1 Working with the GSEs NCSHA HFA Institute January 14, 2016 Speaker: Mark Spates Director of Customer Engagement, Fannie Mae

2 Fannie Mae is Excited About The Opportunities Ahead  Millennials will enter homebuying market in increasing numbers  New household growth driven by traditionally underserved segments  Household growth is projected to rebound over the next 5 years  Minorities expected to continue to account for most household growth Fannie Mae’s Economic and Strategic Research group reports a “demographic sea change” in the housing market, characterized by the rise of the Millennials, increased diversity, and a growing elderly population; and new household growth is being driven by traditionally underserved segments.

3 HFA/Fannie Mae Value Proposition  HFA Preferred performing very well  Continue to enhance HFA Preferred features  Monitor and develop lender networks  Rep and warrant relief  Strong quality control will pay dividends  Rates increasing, may drive more MRB business

4 Becoming a Fannie Mae Seller/Servicer  The HFA Team is prepared to assist any HFA interested in exploring becoming a Fannie Mae approved seller/servicer  Understanding our requirements is a key to success combined with a commitment from your senior management  Approval expands your access to: –Fannie Mae Technology Solutions –Capital Markets Sales Desk –Expanded Execution Options –More Training and Support Services

5 The Approval Process – Application  The HFA Team will work with you through every stage of the process prior to your submission of the on- line application  The first step on the path to approval is to review Fannie Mae’s Seller/Servicer Application.  Fannie Mae has developed multiple tools to facilitate this process: –Path to Approval ToolkitPath to Approval Toolkit –Online Self-Assessment Tutorial – Consult with your HFA Team Account Manager Review the Path to Approval Toolkit Work with your Account Manager and Submit Documentation Become a Fannie Mae Approved Seller

6 Tools to Effectively Manage Risk  Desktop Underwriter™ (DU) – the leading automated underwriting platform in the industry  Early Check™ – provides access to Fannie Mae delivery edits to assist lenders in identifying and correcting potential eligibility and/or data issues early in their processes and prior to loan delivery  Collateral Underwriter™ (CU™) – Proprietary appraisal review application developed by Fannie Mae to support proactive management of appraisal quality. –Gives lenders access to the same appraisal review tool that Fannie Mae uses, at no additional cost.

7 New Borrower Income Flexibilities Non-borrower household income  Non-borrower household member is not on the loan  Non-borrower household member lives in the home  May be considered as a compensating factor in DU only  NOT part of qualifying income Non-occupant borrower  Borrower is on the loan  Non-occupant borrower(s) income is included in qualifying income  Consider income, assets, credit, and liabilities  DU LTV up to 95%; manual underwriting LTV up to 90%  Must meet income eligibility requirements  No limitation on ownership of other property for non-occupant borrowers Example of Non-Occupant Borrower(s): A young couple is buying a home. His parents are willing and able to be borrowers on the loan, but they will not live in the home. For HFA Preferred, the parents’ income will be considered in meeting income eligibility requirements (based on the property location); their income, assets, credit, and liabilities are considered in underwriting; and their income is considered in calculating the DTI ratio.

8 Boarder income  Permissible with 1-unit properties only  Boarder income (relatives or non-relatives):  Up to 30% of qualifying income  Rent paid monthly from someone in shared living quarters Rental income from an accessory unit  Rental income from a 1-unit property with an accessory unit may be used as qualifying income.  Rent is paid monthly  Rent from a separate dwelling unit (as identified by the appraisal) with a kitchen and a bathroom  Note: Accessory unit income added as a new Other Income Type in DU (used in qualifying). New Borrower Income Flexibilities (Continued) Important distinction between Rental and Boarder Incomes:  Rental Income: The home being purchased is a 1-unit property that has a basement apartment, which includes a functioning kitchen and bathroom, that can be rented out.  Boarder Income: A roommate has been sharing living quarters with the borrower for the past 12 months and plans to live in the newly purchased home.

9 Reach more homebuyers Fannie Mae customizable marketing materials  Self service consumer marketing materials available  Reach out to credit worthy homebuyers and educate them about the availability of low down payment options  Customizable to include your company’s logo, contact information, and product name(s)  Materials available on the Fannie Mae website at:  Flyers and frequently asked questions resource materials available in both English and Spanish translations

10 HOME by Fannie Mae™  Fannie Mae consumer app created to support access to homeownership  Informs prospective homebuyers on the home buying process  App includes dashboards, checklists, financial calculators, videos and more  Free interactive app

11 HOME by Fannie Mae™ Video

12 Thank You for making Fannie Mae your Preferred Business Partner Our team is here to serve you! Recognize the power of the Tweet! If you enjoyed this overview make sure to tweet about it. Remember to tag us and use our hashtags (#) #HFAPreferred #creatingopportunities