Adding support for DU and LPA affordable loan programs

Date Available: Beta 12/19, Prod 1/23

Which customers are impacted?: Any customer that runs LPA in Blend.

How to turn on:

• This feature will be automatically enabled for all customers on the date listed above.

Purpose of Update and Benefit: 

We are releasing support for Fannie and Freddie's affordable loan programs. Today, these are not well supported in Blend. These types of loans can be returned in the pricing results, but there are additional pieces of data that need to be passed to DU and LPA. This release will support all current DU and LPA programs. 

DU programs:

1. HFAPreferred
2. HFAPreferredRiskSharing
3. HomeReady

LPA programs:

1. CHOICEHome
2. CHOICERenovation
3. CommunityLandTrust
4. GreenCHOICE
5. HFAAdvantage 
6. HeritageOne
7. HomePossibleMortgage
8. IncomeBasedDeedRestrictionsTerminate 
9. IncomeBasedDeedRestrictionsSurvive 
10. RefiPossible (Refis only)

Current Behavior:

Currently, affordable loan programs are not supported.

New Behavior:

As stated above, we are now supporting all affordable loan programs from Fannie and Freddie. Most of these changes will apply to Freddie. The only changes for Fannie are to support their 3 programs. 

All changes are manual and require a user to manually update the loan application. We are not automatically linking the product selection to the application page. Users can now indicate whether the product is an affordable loan, whether it's for DU or LPA, and which program it is. For DU, you can only select one loan program at a time. For LPA, they allow multiple select and you can select up to 5 programs at once. In the dropdown, we will disable all other options once 5 programs have been selected.

Also, for LPA, some of the programs selected require additional fields:

1. GreenChoice - If this loan program is selected, the followup question "Will finance energy-related improvements" is required. If Yes, then the energy improvements amount is required.
2. IncomeBasedDeedRestrictionsTerminate and IncomeBasedDeedRestrictionsSurvive - These require the followup field months of deed restriction. 
3. CHOICERenovation - If this loan program is selected, then the followup data field alterations, improvements, and repairs amount is required. 

Separately, we have also added a new Seller Concessions field. This is a standalone field that applies to both DU and LPA and is unrelated to any individual loan program.

Additionally, LPA requires different LTV calculations for some of the loan programs. 

Specifically:

1. In general, the "V" in LTV is the lesser of the appraised property value (estimated appraised value in Blend is also accepted) or the sum of the purchase price plus any improvements minus any seller concessions. 
2. For GreenChoice, the calculation is purchase price + energy improvements amount - seller concessions.
3. For ChoiceRenovation, the calculation is purchase price + alterations amount - seller concessions.
4. If BOTH GreenChoice and ChoiceRenovation are selected, then the calculation is purchase price + alterations amount + energy improvements amount - seller concessions. HOWEVER, LPA expects the sum of the alterations and energy improvements to be added together and inputted only in the alterations, improvements, and repairs field. We have added a tooltip that includes this information as well. 
5. If CommunityLandTrust is selected, then LPA uses the appraised property value. In Blend, this is the estimated property value. If this field is not filled out when this program is selected, then the LPA certificate will return an error. 
6. When GreenChoice is NOT selected and the energy improvements amount is still filled in, LPA does NOT include the energy improvements amount into the LTV calculation. They only include the energy improvements amount if GreenChoice is selected. 
7. However, DU follows different calculations than LPA. Specifically, DU does NOT include seller concessions and it DOES include the energy improvements amount regardless of the loan program chosen. 
8. Given these complicated calculations and the differences between DU and LPA, Blend has chosen to match DU LTV calculations in most cases (since most of our customers use DU), and follow the LPA calculations when one of the affordable loan programs is chosen that has a different calculation methodology. For example, if seller concessions are filled in and no loan programs are selected, then the Blend LTV will match the DU LTV. If GreenChoice is selected, then Blend LTV will match the LPA LTV, which adds the energy improvement amounts and subtracts the seller concessions. THIS WILL MEAN THAT THE LTV BETWEEN BLEND, DU, AND LPA MAY NOT MATCH IN SOME CIRCUMSTANCES.

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