1. Remove this text and place lender logo here [Name of Presenter] [Date Presented]

2. Remove this text on slide master and place lender logo here © Freddie Mac 2015 2  It’s Still a Great Time to Buy  Today’s First-time Homebuyers  Bridging the Gap: Down Payment and Closing Cost Resources  Down Payment and Closing Cost Resources in Your Area  Putting These Programs into Action for Your Business and Your Clients Today’s Presentation

3. Remove this text on slide master and place lender logo here © Freddie Mac 2015 3 It’s Still a Great Time to Buy

4. Remove this text on slide master and place lender logo here © Freddie Mac 2015 Low Interest Rates + Low Home Prices = Affordability 4

5. Remove this text on slide master and place lender logo here © Freddie Mac 2015 Refinances Are Still High, New Purchases Increasing 5

6. Remove this text on slide master and place lender logo here © Freddie Mac 2015 6 Today’s First-time Homebuyers

7. Remove this text on slide master and place lender logo here © Freddie Mac 2015 7 First-time Homebuyers Today Source -- National Association of REALTORS  Profile of Home Buyers and Sellers 2014 2014 Homebuyer Profile First-time Homebuyer – Demographic Characteristics  FTHB share is lower by five percent -- from 38 percent in 2013 to 33 percent in 2014  Married couples represent 54 percent of FTHBs  Single female buyers represent 18 percent of FTHBs  Single male buyers represent 11 percent of FTHBs FIRST-TIME HOMEBUYER DEMOGRAPHICS

8. Remove this text on slide master and place lender logo here © Freddie Mac 2015 8 Age of First-time Homebuyers Homebuyer Age  First-time homebuyers are younger than repeat buyers.  The largest demographic, 25-34 years old, continues at 56 percent.  Median age of first-time homebuyers is 31 years old. Source -- NATIONAL ASSOCIATION of REALTORS  Profile of Home Buyers and Sellers 2014 Age of First-time Homebuyers Age201220132014 18-249%8%9% 25-3454%59%56% 35-4419% 45-5410%8% 55-645% 6% 65-742%1% 75+0%<%<1%

9. Remove this text on slide master and place lender logo here © Freddie Mac 2015 9 Source -- U.S. Census Data 2008 and 2009 9.77% 8.50% Population Growth 2010–2050 30.11% 33.46% 7.45% 25.8% 29.48% 6.69% 22.26% 25.94% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% WhiteBlackAsianHispanic Percentage Change 2010 2020 2030 2050 2040 White 2010246,630 2020266,275 (7.97%) 2030286,109(7.45%) 2040305,247(6.69%) 2050324,800(6.41%) Black 201039,909 202044,389 (11.23%) 203048,728(9.77%) 204052,868(8.50%) 205056,944(7.71%) Asian 201014,415 202018,756 (30.11%) 203023,586(25.8%) 204028,836(22.26%) 205034,399(19.29%) Hispanic 201049,726 202066,365(33.46%) 203085,931(29.48%) 2040108,223(25.94%) 2050132,792(22.70%) White 2010246,630 2020266,275 (7.97%) 2030286,109(7.45%) 2040305,247(6.69%) 2050324,800(6.41%) Black 201039,909 202044,389 (11.23%) 203048,728(9.77%) 204052,868(8.50%) 205056,944(7.71%) Asian 201014,415 202018,756 (30.11%) 203023,586(25.8%) 204028,836(22.26%) 205034,399(19.29%) Hispanic 201049,726 202066,365(33.46%) 203085,931(29.48%) 2040108,223(25.94%) 2050132,792(22.70%) Projected Population Increase – 2010-2050 6.41% 7.71% 19.29% 22.70% 7.97% 11.23%

10. Remove this text on slide master and place lender logo here © Freddie Mac 2015 10 What Does This All Mean for You and Your Clients?  Low interest rates + low home prices = affordability.  2015-16: less refinances, more purchases.  There are opportunities out there to sell more homes to first-time homebuyers and grow your business.  Many well-qualified first-time homebuyers need your assistance to overcome fears.  Many first-time homebuyers will need to seek ways to bridge small gaps in down payment and closing costs.

