Fannie Mae is reinstating required homeownership counseling for first-time buyers who don’t have a solid credit history or are seeking loans tailored for low- and moderate-income buyers.
Beginning Jan. 1, Fannie Mae will require counseling for home buyers relying on nontraditional credit or obtaining a MyCommunityMortgage loan to purchase a single-family home. Fannie Mae already requires pre-purchase counseling, including landlord education for borrowers purchasing a two- to four-unit property using a MyCommunityMortgage loan.
Counseling must be provided prior to closing by an independent and certified third-party agency or counselor, Fannie Mae said, and cover topics including budgeting and credit, selecting a home, and obtaining a mortgage. Homebuyers will receive a personalized assessment of their financial position and readiness for homeownership, and an analysis of their credit history and current financial situation.
Although Fannie Mae will encourage face-to-face counseling, borrowers who can’t attend sessions in person or don’t have an eligible provider in their area will be allowed to conduct sessions over the phone. Online counseling programs developed for and provided by mortgage insurance companies will also be permitted.
Counseling must meet standards established by the National Industry Standards for Homeownership Education and Counseling or standards of comparable quality established by other organizations, Fannie Mae said in a bulletin to lenders.
Evidence of completion of the home-buyer education session must be documented in the individual loan file by a certificate or letter from the counseling provider.
Fannie Mae offers counseling resources, including a "Find a Counselor" search tool, on its Web site.
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