UPDATE: This lender will now help mortgage borrowers crowdfund their down payment
By Jacob Passy
Down payments continue to represent a major obstacle to homeownership for many Americans
For many Americans, saving enough for a down payment (http://www.marketwatch.com/story/down-payments-cast-a-big-shadow-real-and-imagined-over-home-buyers-2017-09-25) seems like a practically insurmountable hurdle. And one lender claims to have found a solution to this problem.
Privately-held mortgage banking firm CMG Financial has launched HomeFundMe -- a pilot crowdfunding service that's the first to receive approval from Fannie Mae and Freddie Mac. To facilitate the crowdfunding process, HomeFundMe received approval from Fannie Mae and Freddie Mac for borrowers to accept money from a wider array of potential donors.
If home buyers use HomeFundMe, they can collect the money for a down payment and will receive a mortgage from CMG Financial. There's no fee to use the service, although home buyers do obviously have to get pre-qualified for a loan.
How does it work?
Each donor to HomeFundMe campaigns can give gifts up to $7,500. For people who earn less than their area's median income, HomeFundMe will match two dollars for every dollar raised up to $2,500 or 1% of the home's purchase price. Those who make more than their area's median income will get match funds up to $1,000. The service has been in beta testing for about a month. CMG requires HomeFundMe's users to go through housing counseling from an independent agency and will cover any related fees.
Already roughly 100 people have used the platform, the company said. CMG will pilot the program through June. Then it will review its results with Fannie and Freddie, at which point the mortgage-finance companies could open up crowdfunding for other lenders to explore, said Jonathan Lawless, vice president for product development and affordable housing at Fannie Mae.