New uniform mortgage documents set to increase efficiency and lower costs
Freddie Mac has rolled out new standardized mortgage documents designed to create consistency in down payment assistance (DPA) programs across the United States.
These documents, used by lenders collaborating with housing finance agencies (HFAs) at various levels, aim to provide uniformity and clarity in DPA programs, which have previously been varied and often confusing.
The lack of standardization in subordinate lien documents for DPA programs has historically led to inconsistency and misinterpretation, creating hurdles in the loan process, it was suggested. Freddie Mac’s initiative is expected to enhance efficiency, reduce costs, and broaden the scope of lenders and borrowers participating in DPA programs.
“We know that standardization has increased efficiency, lowered costs and improved many areas of the mortgage industry,” said Danny Gardner, senior vice president of mission and community engagement at Freddie Mac Single-Family. “By embracing standardization and creating a set of industry-wide documents, we are providing clarity and consistency that will enable more lenders to help more individuals and families leverage down payment assistance programs across the country.”
Stockton Williams, executive director of the National Council of State Housing Agencies (NCSHA), commented on the move: “This effort by Freddie Mac complements NCSHA’s HFA1 Affordable Homeownership Lender Toolkit online resource, which enables home mortgage lenders to partner more efficiently with state housing finance agencies in providing mortgage loans and down payment assistance to lower-income home buyers.”
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The development of these standardized documents was a collaborative effort involving Fannie Mae and state HFAs. By the end of the year, these documents are expected to be available for at least 19 states, with the rest of the states and the District of Columbia to follow.
States currently covered by the standardized lien documents are: Alabama, Iowa, Arkansas, Massachusetts, Arizona, Minnesota, California, New Mexico, Colorado, South Dakota, Connecticut, Tennessee, Idaho, Virginia, Illinois, and Washington.
Additionally, Freddie Mac recently launched DPA One, a platform that consolidates various down payment assistance programs, making it easier for lenders to compare and access these programs. This tool, available at no cost to lenders, housing counselors, and program providers, currently includes programs for 48 of the 50 state housing finance agencies, along with local and municipal programs in several states. The inclusion of more local and state assistance programs is planned throughout 2024.
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