Fannie Mae Changes Owner Education Requirements


Fannie Mae announced on Wednesday that starting in 2022, it will allow third parties to meet the home ownership education requirement on certain affordable mortgages.

Third-party homeownership education providers will still need to align with national industry standards for homeownership education and counseling or Department of Housing and Urban Development Housing counseling program, if not from a HUD approved counseling agency.

Since 2015, Fannie Mae has required borrowers to complete the course by Homeownership Framework, which started in 2012 as a partnership between Housing Partnership Network and Minnesota Home Ownership Center. In 2019, Fannie Mae started waiving the $ 75 fee for the Framework course.

A spokesperson for Framework said more than 1.2 million home buyers have used its educational program.

“We are pleased that Fannie Mae has used Framework to prove the effectiveness of homebuyer education and as a social enterprise we applaud all efforts to put homebuyer education in the hands of homebuyers. ‘more people,’ said a spokesperson for Framework. The spokesperson added that obtaining a Framework certificate “saves lenders time and hassle at the last minute before closing because it is more flexible and widely accepted.”

Fannie Mae is currently asking first-time home buyers who buy a home with over 95% financing to take a homeownership training course. It’s also a must-have for first-time homebuyers who use Fannie Mae’s flagship affordable finance program, HomeReady, which offers very low down payments. The same goes for first-time home buyers who use Fannie Mae’s HFA Preferred program, which is administered by housing finance agencies for low to moderate income borrowers.

Fannie Mae also requires the course for borrowers without a credit score, although this is not typical, as the average borrower in the mortgage giant’s loan portfolio now has a FICO score of 752. The course is also mandatory if borrowers use non-traditional sources of credit, such as rental, utility or child care payments, to build a credit history.

Homeownership education, unlike loan counseling and other programs to help borrowers keep their homes, aims to prepare potential borrowers for the complex process of buying a home. Buying a home can be especially intimidating for first generation home buyers who don’t have family members to guide them through the process.

Potential borrowers have persistent misconceptions about what is needed to qualify for a mortgage, which can create a barrier for first-time homebuyers. A 2019 Fannie Mae study found that borrowers still overestimate the minimum down payment and credit score for mortgage financing.

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