11. Remove this text on slide master and place lender logo here © Freddie Mac 2015 11 You Are the Critical Link  You are the critical link to helping well-qualified homebuyers achieve their homeownership objectives.  Help first-time homebuyers understand home financing in new market.  Guide eligible first-time homebuyers in choosing homes that they can afford and keep.  Result: First-time homebuyer dream realized – and more sales closed for you.

12. Remove this text on slide master and place lender logo here © Freddie Mac 2015 12 Bridging the Gap: Down Payment, and Closing Cost Assistance Resources

13. Remove this text on slide master and place lender logo here © Freddie Mac 2015 13 Sources of Funds  Assistance from a variety of sources is available for mortgage-ready, well-qualified first-time homebuyers who need a little bit more to bridge the gap: –Mortgage Credit Certificates; and –Down payment and closing cost assistance (grants and deferred seconds) offered through either HUD’s HOME Investment Partnerships Program or the Community Development Block Grant Program that are used to administer programs on the state or local level. An example of a program is the Neighborhood Stabilization Program.  Assistance may be limited to first-time homebuyers and/or low- and moderate- income homebuyers, depending on the assistance program.  Homebuyer education counseling is often required, but not always. Source – HUD and NCSHA

14. Remove this text on slide master and place lender logo here © Freddie Mac 2015 14 Sources of Funds Mortgage Credit Certificates (MCCs)  Issued by certain state or local governments (including state housing finance agencies), MCCs generally allow homeowners to claim around 20 percent of the annual interest on their mortgage as a federal tax credit every year for the life of the original first mortgage (details vary by state).  Amount of credit per mortgage loan capped by Internal Revenue Service @ $2,000 per year.  NOTE: Although MCCs are not a down payment assistance source, mortgage lenders often use the estimated amount of the credit on a monthly basis as additional income to help the potential borrower qualify for the loan. Source – NCSHA and Wikipedia®

15. Remove this text on slide master and place lender logo here © Freddie Mac 2015 15 Mortgage Credit Certificates (cont’d)  Homebuyers who wish to obtain an MCC must meet certain minimum guidelines (restrictions may be waived by issuing entity in certain circumstances): –Must not have owned a home in the previous three years; –Must meet income and purchase price restrictions; and –Must use the new home as a primary residence. Source – NCSHA and Wikipedia®

16. Remove this text on slide master and place lender logo here © Freddie Mac 2015 16 How Mortgage Credit Certificates Work Borrower receives an MCC for: 30% credit $200,000 mortgage 30-year, fixed-rate 6% interest rate Borrower receives an MCC for: 30% credit $200,000 mortgage 30-year, fixed-rate 6% interest rate Allowable Tax Credit: Mortgage Interest Paid (First Year): $11,933 X 0.30 (30% MCC Credit) = Total Credit: $3,579 Allowable Tax Credit: Mortgage Interest Paid (First Year): $11,933 X 0.30 (30% MCC Credit) = Total Credit: $3,579 Results:  Total tax credit in this example exceeds IRS limit of $2,000  Homebuyer reports a $2,000 credit on tax return  Homebuyer may continue to receive a tax credit for as long as they remain in home and retain mortgage Results:  Total tax credit in this example exceeds IRS limit of $2,000  Homebuyer reports a $2,000 credit on tax return  Homebuyer may continue to receive a tax credit for as long as they remain in home and retain mortgage For illustrative purposes only. Borrowers should always check with their tax advisor to determine any potential tax benefits. Source – Wikipedia®

17. Remove this text on slide master and place lender logo here © Freddie Mac 2015 17 Sources of Funds Down payment and closing cost assistance  Most assistance is provided to the mortgage-ready borrower through grants and deferred seconds funded by states and local governments through: –the HOME Investment Partnerships Program; and –the Community Development Block Grant (CDBG) Program (which includes the Neighborhood Stabilization Program). Source -- HUD

18. Remove this text on slide master and place lender logo here © Freddie Mac 2015 18 Sources of Funds Grants  Grants are funds that do not have to be paid back, but often have to be paid back if the borrower sells his or home within a certain period of time. Deferred Seconds  Many down payment assistance programs come in the form of a second mortgage that has a low interest rate and/or deferred payments. Source -- HUD

