Educating homebuyers – and staying by their side – helps all of us

Homeownership advisors are an untapped resource able to help credit unions prepare members for sustainable homeownership.

“This educational approach is important in supporting borrowers in getting prepared, making choices that are right for them, and sustaining homeownership for the long run,” says Anne McCulloch, Fannie Mae’s senior vice president for credit and housing access.

Case in Point

Pre-purchase or homebuyer education is available through HUD-approved non-profit housing counseling agencies. These agencies help consumers – sometimes for a fee, usually less than $200 – decide the right time to buy, develop budgets, strengthen credit, find down payment assistance, and get prepared for the challenges of owning a home.

“Some consumers will ask us to just review their loan documents and go on their way. While others work with us longer term because they have multiple credit issues and may not be ready to buy,” explains Simone Griffin, vice president of Affiliate Relations at HomeFree-USA. “We offer value to every homebuyer,” she adds.

And it works. A study of the two-year loan performance of more than 18,000 pre-purchase counseling clients from the NeighborWorks America’s network found clients who received counseling were one-third less likely to become 90 or more days delinquent in the two years since obtaining their loan when compared to similar borrowers who did not receive pre-purchase counseling. 

Road to Homeownership

The mortgage industry is starting to recognize that value. When Fannie Mae introduced its 3 percent down HomeReady mortgage in 2015, it required borrowers to take an online education course provided by Framework Homeownership.

The $75 course gets high marks from first-time and repeat homebuyers. Framework employs motion-graphic videos and homebuyer stories, among other content. “Most people complete it within a day of signing up,” says Framework’s president Danielle Samalin. “One of the most common remarks we’d hear from consumers is ‘I wish I’d taken the course earlier in the process,’” she says.

Fannie Mae recently widened its support for borrowers who face barriers. They can complete 1-on-1 counseling with a HUD-approved housing counseling agency.

“These borrowers have gone through counseling that includes a thorough review of their budget and credit, so we have more confidence they can sustain that level of debt to income ratio (DTI),” says McCulloch. “We think this change opens the doors to homeownership for some borrowers who were unable to qualify in the past based on their DTI. It’s a plan B. They can complete counseling, and move into homeownership when they are ready,” she adds.

Quality education for homebuyers and homeowners is central to Fannie Mae’s affordable lending strategy “because when someone buys a home they can afford, that they’ll live in for decades, we all win,” says McCulloch.

Tammy Trefny

Tammy Trefny

Tammy J. Trefny is a Senior Account Manager with Fannie Mae’s Customer Engagement- Business Development Team.   Her role includes working with lenders interested in getting approved to do business ... Web: www.fanniemae.com Details