But there is another, potentially more urgent motivator: Creating special purpose credit programs might help nonbank lenders avoid being labeled a redliner. GSE incentives could encourage nonbank lenders to create special purpose credit programs. Nonbanks, however, are not subject to the law. They could get credit toward passing their community reinvestment act exams, depending on the outcome of that statute’s major rewrite. Why any lender would create a downpayment assistance fund with its own money - rather than that of a state housing finance agency or other source - is not clear from Fannie Mae’s guidance.Ī Fannie Mae spokesperson said that the Selling Guide was updated in response to lender interest in helping prospective homebuyers with downpayment assistance.įor banks, there is a potential incentive for making targeted programs. The loan must also be underwritten under Fannie Mae’s HomeReady program, which is geared toward low-income borrowers, and gives lenders a break on up-front fees if the borrower has a high loan to value ratio and a credit score over 680. The loan must be secured by a principal residence. The borrower must make a 3% contribution from other sources of funding. There are, however, a number of additional caveats for a mortgage loan with a lender-funded grant to be eligible for sale to Fannie Mae. Lender special purpose credit programs - tailored to benefit underserved groups - would fit the bill. According to Fannie Mae’s guidance, “The lender must have a documented program that provides grants for low- to moderate-income borrowers, community development, equitable housing initiatives, or similar initiatives.” The government-sponsored enterprise will start accepting such loans immediately. The change could give nonbank lenders a way to guard against redlining accusations. Fannie Mae will now buy mortgage loans with lender-funded grants, including down payment assistance, closing costs or financial reserves.

Fannie mae guides on second notes