19. Remove this text on slide master and place lender logo here © Freddie Mac 2015 19 HOME Investment Partnerships Program  Administered by HUD, HOME is the largest federal block grant to state and local governments (including housing finance agencies), and is designed exclusively to create affordable housing for low-income households (those earning 80 percent or less of the area median income).  HOME provides annual formula grants to states and localities that communities use – often in partnership with local nonprofit groups – to fund a wide range of activities that build, buy, and/or rehabilitate housing for homeownership or rental, or provide direct rental assistance to low-income individuals and families.  Provides participating jurisdictions with a line of credit to draw upon, as needed, to use for grants, direct loans, loan guarantees or other forms of credit enhancement, or rental assistance or security deposits. Source – HUD and Wikipedia®

20. Remove this text on slide master and place lender logo here © Freddie Mac 2015 20 HOME Investment Partnerships Program (cont’d)  States are automatically eligible for HOME funds and receive either their formula allocation or $3 million, whichever is greater. Local jurisdictions eligible for at least $500,000 under the formula can receive an allocation. Communities that do not qualify for an individual allocation under the formula can join with one or more neighboring locality so that members’ combined allocation would meet the threshold for direct funding.  Eligible jurisdictions receiving funds must provide 25 cents of their own funds for every HOME dollar received.  State and local government HOME grantees (or designees) administer these programs and accept applications from eligible mortgage-ready borrowers seeking funding. Source – HUD and Wikipedia®

21. Remove this text on slide master and place lender logo here © Freddie Mac 2015 21 Down Payment and Closing Cost Assistance Example – [Add Type of Assistance Here] XX City, XX State – [Add Name of Program Here]  Describe program here Source – [Add Here] [USE THIS SLIDE TO PROVIDE A SPECIFIC EXAMPLE OF A DOWN PAYMENT AND CLOSING COST ASSISTANCE PROGRAM IN YOUR LOCAL AREA OR LENDING FOOTPRINT.]

22. Remove this text on slide master and place lender logo here © Freddie Mac 2015 22 Community Development Block Grant (CDBG) Program  One of HUD’s longest-running programs (since 1974), the CDBG provides communities with resources to address a wide range of unique community development needs including affordable housing, anti-poverty programs, and infrastructure development.  CDBG funds are allocated to more than 1,100 local and state governments called “entitlement” and “non-entitlement” communities.  Entitlement communities – Annual grants to larger cities and urban counties to develop viable communities by providing decent housing, a suitable living environment, and opportunities to expand economic opportunities, principally for low- and moderate-income persons. Source – HUD and Wikipedia®

23. Remove this text on slide master and place lender logo here © Freddie Mac 2015 23 Community Development Block Grant Program (cont’d)  With Non-entitlement Communities or State Administered CDBG (also known as the Small Cities CDBG Program), states award grants to smaller units of general local government for community development activities. Annually, each state develops funding priorities and criteria for selecting projects.  HUD determines the amount of each CDBG entitlement grant by a statutory dual formula which uses the needs of the community, extent of poverty, population, housing overcrowding, age of housing, and population growth lag in relation to other metropolitan areas.  CDBGs differ from categorical grants; they are made for specific purposes in that they are subject to less federal oversight and are largely used at the discretion of the state and local governments and their subgrantees.  CDBG grantees, or nonprofit designees, administer these programs and accept applications from eligible mortgage-ready borrowers seeking funding. Source – HUD and Wikipedia®

24. Remove this text on slide master and place lender logo here © Freddie Mac 2015 24 Neighborhood Stabilization Program (NSP)  A component of CDBG, HUD provides Neighborhood Stabilization Program grants to communities hardest hit by foreclosures and delinquencies to purchase, rehabilitate, or redevelop homes and stabilize neighborhoods.  Grantees (government agency or nonprofit administering the program) develop their own programs and funding priorities, but must use at least 25 percent of the funds appropriated for the purchase and redevelopment of abandoned or foreclosed homes or residential properties that will be used to house individuals or families whose incomes do not exceed 50 percent of the area median income.  All activities funded by NSP must benefit low- and moderate-income persons whose income does not exceed 120 percent of the area median. Source -- HUD

25. Remove this text on slide master and place lender logo here © Freddie Mac 2015 25 Neighborhood Stabilization Program (cont’d)  Eligible NSP activities can include (but are not limited to): –Direct purchase and rehabilitation of abandoned and foreclosed homes for sale, rent, or redevelopment; –Establishment of financing mechanisms for purchase and redevelopment of foreclosed homes and residential properties; and –Demolition of blighted structures.  NSP funds can be used to help homebuyers purchase homes and the borrower must apply through the NSP grantee. Source -- HUD

