Affordable lending-product enhancements and new condo guidelines can help originators

Thomas J. Collins, sales director in the community and multicultural lending channel, Fannie Mae

As published in Scotsman Guide's Residential Edition, February 2006.

Maintaining your competitive edge in these changing times requires hard work and market savvy. Just as necessary are flexible origination options that meet the needs of potential homebuyers.

Two trends -- record population growth among black Americans, Hispanic Americans and Asian Americans and the rebirth of condominiums -- present real opportunities for mortgage originators. Originators who wish to maximize these opportunities to better position their business for market expansion and future growth could have help from Fannie Mae, which has enhanced its products and streamlined its condominium guidelines.

Making homes more affordable

According to the U.S. Census Bureau's interim population-growth estimates, between 2000 and 2020 the number of Hispanics in the United States will increase by 24.1 million residents, a jump of 67.8 percent. In that same period, the population of blacks will grow by 9.5 million residents, an increase of 26.7 percent, and the number of Asian Americans will increase by 7.3 million residents, a gain of 68.4 percent.

Figures also show that while progress has been made in increasing the low homeownership rates among these groups, little progress has been made in closing the homeownership gap.

To help meet this challenge and help provide origination opportunities, Fannie Mae has made significant changes to MyCommunityMortgage. This mortgage product was created to make homebuying more affordable for low- and moderate-income borrowers and those living in underserved communities.

Responding to lenders' requests, Fannie Mae has reduced mortgage-insurance requirements for MyCommunityMortgage by more than 40 percent, thus providing significant savings in borrowers' monthly mortgage payments. For example, a homebuyer with a $150,000 mortgage at a 6-percent interest rate could expect to save about $46 per month at standard mortgage-insurance rates or about $64 per month at A-paper rates. Rates may vary depending on the mortgage-insurance company and other factors.

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