‘A Home of Your Own’ pilot aims to help buyers achieve sustainable homeownership
A fireplace. A porch. The simple things.
That’s what Melvin Phillips was looking for in the home he recently bought in Atlanta. The yearnings may sound familiar to many young renters hoping to buy their own home someday.
But Phillips isn’t just starting out – he’s a first-time homeowner at the age of 78.
Phillips was helped by “Home of Your Own,” a pilot program supported by Fannie Mae and developed by the nonprofit National Investment Division-Housing Counseling Agency (NID-HCA); National Association of Real Estate Brokers (NAREB), a trade group of minority housing professionals; and lender partner SunTrust.
Initially announced at the NAREB conference in August 2016, the pilot (also known as the Virtuous Triangle), offers homebuyer education and counseling through educational forums in Atlanta and Miami, two locations where both SunTrust and NID have a strong presence.
“When you think of this program as a triangle, you have us as the lender on one side; Fannie Mae on another; and NAREB on the third,” says SunTrust’s Senior Vice President for Inclusive Lending/CRA Strategy Anthony Weekly.
“Then at the center, you have NID-HCA, which is the ‘safe haven’ as a non-profit where individuals know they can seek solid information on how to make better financial decisions.”
Weekly, an advisory board member for NAREB, saw important synergy with this program and the group’s focus on increasing minority homeownership.
According to NAREB’s 2017 State of Housing in Black America (SHIBA) report, black homeownership rose to 42.7 percent during the first two quarters of 2017, an increase from the near 50-year low of 41.3 percent in the third quarter of 2016, and yet far below the 71.8 percent for non-Hispanic whites.
Fannie Mae is always open to ideas for lender-driven pilots that increase access to credit for underserved borrowers, such as this one developed in response to a SunTrust request.
“The goal of the pilot is to connect the three critical players in the housing realm, while supporting Fannie Mae’s vision to create more sustainable homeownership,” says Charmaine Brown, director of Fannie Mae’s Office of Diversity and Inclusion.
“Coming out of the crisis, we learned to further enhance products to offer greater access to underserved, creditworthy borrowers and help them better understand the responsibilities of owning a home,” she adds.
Homebuyer education is an important component of Fannie Mae’s affordable lending product, HomeReady® mortgage, which is designed to help low- to moderate-income borrowers purchase a home with as little as three percent down. “We want to capture those buyers who are falling by the wayside,” says SunTrust’s Weekly.
The Important Role of Homebuyer Education
A key component of the program is a robust homeownership class. Phillips found that the one-on-one counseling he received from NID’s Atlanta branch manager and outreach coordinator Cassie Stanley completely alleviated any reticence he had about the home-buying process.
Retired in 1997, Phillips supplements his Social Security and retirement check from his long-time employer driving cabs on the weekend. While frugal by nature, he still benefitted from the budget refresher that will allow him to comfortably afford the payment on his $155,000 home. Phillips qualified for the HomeReady mortgage, which allowed him to choose a conventional 25-year loan and purchase the property with a minimal down payment.
“We frequently deal with seniors, who just want an opportunity to fulfill their hope of owning a home during their lifetime,” Stanley says. “It was a delight to help Melvin live his dream.”
As part of the counseling, Stanley dove into his finances and gave him tips on how he could lower his taxes by filing for Georgia’s Homestead Exemption. Stanley was gratified when he reached back out to get details regarding the process, which, as she noted, meant he was listening and absorbing the information.
A key part of their meeting involved budgeting, a crucial topic Stanley covers with every prospective homebuyer, since it is critical for sustainable homeownership.
She finds that many would-be buyers fail to factor in the cost of owning a home, such as upkeep and utilities, which an existing budget might not cover. “We are not here to tell them what to do, but to help them make informed decisions, and often we change their mindset,” she says.
Brown reports that Fannie Mae has seen an uptick in HomeReady borrowers through the pilot. In June, Fannie Mae will assess results and hopefully expand it to other markets.
The “Silent Generation,” those already in retirement, are a population that is often under the radar in relation to homeownership. Notes Brown, “At the heart of housing is the fact that homeownership is aspirational at any age.”
Just ask Phillips as he sits before his new fireplace…or enjoys the sunrise from his new front porch. There really is no place like home.
Cathie Ericson is a freelance writer who writes for The Home Story as well as for The Oregonian, Learnvest.com, Forbes.com, and other online and print publications.