Administrator s Guidelines Escambia County Housing Finance Authority. Big Splash TBA Single Family (Multi-County) Program

Transcription

1 i Administrator s Guidelines Escambia County Housing Finance Authority Big Splash TBA Single Family (Multi-County) Program Freddie Mac HFA Advantage (Conventional) Program Published and Restated in its Entirety: August 1, 2017 (Initially Published on ) Revised Revisions Summarized on Page vi i

2 ii Table of Contents I. THE ESCAMBIA COUNTY HOUSING FINANCE AUTHORITY TEAM... 1 Escambia County Housing Finance Authority, Issuer... 1 Participating Lenders... 1 U.S. Bank, Master Servicer... 1 ehousingplus, Program Administrator... 1 CONTACT DIRECTORY... 2 II. THE ECHFA TBA PROGRAM GENERAL INFORMATION... 5 First Mortgage... 5 Down Payment/Closing Cost Assistance... 5 Current Down Payment Assistance Product... 6 DPA Second Mortgage... 6 DPA Second Mortgage Disclosure Requirements... 6 Mortgage Credit Certificate Program... 7 III. THE FREDDIE MAC HFA ADVANTAGE (CONVENTIONAL) PROGRAM OPTION... 8 Eligible Borrowers `... 8 Freddie MAC First-Time Homebuyers Exceptions... 8 Veterans Exception... 9 Minimum FICO (Credit) Score... 9 Maximum Debt to Income Ratio... 9 Eligible Properties; Property Requirements... 9 Household Income Calculation Income Limits Affordable Income Subsidy (AIS) Grants Conventional Option Program ONLY AIS Grant Step-by-Step Reservation Instructions Affordable Income Subsidy Grant Income Limits Financing Facts For Freddie Mac Conventional Program Option Freddie Mac HFA Advantage Fact Sheet Appraisal Buydowns Cash Back Construction to Permanent Co-signers Freddie Mac Loan Level Price Adjustment and Adverse Market Fees Documentary Stamp Tax and Intangible Tax... 15

3 iii Final Typed Loan Application (1003) Homebuyer Education Manufactured Homes Minimum Loan Amount Maximum Loan Amount Prepayments Real Estate Purchase Contract Recapture Tax Refinances Remaining Reserves Tax Returns or Tax Transcripts IV. SUMMARY OF THE COMPLIANCE ORIGINATION PROCESS Mandatory Program Training ehousingplus Lender Portal System Training Lender Portal User Credentials Qualify Disclose Reserve Process Underwrite and Certify HFA S Process Guidelines for Reserving Down Payment Assistance Funds Reserve Affordable Income Subsidy (AIS) Grant Income Qualified Freddie Mac HFA Advantage Loan Only Request DPA Funds for Closing Close and Verify Ship / Submit Exceptions Final Documents Shipping Instructions for HFA DPA Documents V. PROGRAM TIMELINE Timely Delivery Procedures VI. PROGRAM FEES First Mortgage Program Fees Extension Fee Second Mortgage Fees... 26

4 iv ehousingplus Fee US Bank Fees Lender Fees Lender Compensation Freddie Mac Program Option VII. PROGRAM FORMS Originating Compliance Forms Pre-Closing Form Closing Forms DPA - Second Mortgage Documents Close Borrower Receiving Freddie Mac Affordable Income Subsidy Grant ehousingplus COMPLIANCE FILE Compliance File Checklist (available online) U.S. Bank Post Closing Forms U.S. Bank Website Other Documents Required for Program Compliance File (Not Auto-Generated) Tax Transcripts Real Estate Purchase Contract Final Typed Loan Application (1003) Closing Disclosure (CD) Warranty Deed Discharge or Release Papers EXHIBIT A Instructions For Completing First Mortgage Affidavit For Exemption From Documentary Stamp Tax Instructions For Completing Second Mortgage Affidavit For Exemption From Documentary Stamp Tax... 36

