Q1: Who are the
Responsible Homeownership (R-HOME) initiative participants and what are their roles?
A: Neighborhood Housing Services of America (NHSA), through its technology subsidiary Just Price Solutions (JPS), provides automated underwriting customized to the community development field and to under-served borrowers. NHSA and JPS work with the nonprofit networks that provide under-served homebuyers with financial education and counseling and long-term borrower support.
First American CREDCO has developed a ground-breaking alternative scoring technology, First American CREDCO’s Anthem Suite™ of services enables lenders to accurately measure risk and evaluate a nontraditional borrowers' creditworthiness.
CitiMortgage brings the instant access to capital necessary to make the process widely available and also is a trusted source to serve as the mortgage servicer.
State Farm's $100 million investment creates a secondary-market revolving pool for the mortgages, making possible billions of dollars in long-term investor placements with such financial giants as CitiMortgage, Fannie Mae, and Freddie Mac.
Q2: What makes the R-HOME mortgage process unique?
A: R-HOME is the result of a unique collaboration of industry and nonprofit organizations that have joined together to apply modern technology to best practices in mortgage products and processes and, in so doing, create a new way of serving first-time, low-to-moderate-income and alternative-credit homebuying consumers.
Q3: How do I apply for an R-HOME mortgage?
A: To find out more about the R-HOME mortgage process—including whether it may be the best option for you—call (866) 577-6968.
Q4: Who is eligible for R-HOME mortgages?
A: The R-HOME mortgage process was designed to provide responsible, under-served borrowers with an opportunity to qualify for stable, affordable, 30-year, fixed-rate mortgages. Eligible borrowers who do not have a substantial credit history—either because they have always paid cash or because their credit was in the name of a parent, spouse or other family member—could otherwise be denied a mortgage or steered toward a nonprime loan. If an applicant can document income and expenses and can provide at least four alternative trade lines that demonstrate the willingness and ability to repay, there is a good chance that the applicant will be able to qualify for an R-HOME mortgage.
Q5: Is R-HOME for new borrowers only, or can people refinance existing loans through R-HOME?
A: The R-HOME mortgage was originally designed to serve the needs of under-served, first-time homebuyers. In the current mortgage environment, however, we recognize that we also need to serve borrowers who are seeking to refinance into appropriate mortgages. Therefore, we are offering refinancing opportunities, as well. The main focus, however, continues to be on giving first-time under-served borrowers an alternative to nonprime loans from the start.
Q6: How long does it take to apply?
A: The application, which is completed and submitted via the Internet, takes approximately one hour. A preliminary decision is returned in a matter of minutes, and a final answer is usually available within two business days.
Q7: What happens if I can't pay my mortgage? Does it automatically go to foreclosure?
A: One of the most important benefits of R-HOME mortgages is the long-term borrower support provided by NHSA and its network of nonprofit counseling
affiliates. This support helps borrowers respond to life events that may interrupt their capacity to meet their mortgage payments. R-HOME connects applicants to nonprofits that are able to work with distressed borrowers to avoid foreclosure through counseling, support, payment restructuring or even short-term capital investment.
Q8: The R-HOME mortgage process is in a pilot phase in the Washington, D.C. area. Specifically, what are the geographic parameters of this pilot project?
A: The geographic boundaries of the District of Columbia.
Q9: Are all R-HOME loans fixed-rate?
A: Yes. The interest rate on all R-HOME mortgages is fixed for a full 30 years.
Q10: Are R-HOME loans prime loans?
A: If the borrower does not qualify for the lowest-cost mortgage available, the interest rate may be somewhat higher than prime. However, the interest rate on an R-HOME mortgage will generally be much lower than what is normally associated with nonprime loans. Moreover, R-HOME mortgages have none of the features generally associated with nonprime loans—such as escalating payments and prepayment penalties. R-HOME provides greater flexibility and makes it possible to offer lower interest rates to our borrowers than might otherwise be available.
Q11: Are they subprime loans?
A: No. R-HOME mortgages are not subprime loans. They are 30-year, fixed-rate mortgages that are more affordable than nonprime alternatives. R-HOME mortgages have no escalating payments or prepayment penalties.
Q12: How do you determine the mortgage rate that an R-HOME borrower gets?
A: The fiscally responsible way to determine the interest rate on a mortgage is through risk-based pricing. The difference with an R-HOME mortgage, however, is that our proprietary technology is able to evaluate risk based on the applicant's willingness and ability to repay the loan, and by examining a wide range of alternative trade lines, such as rent, utilities and child care payments. Without this technology, a responsible applicant who does not have a traditional credit history—for example, credit cards, auto loans, or a previous mortgage—would appear to be a risk, and therefore charged higher pricing.
Q13: How do you ensure the validity of the borrowers' data?
A: By marrying innovative technology with the time-tested, but laborious, manual process of scoring nontraditional credit lines to weigh risk, the R-HOME mortgage process is able to analyze and determine the validity of borrowers' data far more efficiently than before. This means R-HOME mortgages can be made widely available, thus vastly increasing opportunities for borrowers who have good credit but no FICO® score. |
Equal Housing Opportunity
