Fannie Mae's most successful affordability product line is about to get upgraded.
MyCommunityMortgage, products intended for low-to-moderate income borrowers, will undergo a series of changes this summer, Fannie recently announced.
In August, MyCommunityMortgage will be part of Fannie's Selling Guide, enabling it to be a standard product offering to all approved lenders, eliminating the requirements for special approvals, allocation limits, and negotiated contracts, according to the announcement.
Rather than limiting the products to a 30-year term, Fannie said amortization terms of 40 years will be available.
Additionally, borrowers will also have new adjustable-rate options, including 5/1, 7/1 and 10/1 CMT and LIBOR-indexed fixed-period ARMs, according to the announcement.
Fannie said it will offer standard whole loan commitments and mortgage-backed securities pool purchase contracts for delivery of MCM first lien fixed-rate and certain ARMs and will reduce the number of product options requiring different guaranty fees or whole loan pricing.
Also, the requirement of a minimum $500 purchase-borrower contribution will no longer apply and temporary interest rate buydowns will be permitted on MCMs where the rate reduction does not exceed two percentage points, and the rate increases by a maximum of one percentage point per year.
In September, Fannie will reportedly add interest-only options, including 40-year and 30-year fixed-rate mortgages as well as a 5/1 ARM with a 10-year IO period, and a 35-year fixed-rate mortgage with a 5-year IO period.
Among other changes, Fannie said it will no longer require pre-purchase home-buyer education for first-time borrowers.
But Fannie says the changes start as early as tomorrow, when certain Community Seconds will be allowed to be entered as a gift on MCMs rather than a subordinate lien.