5 v REVISION TABLE DATE 8/1/17 Substantial revision in connection with implementation of new Freddie Mac HFA Advantage (Conventional) Program Option. 9/25/17 Page 9 & 10, added Bay County and Jefferson County to Governmental Loan Program including Targeted Area Census Tract and removed Income Limits and Acquisition Limits that were not applicable; Page 20, added Bay County and Jefferson County to Freddie Mac Conventional Loan Program and updated the Acquisition Limits; Page 34, deleted Tax Exempt Rider from Compliance Checklist 10/30/17 Page 9 & 10, added Franklin County to Governmental Loan and updated Income Limits and Acquisition Limits; Page 20, added Franklin County to Freddie Mac Conventional Loan Program and updated the Acquisition Limits 12/6/17 Page 9 & 10, added Hernando and Gulf County to Governmental Loan and updated Income Limits and Acquisition Limits; Page 20, added Hernando and Gulf County to Freddie Mac Conventional Loan Program and updated the Acquisition Limits 4/16/18 Page 7, added Mortgage Credit Certificate Program; Page 8, added Jefferson County; Page 12, added Tax Returns and Transcript definition; Page 13, added Homebuyer Education definition; Page 13, 25 & 35, combined Documentary Stamp Tax and Intangible Tax to include new exemption effective July 1, 2018; Page 26, revised Homebuyer Education definition; Page 23, added Freddie Mac Affordable Income Subsidy (AIS) Program; Page 24, added AIS Reservation Instructions; Page 25, added AIS Income Chart; Page 29, added Reservation for Freddie Mac AIS Grant; Page 36, Per US Bank LOU L increase Tax Service Fee to $80 effective for loan reservations on 4/30/18 and after; Adjusted the font to Arial 12 pt for the entire document; Removed the background color from all charts; Changed the red font to black font for the entire document 6/11/18 Pages 10-13, Governmental Program new income limits and sales price limits effective for all loan applications date June 11, 2018 and after. Old limits remain in Guide until loans with earlier limits are fully originated. Pages 24 & 25, Freddie Mac Conventional Program new income limits and sales price limits effective for all loan applications date June 11, 2018 and after. Old limits remain in Guide until loan with earlier limits are fully originated. Page 40, Added ehp AIS Grant fee. 7/9/18 Pages 15, 16, 29, 30, 36, 40, 44, Added First and/or Second Mortgage Doc Stamp Exemption language; Page 41; updated US Bank Tax Service Fee; Page 45, moved US Bank Website information; Pages 48-51, Added Exhibit

6 vi A Instructions for completing First and Second Mortgage Affidavits for Documentary Stamp Tax Exemption. 7/273/18 Page 29, Updated Affordable Income Summary (AIS) new income limits; Page 35, DPA Loan Disclosure should be included with the DPA Funds Request Package; Pages 40 & 42, Effective October 1, 2018, updates regarding the DPA Loan allowable fees. 11/15/18 Removal of the 2012 Single Family (Governmental) Program Option

7 Section 1 The ECHFA Team 1 I. THE ESCAMBIA COUNTY HOUSING FINANCE AUTHORITY TEAM Escambia County Housing Finance Authority, Issuer Plans and implements programs, develops relationships with participating counties, structures the first mortgage programs and, if applicable, down payment/closing cost assistance programs, recruits lenders, sets the rate, term and points, assists with funding and financing, maintains county and lender relationships and markets the programs. Participating Lenders Takes applications, reserves in their own system, processes, underwrites, approves, funds, closes and sells qualified loans to the programs. Lender must check with their own company on how to reserve a Program loan rate in its own system so that funds are available for closing (companies may have their own codes). Lenders are responsible for servicing first program loan in accordance with applicable agency requirements until they are purchased by the Master Servicer. U.S. Bank, Master Servicer Provides training concerning underwriting information on acceptable loan products and the delivery and funding of Program loans. Receives all mortgage files, reviews mortgage files, post and notifies lenders of mortgage file exceptions, approves mortgage files, purchases first mortgage loans, pools and delivers loans, delivers certificate to Trustee or Issuer as applicable. Servicer is not obligated to purchase loans that do not comply with applicable requirements. ehousingplus, Program Administrator Maintains the program reservation system and website; posts Administrator s Guidelines, program forms and training materials; provides training on compliance issues and system; answers Program compliance questions, receives compliance files.