26. Remove this text on slide master and place lender logo here © Freddie Mac 2015 26 Down Payment and Closing Cost Assistance Example – [Add Type of Assistance Here] XX City, XX State – [Add Name of Program Here]  Describe program here Source – [Add Here] [USE THIS SLIDE TO PROVIDE A SPECIFIC EXAMPLE OF A DOWN PAYMENT AND CLOSING COST ASSISTANCE PROGRAM IN YOUR LOCAL AREA OR LENDING FOOTPRINT.]

27. Remove this text on slide master and place lender logo here © Freddie Mac 2015 27 First Mortgage Borrower obtains a 30-year conventional fixed-rate loan + Mortgage Credit Certificate (MCC), when available Money Out of Pocket Borrower’s personal contribution towards the purchase can be as low as 3% of the purchase price “Gap” Loan Silent second loan from a local government agency requires no monthly payment and, therefore, is not counted as a borrower’s debt during underwriting Other Assistance Programs Remaining down payment or closing cost assistance needed to close the loan (can include seller concessions) YOUR BORROWER’S NEW HOME FIRST MORTGAGE Obtain a 30-year fixed-rate conventional mortgage and combine it with a Mortgage Credit Certificate to lower the borrower’s monthly payment and maximize his or her purchasing power. MONEY OUT OF POCKET Borrower’s personal contribution. “GAP” LOAN These loans fill the gap between what you can qualify for on your own and the actual price of the home. These loans don’t require any monthly payments. Home Purchase Price + Closing Costs __________________________ TOTAL REQUIRED TO CLOSE Home Purchase Price + Closing Costs __________________________ TOTAL REQUIRED TO CLOSE OTHER ASSISTANCE PROGRAMS If the “gap” loan isn’t sufficient to close the loan, these programs give extra help with the borrower’s down payment and closing costs. Seller concessions can be applied here. How Government Grants and Loans Can Help Borrowers Buy Their First Home

28. Remove this text on slide master and place lender logo here © Freddie Mac 2015 Down Payment and Closing Cost Resources in [Insert Location Here] 28

29. Remove this text on slide master and place lender logo here © Freddie Mac 2015 29 Down Payment and Closing Cost Assistance Programs in [Insert Location Here] Statewide and Regional Programs:  [Add here] City/County Programs:  [Add here] Municipal Programs:  [Add here] Counseling Agencies Providing HUD-approved Homebuyer Education:  [Add here] [CUSTOMIZE THIS PAGE USING INFORMATION FROM HUD’S WEBSITE @ http://portal.hud.gov/hudportal/HUD?src=/states TO LIST DOWN PAYMENT AND CLOSING COST ASSISTANCE PROGRAMS OFFERED IN THE STATE, REGION, CITY, COUNTY, AND MUNICIPALITY -- ALONG WITH THE LIST OF COUNSELING AGENCIES OFFERING HOMEBUYER EDUCATION.]http://portal.hud.gov/hudportal/HUD?src=/states

30. Remove this text on slide master and place lender logo here © Freddie Mac 2015 30 [Lender: List Your Product Offerings Here]  [Name of product] – Description…  [Name of product] -- Description… Source – [Add Here] [CUSTOMIZE THIS PAGE TO SHOW YOUR MORTGAGE PRODUCT OFFERINGS, REQUIREMENTS, AND SPECIAL PROGRAMS.]

31. Remove this text on slide master and place lender logo here © Freddie Mac 2015 31 Why Is Homeownership for Mortgage-Ready, First-time Homebuyers Still Important?  Owning a home still has its advantages, both personally and financially: –housing costs are more stable if the first-time homebuyer obtains a fixed-rate mortgage (still available at historically low rates); –tax incentives such as the mortgage interest deduction not offered to renters; and –mortgage-ready borrower obtains a sustainable mortgage at an affordable rate using available down payment and closing cost assistance.

32. Remove this text on slide master and place lender logo here © Freddie Mac 2015 32 Contact Information [CUSTOMIZE THIS PAGE TO INCLUDE YOUR CONTACT INFORMATION, “800” NUMBER, NAME OF A SPECIFIC LOAN OFFICER, ETC.]