Has it been difficult for you to identify mortgage lenders ready to work with your homebuyers? We know that, particularly for programs with long-term affordability restrictions, finding mortgage lenders who understand your program and are willing to lend to your potential buyers can be a big challenge. Sometimes lenders are unfamiliar with unconventional legal agreements and program structures, or unsure if these loans can be sold on the secondary mortgage market.
As Grounded Solutions Network’s Membership Specialist, I hear about these challenges regularly from our members and partners in the field, so I’d like to take this opportunity to highlight a few ways you can make developing lender partnerships easier:
1. Leverage tried and true model legal documents as the foundation for your homeownership program with lasting affordability. If you’re using the Community Land Trust model, the 2011 National Model Ground Lease is the go-to resource because it distills years of experience and best practices into a standardized format. There are Riders to the lease approved by Fannie Mae (Form 2100) and Freddie Mac (Form 490) which bring the lease into compliance with their respective Selling Guides, so that programs can access mortgages sold on the secondary market. Beyond mortgage financing, there’s also a HOME Rider that brings the lease into compliance with HOME Investment Partnership Program rules, when necessary.
If you’re using a deed-restricted covenant, Grounded Solutions recently released the 2021 Model Deed Restriction, which brings best practices and similar insights for condominium projects, states where ground leasing is not feasible, or for other projects and programs where a deed restriction is preferable.
2. Check out Grounded Solutions Network’s compilation of resources and information about potential mortgage lending partners. If you’re just getting started or want some national insights, this resource pack includes a great handout on the advantages of mortgage lending to buyers in homes with lasting affordability. It also provides an overview of how Fannie Mae or Freddie Mac conventional loans, portfolio loans, Housing Finance Agency loans, FHA-insured loans, USDA loans and VA loans may work with your program, depending on their specific requirements. These resources are helpful internally for bringing your team up to speed, as well as externally for providing education and documentation when developing partnerships with potential lenders, appraisers and realtors interested in working with your program.
3. Consider submitting your program for Duty to Serve Shared Equity Homeownership Certification for Fannie Mae. If your program is operated by a nonprofit or government, has an affordability term of 30+ years, and has a resale formula that limits the homeowner’s proceeds at resale, it may be defined as a “shared equity homeownership program” in FHFA’s Duty to Serve Rule – this means that Fannie Mae and Freddie Mac have a duty to serve your homeowners. This certification takes about 10 minutes and could identify your program to Fannie Mae lenders as eligible under Duty to Serve and the CLT Organizational Underwriting Criteria in Fannie Mae’s Selling Guide. This should save your staff and your lenders a lot of time and headache down the line. Learn more and apply at groundedsolutions.org/duty-serve.
If these resources don’t do the trick, don’t hesitate to reach out to Grounded Solutions Network’s Help Desk at firstname.lastname@example.org. We are here to support our members and the field of practitioners implementing housing programs with lasting affordability across the country.
By Jenee Gaynor, Membership Specialist at Grounded Solutions Network