8 Section 1 The ECHFA Team 2 CONTACT DIRECTORY Question General Program Compliance Questions Direct Questions to: ehousingplus (ehp) Contact Information Sue Denihan sue@ehousing.cc Patt Denihan patt@ehousing.cc Assistance with ehp Lender Portal Joe Athey joe@ehousing.cc Assistance with User Credentials for ehp Lender Portal Update an Underwriter Certified Loan ehousingplus Jennifer Erwin Jennifer@ehousing.cc Vicki Stewart Vicki@ehousing.cc Anyone at ehp Compliance office services@ehousingplus.com

9 Section 1 The ECHFA Team 3 Program Training ehousingplus Click on this link: Problems with Training Joe Athey joe@ehousing.cc System Software Training for ehp Lender Portal Program Rates Credit underwriting questions ehousingplus ehousingplus Participating Lenders should refer to their internal Underwriting Department or Manager Click on this link for the once weekly Live Webinar: Or contact: Jennifer Erwin Jennifer@ehousing.cc Vicki Stewart Vicki@ehousing.cc Click on this link to view: Then click on the RATES page. US Bank does not re-underwrite loans. For general questions, contact US Bank at hfa.programs@usbank.com or Option 2 (for general questions). Please note: US Bank answers underwriting questions from the underwriter of a lender for whom US Bank provides underwriting services ONLY.

10 Section 1 The ECHFA Team 4 Questions regarding the shipping of closed loan files ehousingplus (for questions regarding Program compliance files) services@ehousingplus.com Questions regarding exceptions US Bank (for questions regarding the first and second mortgage closed loan files) ehousingplus (for questions regarding exceptions on Program compliance files) hfa.programs@usbank.com Option 1 (for questions regarding exceptions) Debbie Kerr ehp.exceptions@ehousingplus.com X 216 US Bank (for questions regarding exceptions on the first and second mortgage closed loan files) hfacommunications@usbank.com Option 1 hfa.exceptions@usbank.com

11 Section II The TBA - Program General Information 5 II. THE ECHFA TBA PROGRAM GENERAL INFORMATION The Escambia County Housing Finance Authority (the HFA ) Big Splash Single Family (Multi- County) Mortgage Loan Program (the Program or the TBA Program ) serves many counties throughout Florida. Presently, loans may be originated through the Program in Alachua, Bay, Bradford, Escambia, Franklin, Gadsden, Gulf, Hernando, Indian River, Jackson, Jefferson, Leon, Marion, Martin, Okaloosa, Santa Rosa, St. Lucie, Wakulla and Walton Counties. The HFA presently offers its TBA Program as a Freddie Mac HFA Advantage Program (the Conventional Program ). For the Conventional Program, all loans must be guaranteed by Freddie Mac. Loans that are insured or guaranteed by FHA, VA or USDA-RD should be directed to the HFA s 2018 Single Family (Multi-County) Bond Program. Borrowers qualifying for a first mortgage under the TBA Program may choose to utilize the down payment and closing cost assistance products offered by the HFA ( DPA ). PLEASE NOTE THAT THE FIRST MORTGAGE INTEREST RATE AND THE AMOUNT AND TERMS ON THE DOWN PAYMENT ASSISTANCE MAY CHANGE AT ANY TIME WITHOUT NOTICE. First Mortgage The current interest rate on the First Mortgage is available on the ehousingplus web page for the HFA TBA Program. The interest rate is only guaranteed at the time it is reserved on the ehousingplus Lender Portal. Qualified borrowers will receive a 30-year, fixed rate, fully amortizing first mortgage loan with 360 level monthly payments. Down Payment/Closing Cost Assistance In order to enhance the efficiency of the Program, the HFA provides down payment and closing cost assistance to first time homebuyers through loans and/or grants to assist in the purchase of residences. PLEASE NOTE THAT THE TYPE, AMOUNT AND TERMS OF THE DOWN PAYMENT ASSISTANCE MAY CHANGE AT ANY TIME WITHOUT NOTICE.

