Freddie Mac is streamlining down payment assistance programs with standardized mortgage documents.
Leaders at the GSE say subordinate lien documents currently vary greatly by lender, causing confusion. These new documents will “increase clarity, consistency and accessibility” of DPA programs across the country, and can be used by lenders working with the HFAs at all levels.
“We know that standardization has increased efficiency, lowered costs, and improved many areas of the mortgage industry,” said Danny Gardner, Single-Family Senior Vice President of Mission and Community Engagement at Freddie Mac.
“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.”
Standardization should bring efficiency and cost-saving to the industry, as well as encourage more lenders to offer DPA programs.
“This effort by Freddie Mac compliments NCSHA’s HFA1 Affordable Homeownership Lender Toolkit online resource, which enables home mortgage lenders to partner more efficiently with state housing finance agencies in providing mortgage loans and down payment assistance to lower-income home buyers,” Stockton Williams, Executive Director, National Council of State Housing Agencies, noted.
Documents for at least nineteen states and D.C. will be available by the end of 2023.
The states currently covered are Alabama, Iowa, Arkansas, Massachusetts, Arizona, Minnesota, California, New Mexico, Colorado, South Dakota, Connecticut, Tennessee, Idaho, Virginia, Illinois, and Washington.
The announcement comes just weeks after Freddie Mac announced DPA One, a free online resource designed to help housing professionals match DPA programs to buyers. DPA programs can help ease the initial financial burdens of homebuying, giving buyers more breathing room when purchasing a home.
First-time homebuyers are particularly struggling to save for a down payment, pushing the dream of homeownership further out of reach. The median down payment in the U.S. is up more than 60% from pre-pandemic levels.
At the same time, rents and inflation soared throughout 2023, making it even more difficult to put money aside month-to-month.
“You’re faced with that situation of, do I wait, do I put off my dream? Or do I possibly take on a situation where I’m eating ramen for the rest of my life?” Jeffrey Bowers, a homebuyer, told Money.
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