Fannie Mae and Freddie Mac’s definitions and policies regarding first-generation homebuyers are concerning, America’s Credit Unions joined the Housing Policy Council and other trades in writing to the Federal Housing Finance Agency (FHFA) Friday. Comments were sent in response to FHFA’s request for input on Fannie and Freddie’s Housing Finance Plans.
Concerns include:
- The narrow definition will unnecessarily exclude people who need the assistance;
- The definition is also too expansive meaning any future mortgage assistance will not adequately target those who are most in need of assistance; and
- The certification form and fact sheets intimate lenders will at some point be expected to verify that both a borrower and parents meet the definition, something the groups believe to be operationally infeasible.
The organizations recommended several changes to improve the effectiveness:
- The definition should require only one borrower to meet the eligibility requirements;
- The definition should require that the buyer and buyer’s parents have never owned a home or purchased a home but lost it to foreclosure.
- They oppose any definition that relies on lender verification of borrower eligibility, particularly any requirement that a borrower’s parents never owned a home or haven’t not owned a home in the last three years; and
- The FHFA should require Fannie and Freddie to conduct quality control analyses of the borrowers and mortgage transactions deemed eligible.
