The following is from fanniemae.com
Predatory Lending Practices
Steering -- For loans delivered to Fannie Mae, the company expects
lenders will have determined the borrower's ability and willingness to repay the mortgage debt regardless of the underwriting method the
lender uses. In addition, lenders should have practices and procedures to offer mortgage applicants the full range of products for which they
qualify, and should specifically avoid the steering of borrowers to high-cost products that are designed for less creditworthy borrowers if
the applicants can qualify for lower-cost products. Similarly, consumers who seek financing through a lender's higher-priced subprime lending
channel should be offered (or directed toward) the lender's standard mortgage product line if they are able to qualify for one of the standard
products.
Excessive Fees -- Lenders should have their own guidelines and
policies on fees that originators and brokers can charge a borrower, and should apply them consistently. For loans delivered to Fannie Mae, the
points and fees charged to a borrower should not exceed 5 percent, except where this would result in an unprofitable origination (for
example, because of the small size of the loan). In addition, we will not purchase a mortgage that is subject to the requirements of the Home
Ownership and Equity Protection Act of 1994 (HOEPA) that apply to "high-cost" mortgages.
Prepaid Single-Premium Credit Life Insurance Policies -- We will
not purchase or securitize any mortgage for which a prepaid single-premium credit life insurance policy was sold to the borrower in
connection with the origination of the mortgage loan, regardless of whether the premium is financed in the mortgage amount or paid from
the borrower's funds. This does not apply to credit life insurance policies that require separately identified premium payments on a monthly or
annual basis, or to prepaid hazard, flood, or mortgage insurance policies.
Prepayment Penalties -- We will only consider allowing prepayment
penalties under the terms of a negotiated contract, and where the lender adheres to the following criteria: a mortgage with a prepayment
penalty should provide some benefit to the borrower (such as a rate or fee reduction); the borrower also should be offered the choice of
another mortgage product that does not require payment of such a premium; the terms of the mortgage provision that requires a
prepayment penalty should be adequately disclosed to the borrower; and the prepayment penalty should not be charged when the mortgage
debt is accelerated as the result of the borrower's default in making the mortgage payments.
Full-file Credit Reporting -- We believe that it is important for a
borrower's entire payment history to be reported to the credit repositories, since that gives a borrower who has a good payment
record more opportunities to obtain new financing (and better mortgage terms) when the need arises. Therefore, we restated our policy that
lenders, each month, must report to the credit repositories the status of any Fannie Mae loan that they are servicing.
Servicing Practices
-- We generally require servicers to maintain escrow deposit accounts for the monthly deposit of funds to pay taxes,
ground rents, mortgage insurance premiums, etc. In some cases, we will allow servicers to waive the requirement on a case-by-case basis.
However, we suggest that waivers should not be granted in the case of borrowers with blemished credit records, to protect them from
additional risk of default.
Fannie Mae also will broaden its efforts, and challenge the entire
housing finance industry to join us in establishing and enforcing a set of
principles for lending activities in the subprime market to bar predatory
lending practices.
Fannie Mae
Predatory Lending
Alternative Note (PLAN)
What is it?
PLAN is a $2 million pilot mortgage loan
program in Omaha that allows eligible homeowners to refinance their existing
loan. The borrower must qualify for the loan refinance as a result of
engaging in a loan with predatory-like characteristics that limits the
homeowner's ability to pay their loan, due to:
-
Excessively high interest rate without
regard to the borrower's profile
-
Unusually high loan fees, including but
not limited to large pre-payment penalties with no benefit to the borrower
-
Large balloon payment with limited or no
opportunity to refinance under reasonable terms
Who is involved?
The Fannie Mae Nebraska Partnership Office has
partnered with First National Bank of Omaha and Self-Help, the nation's leading
community development financial institution to offer an affordable refinance
product to low- and moderate-income individuals and families.
Family Housing Advisory Services works with
interested clients to prepare them for the process and to provide pre-and
post-purchase counseling.
Who is eligible?
-
Borrowers at or below 100% of HUD's Area
Median Income
-
Homeowners seeking help in order to avoid
foreclosure due to unreasonable loan terms
-
Borrowers who meet the underwriting
guidelines of Fannie Mae, First National Bank of Omaha, and Self-Help
What properties are eligible?
What can it do for homeowners?
Offers homeowners an affordable and flexible
refinance option from their predatory loan, including:
-
Fixed rate, fully amortizing loan
-
Minimum 1% or $500 (whichever is less)
towards closing costs. Additional funds can come from grants or gift
funds
-
One month reserve from borrower's own
funds
-
580 credit score is acceptable
-
Single-qualifying ratio of 45%; exceptions
to 50% will be considered with qualifying budget
-
97% Loan-to-Value; 105% Maximum Combined
Loan-to-Value
-
Financial counseling through Family
Housing Advisory Services
How can I find out more information about
this program and/or apply?
Family Housing Advisory Services - Donna
McFadden - 402-834-1777
First National Bank of Omaha - Diane
Desjardens - 402-341-0500
Fannie Mae Nebraska Partnership Office -
Cynthia Swoops - 402-063-0123
Fannie Mae's Consumer Resource Center -
1-800-7Fannie
Fannie Mae Products
New Mortgage Products
Predatory Lending Alternative Note (PLAN)
PLAN is a $2 million pilot mortgage loan
program in Omaha that allows eligible homeowners to refinance their existing
loan. The borrower must qualify for the loan refinance as a result of
engaging in a loan with predatory-like characteristics that limits the
homeowner's ability to pay their loan, due to:
-
Excessively high interest rate without
regard to the borrower's profile
-
Unusually high loan fees, including but
not limited to large pre-payment penalties with no benefit to the borrower
-
Large balloon payment with limited or no
opportunity to refinance under reasonable terms
Expanded Approval Timely Payment Rewards (EATPR)
Fannie Mae has partnered with lenders so that
they may offer borrowers with past credit problems a more competitive mortgage
option called expanded Approval Timely Payment Rewards. Expanded Approval
is an option in Fannie Mae's Desktop Automated Underwriting Systems that allows
lenders to take a more comprehensive view of a borrower's
creditworthiness. The Timely Payment Rewards feature rewards qual9ifying
borrowers with an interest rate reduction of up to 1% after making timely
payments for 24 consecutive months.
Additional Loan Products
Reverse Mortgages
A mortgage for seniors that accesses home
equity. Borrowers receive funds directly from the lender and repayment of
the loan is deferred until the borrower moves permanently from their home.
The reverse mortgage differs from home equity loans in that there are nocredit/income
requirements, and no requalification.
HomeChoice
HomeChoice is a mortgage loan product that
helps low- and moderate-income Nebraskans who experience a disability obtain a
home loan by offering lower down payment requirements (as little as $500 when
remaining down payment is obtained from a grant or a gift), flexible qualifying
and underwriting standards that look at personal budgets and a history of timely
payments on traditional and/or non-traditional credit, and support from
coordinating agencies.
My Community Mortgage (MCM)
My Community Mortgage is a suite of 1-4 family
CRA and affordable homeownership lending options, with flexible guidelines to
meet challenging affordability and credit needs of low- and moderate-income
borrowers. Special features can include credit scores as low as 600,
nontraditional credit history guidelines, and low down payment and closing
costs.
1% Option PLUS
The 1% Option Plus mortgage loan program with
the Nebraska Investment Finance Authority's (NIFA), Fannie Mae, and local
lenders is an enhanced 97 percent loan-to value (LTV) mortgage option with flexible
credit guidelines. The core features include a minimum contribution of 1%
or $500, whichever is greater, no monthly reserves, lower credit score, and a
higher single qualifying ratio.
