Working families and many key community workers –police, firefighters, teachers, and healthcare workers – from across the nation can now take advantage of Home Possiblesm Mortgages – a new suite of low downpayment mortgage products with flexible credit underwriting standards that is expected to help thousands of families with savings issues or imperfect credit become homeowners, announced Freddie Mac (NYSE:FRE), one of the nation's largest investors in residential mortgages.

"We created Home Possible Mortgages so more lenders can say 'Yes' to more borrowers," said David Stevens, senior vice president of single family sourcing at Freddie Mac. "Home Possible is what our lenders tell us they need to compete in today's market: a flexible, easy-to-use mortgage uniting Loan Prospector's ease and efficiency with exceptionally low-downpayments and flexible credit. Perhaps no other mortgage product launched in recent memory will enable our lenders to reach and help as many additional borrowers as Home Possible."

The new Home Possible Mortgage combines borrower education and early delinquency counseling, zero and three percent downpayment mortgage products and flexible credit requirements so low-and moderate-income borrowers anywhere in the country can get an affordable, low-cost conforming conventional mortgage for a single family property with as little as $500 of the downpayment or closing costs coming from their own funds.

Home Possible Neighborhood Solutionsm Mortgages offers the same flexibility as Home Possible plus special features designed to boost the home buying power of teachers, law enforcement officers, firefighters and health care workers by as much as 30 percent in some cases.

Home Possible and Home Possible Neighborhood Solution Mortgages are available through Freddie Mac's national network of more than 2,000 lenders and 10,000 mortgage brokers using Loan Prospector®, Freddie Mac's automated underwriting service, such as ABN Amro, U.S. Bank and National City Bank.

"Home Possible Mortgages underscore Freddie Mac's determination to fulfill our public mission to expand affordable mortgage opportunities and our conviction that the home is the foundation of America's 'ownership' society," added Robert Tsien, Freddie Mac's senior vice president, mission division. "We will continue to build on Home Possible so our lenders can give borrowers even greater opportunities to achieve their financial goals."

How Home Possible Works
The basic Home Possible mortgage is available either as a 100 percent loan-to-value mortgage that borrowers can use for single-family home purchases and no cash-out refinancing, or as a 97 percent LTV mortgage for one-to-four unit properties. Both the zero and 3 percent downpayment versions of Home Possible allow borrowers to put down as little as $500 from their personal funds towards the down payment and closing costs for a one-unit property. Two-unit properties require borrowers to put in 3 percent of the property's value; 3-4-unit properties and manufactured homes require a 5 percent borrower contribution.

By combining a temporary subsidy buydown with a higher debt-to-income ratio, Home Possible Neighborhood Solution is designed to boost the home buying power of teachers, firefighters, law enforcement officers, and health care workers by as much as 30 percent. For example, a borrower with adequate reserves earning $2761 a month and making a 3 percent downpayment can boost her home buying power from $200,000 to $260,400 by opting for a Home Possible Neighborhood Solution Mortgage over standard 97 percent LTV mortgages, all other things being equal.

Home Possible Neighborhood Solution Mortgages allow for even higher debt-to-income ratios than a typical high LTV mortgage as well as a three-year subsidy buy-down that reduces the initial interest rate as much as 1.5 percentage points in the first year and 0.5 percentage points per year for the next two. The buy downs can come from a wide range of sources, such as gifts or grants. Qualified borrowers can use Home Possible Neighborhood Solution Mortgages to finance 1-2 unit properties in or near the communities they serve.

Both Home Possible and Home Possible Neighborhood Solution Mortgages are available as 15-, 20- and 30-year fixed rate mortgages or as 7/1 or 10/1 adjustable rate mortgages for one-unit properties.

To qualify, borrowers can earn up to their area's median income or – if they earn more than the area median income – can buy or refinance a home in an underserved market area. All borrowers must complete a pre-purchase borrower education program. A 2001 Freddie Mac study found that pre- and post-purchase counseling programs significantly reduce mortgage delinquencies and help more borrowers succeed as long-term homeowners.

In addition, Home Possible borrowers financing a 2-4-unit property may have reserves reduced to two months of mortgage payment; no reserves are required for financing a one-unit property. However, Home Possible Neighborhood Solutions' borrowers must have one-month of reserves, either from their own cash or a gift.

Originators can sell Home Possible Mortgages to Freddie Mac through Cash, Guarantor, or MultiLender executions with servicing retained. Lenders can conduct transfers of servicing with Freddie Mac Tier I or Tier II servicers.

Home Possible Key Features

And you’ll benefit from these exciting features:

* Maximum financing. Up to 100 percent loan-to-value (LTV) for Home Possible 100, up to 97 percent for Home Possible 97, and up to 105 percent total LTV (TLTV) with Affordable Seconds® for both products.
* More mortgage product choices. 15-, 20- and 30-year fixed-rate mortgages and 7/1 and 10/1 ARMs. Plus, use Home Possible 100 for 1-unit primary residences, and Home Possible 97 for 1- to 4-unit primary residences, including manufactured homes.
* Options for any market. Use for purchase and no cash-out refinance transactions.
* Leverage technology for easy implementation. Use Loan Prospector® for streamlined borrower assessment at the point of sale, or, as we like to say, the point of Yes! And, use the selling system for easy secondary market sale beginning March 1.
* Sale options to meet your individual needs. Sell for cash, or choose a Guarantor or MultiLender Swap securities execution.
* Special products to serve borrowers who work in your community. Use Home Possible Neighborhood Solution 100 and 97 Mortgages, with additional flexibility for teachers, firefighters, law enforcement professionals and healthcare workers.
* Early Delinquency Counseling. Counseling must be provided to a delinquent borrower by an eligible Servicer or a nonprofit third-party homeownership counseling agency.

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