and down payment assistance to lower-income homebuyers. The toolkit, developed by NCSHA and 23 state HFAs, identifies critical features of HFA homeownership programs crucial for lenders when deciding how and where to collaborate with these agencies.
Freddie Mac anticipates that this standardization will attract more lenders to participate in DPA programs. In the current origination environment, numerous lenders have introduced low-down-payment programs and down payment assistance options for first-time homebuyers, including Rocket, Guild, Guaranteed Rate, Zillow Home Loans, Wells Fargo, and CrossCountry.
Freddie Mac's introduction of standardized mortgage documents follows the rollout of its down payment assistance tool, DPA One, in October. DPA One streamlines state programs into a single source, making it simpler for lenders to identify and compare programs for borrowers, thus facilitating their participation in HFA DPA programs. Currently covering down payment assistance programs for 48 of the 50 state housing finance agencies, DPA One is expected to incorporate local and municipal assistance programs for Florida, Virginia, California, and Kentucky by the end of 2023, with plans to expand to other local and state programs throughout 2024.
