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Finance of America Mortgage Helps Address the Nation’s Affordable Housing Crisis with Launch of ADU Refinancing Option
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Finance of America Mortgage LLC (NYSE: FOA) has launched a new refinance option aimed at homeowners with accessory dwelling units (ADUs), enabling them to consolidate existing loans into a single conforming mortgage. This feature could lower monthly payments and help tackle the affordable housing crisis by allowing homeowners to generate rental income from ADUs. The initiative aligns with recent changes in zoning laws favoring ADU construction, which has seen significant demand in states like California, Florida, and Texas. FAM's offering is accessible nationwide and targets single-family primary homes.
Positive
Launch of a refinance option for ADUs could lower interest payments for homeowners.
Helps address the affordable housing crisis by generating rental income from ADUs.
Aligns with favorable zoning laws encouraging ADU construction in key markets.
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None.
Homeowners with in-law suites or ‘granny flats’ can refinance, potentially reduce their monthly payments and generate a stream of rental income
CONSHOHOCKEN, Pa.--(BUSINESS WIRE)--
Amid a dwindling supply of affordable housing in many areas of the country, Finance of America Mortgage LLC (“FAM”), today announced the launch of an innovative new feature on certain conforming loan products that may enable homeowners to refinance and consolidate loans used to build an accessory dwelling unit (ADU) on their property at lower interest rates.
FAM’s ADU refinance option will allow some borrowers to refinance their primary mortgage and certain ADU financing like a credit card or home equity line of credit into a single, new conforming mortgage loan. This option helps borrowers potentially reduce their monthly interest payments if they financed the construction of the ADU at a higher rate.
Beyond the potential rate reduction, FAM’s ADU offering is designed to help create more affordable housing options and allow homeowners to take advantage of recent state changes that have encouraged the construction of ADUs. Sometimes called in-law suites or “granny flats,” ADUs can be detached or attached to a home. Some examples of attached ADUs might be a guest space converted above an attached garage or a basement. Detached ADUs include carriage houses, guest cottages, or other structures that are free-standing from the main home structure.
“We recognized a need to help increase access to new housing in areas that have increased density, as well as assist homeowners who wish to leverage that garage or section of land to generate additional income,” said Bill Dallas, President of FAM. “The demand for ADU development will continue to grow, especially as the pandemic has shifted housing preferences and more cities adopt ADU-friendly zoning changes. We’re ready to help expand access to this cost-effective way for homeowners to enhance their properties and make the dream of homeownership more attainable for the modern family.”
ADUs are seen as one solution to help address the nation’s growing housing affordability crisis as homeowners can convert a garage or unused portion of their lot into a new housing unit to generate a new stream of income by renting it out. With the scarcity of new land to build on in many localities and the high cost of new construction, many cities have adopted ADU-friendly zoning ordinances to increase housing inventory. The growth in ADU development has been seen around the country, reaching about 1.4 million units as of 2019, according to a Freddie Mac report, and demand is highest in some of the most rapidly-growing regions in the U.S. such as California, Florida and Texas. ADUs are also an attractive living arrangement for multigenerational households, particularly for homeowners who have aging parents or adult children who need affordable housing.
Kathryn Amor, Chief Product Officer at Finance of America, added, “We pride ourselves on being leaders in innovative product development and are constantly exploring new ways to provide flexible options and fill gaps in the market. This unique opportunity will serve borrowers with conforming loan amounts and allow borrowers to potentially utilize some ADU rental income to qualify. It also builds on the company’s diverse suite of lending solutions and compliments our recent expansion into home improvement financing.”
Now, homeowners can build an ADU, and then potentially refinance the costs of that ADU with FAM by consolidating the ADU financing with their primary mortgage. The ADU refinance option is available nationwide through all of FAM’s lending channels and applies only to single-family, primary homes.
FAM is the mortgage originations subsidiary of Finance of America Companies Inc. (“Finance of America”) (NYSE: FOA), a diversified, vertically integrated consumer lending platform.
Finance of America Mortgage LLC is one of the nation’s largest home mortgage lenders and part of the Finance of America Companies (NYSE: FOA) family of companies. Since 2015, the Conshohocken, PA-based lender has helped hundreds of thousands of people achieve their dream of homeownership. Finance of America Mortgage has a team of more than 1,300 local Loan Advisors in more than 200 branch locations across 34 states. In 2020, Finance of America Mortgage funded nearly $30 billion in loan volume representing about 90,000 units nationwide, from distributed retail, third-party originator (TPO), and consumer-direct channels.
Finance of America Mortgage is ranked a 2020 Top Mortgage Lender by Scotsman Guide, the industry resource for mortgage originators. Finance of America Mortgage Loan Advisors work closely with borrowers to guide them through the loan financing process every step of the way. Our Loan Advisors are renowned in the industry for their local market knowledge and loan product expertise with forward, reverse and home improvement mortgages, refinance loans, and HELOCs.
Finance of America gives back to the community through Finance of America Cares (FOA Cares). A 501(c)(3) nonprofit organization, FOA Cares is the independent charitable and philanthropic arm of Finance of America. FOA Cares invests in value-driven programs and charitable activities through dynamic partnerships with community-based nonprofits as well as grantmaking and volunteering.
Finance of America Mortgage LLC is licensed nationwide. NMLS ID # 1071 (www.nmlsconsumeraccess.org). Equal Housing Opportunity.
For more information about Finance of America Mortgage, please visit: www.foamortgage.com.
What is Finance of America Mortgage's new refinance option for ADUs?
FAM has launched a refinance option allowing homeowners to consolidate loans used for ADUs into a single conforming mortgage, potentially lowering monthly payments.
How does the ADU refinance option impact homeowners?
It can help homeowners lower their interest payments and generate rental income from ADUs, addressing affordability concerns.
In which states is Finance of America's ADU refinance option available?
The ADU refinance option is available nationwide through all of FAM's lending channels.
What are the benefits of building an ADU according to Finance of America?
Building an ADU allows homeowners to generate additional income by renting it out while leveraging consolidation of existing loans.
What is the significance of the ADU trend in the housing market?
The trend of developing ADUs responds to the scarcity of affordable housing and helps increase housing inventory in urban areas.
