In May Fannie, Freddie and the FHFA (Federal Housing Finance Agency) which runs Fannie and Freddie released a new form and a new idea to understand the need of First-Generation Homebuyers.

A First-Generation Homebuyer is defined as a family who either grew up without parents or with parents that were not financially capable of helping contribute to a child’s down payment or financial assistance and is looking for information as it pertains to intergenerational wealth or the lack of in this case.

Much of our wealth in the U.S. is contributed to homeownership as mortgage balances decrease monthly and values typically increase monthly creating net worth in the process. Those who have not had homeownership do not have access to this type of net worth growth as other parents and families who have used homeownership to gain worth for heirs.

In an attempt to begin to understand this process the agencies have put out form 1109.

CLICK TO SEE FORM 1109

The form is just a questionnaire a borrower fills out to confirm they are a First-Generation Homebuyer. This is defined by stating they have not owned a home in the last three years and will occupy this home as a primary residence. This applies to all applicants on the home mortgage.

If that is the case, one of the following three items being true then they are classified as a First-Generation Homebuyer.

#1 – If no parent of theirs has owned a home in the last three years. They are required to give their names and addresses. This is an attempt to weed out the misrepresentation although no proof or documentation is required.

#2 – If they aged out of foster care.

#3 – If they became emancipated.

The reason you have likely heard very little about this is that there is currently no benefit to filling out this form. You can and they would love for you to do that although it does not offer a product, pricing, or loan amount benefit in any way. Hence, they are getting minimal responses.

The agency’s hope is to begin to get an idea of the impact, the type borrowers and mortgages First Generation Homebuyers are getting and to learn more. Once this period is completed, which there is no set timeline, they hope to build this information into creating new products, pricing, and loan benefits to help First Generation Homebuyers.

Personally, I think it is a good cause and can lead to future programs that will help. We all just have to choose whether we are willing to put forth the effort to be a part of it.

This is part of the Equitable Housing Finance Plan. One of the items that have come from this three-year study is the use of positive rental income to gain favorable AUS responses, so it is working.

First-Generation Homebuyer Mortgage Fact Sheet below

https://sf.freddiemac.com/docs/first_generation_fact_sheet.pdf