Freddie Mac Announces Fixer-Upper Mortgage
Freddie Mac is launching a new mortgage product that allows borrowers to buy a fixer-upper and finance the renovation all with one loan. Existing homeowners can use it to repair or improve their properties.
The CHOICERenovation loan product is available immediately to all approved lenders. Lenders have two paths for delivering the loan to Freddie. They can either wait until the renovations are complete, or, for approved lenders, they can deliver the loan while work is ongoing if they’re providing oversight for the projects.
“We recognized there’s a significant amount of aging housing stock, both in underserved areas and in the broader housing market, and there’s also a need for affordable housing,” Kelly Marrocco, director of credit policy at Freddie Mac said in an interview. “This is a new offering that allows people to purchase a home that needs repair, or allows existing homeowners to renovate without having to do a cash-out refi.” The funds “can be used to address housing resiliency items that will either repair damage or improve the homes ability to withstand environmental hazards,” Marrocco said.
The renovation market has grown by more than 50% since the Great Recession ended in 2009, Freddie Mac said in its announcement of the new loan product. Nearly 80% of the nation’s 137 million homes are at least 20 years old and 40% are at least 50 years old.
“Given the increasing age of existing housing stock, the growing number of millennials and other first-time homebuyers looking for more affordable homebuying options, and the increase in retirees opting to age in place, the Freddie Mac CHOICERenovation mortgage is a flexible solution to finance or refinance these fixer-uppers,” said Danny Gardner, a Freddie Mac senior vice president.
Article by Kathleen Howley, HousingWire.com, June 2019