12 Section II The TBA - Program General Information 6 Current Down Payment Assistance Product The down payment assistance ( DPA ) currently being offered under the ECHFA TBA Program is a non-amortizing, deferred loan (the DPA Loan ) secured by a second mortgage (the DPA Second Mortgage ) as follows: DPA Second Mortgage The DPA Second Mortgage may ONLY be used with the HFA s first mortgage. If a borrower qualifies for the HFA s first mortgage they automatically qualify for up to $7,500, 0%, 30-year deferred DPA Loan (due upon sale, refinancing, transfer of title, or rental of the home if done within first 30 years) secured by a second mortgage. The DPA Loan is never forgiven. Until otherwise notified the HFA will fund the DPA Loan at closing and will service the DPA Second Mortgage. The proceeds of the DPA Loan may not be used to pay off debt, nor any surplus proceeds be paid to the homebuyer over and above any reimbursement of fees paid prior to the close of escrow (i.e. Mortgage Lender may not use the DPA Loan proceeds for a principal reduction of the First Mortgage). There is no cash back" to the borrower. DPA Loan proceeds may be applied for any eligible use associated with the Mortgage Loan closing process, including but not limited to a borrower s required down payment, closing costs, Lender fees, Servicer fees, prepaids, mortgage insurance premiums, discounts, and the reimbursement of earnest money and pre-close fees, such as credit report and appraisal fees ( Eligible DPA Uses ). With the HFA as the mortgagee, the funds may be used to fulfill any required borrower minimum contribution. DPA Second Mortgage Disclosure Requirements The determination has been made that the Escambia County HFA DPA Second Mortgage, as non-amortizing 0%, 30-year deferred subordinate loans, IS NOT SUBJECT TO TILA or RESPA and lenders may NOT use the new TRID forms (Loan Estimate and Closing Disclosure) for these loans. Instead, a required DPA Loan Disclosure Form has been created to further clarify the terms of the DPA Second Mortgage for the borrower. This disclosure is generated from the ehousingplus Lender Portal and is signed at closing by the borrower. Effective October 1, 2018, please note that the only fees that are permitted to be charged at origination of an Escambia County HFA DPA loan are (i) governmental recording fees; and (ii) a bona fide and reasonable lender application fee that may not exceed 1% of the DPA loan. The amount of these fees must be shown on the required DPA Loan Disclosure Form. (Rev ) If there is less than $500 in remaining DPA Loan proceeds available at the close of escrow, the Lender MUST use such proceeds to reduce the DPA Loan principal balance. If the remaining DPA Loan proceeds is $500 or greater, the DPA Loan amount must be recalculated and reduced before settlement and the Lender should draw new DPA Loan documents and

13 Section II The TBA - Program General Information 7 disclosures. It is the Lender s responsibility to assure that DPA Loans close in compliance with these requirements. See Process Guidelines for Requesting Down Payment Assistance Funds in this Guide. Mortgage Credit Certificate Program The HFA offers a Mortgage Credit Certificate Program. Mortgage Credit Certificates may be used in connection with a mortgage loan obtained through the TBA Program, but the borrower will have to comply with the more restrictive requirements of the Mortgage Credit Certificate Program. Additionally, if the borrower wants to apply for a mortgage credit certificate, the borrower will have to use a Lender that participates in the Mortgage Credit Certificate Program. Use of the Mortgage Credit Certificate Program is not mandatory for participation in the Big Splash Program, however, if a borrower chooses to do so, the borrower may apply for both a mortgage credit certificate and Down Payment Assistance funds. Information regarding the Escambia HFA Mortgage Credit Certificate Program is available at this link: If the borrower qualifies, the borrower may receive DPA assistance and a mortgage credit certificate from the Issuer, along with an AIS Grant from Freddie Mac (see AIS Grants). These subsidies are stackable. (Rev. 4/16/18)

14 Section III The Freddie Mac Conventional Program 8 III. THE TBA FREDDIE MAC HFA ADVANTAGE (CONVENTIONAL) PROGRAM Eligible Borrowers ` Borrowers must be first-time homebuyers or meet the requirements for a Freddie Mac First-Time Homebuyers Exception. First-time homebuyer means a taxpayer who has not owned a principal residence at any time during the three years prior to the date of purchase of a home through the Freddie MAC HFA Conventional Program. Borrowers and their spouses must be able to permanently reside in the US. Follow Agency (Freddie Mac) and US Bank guidelines for non-citizens. Borrowers must live in the property they purchase as their principal residence. All applicants must be considered irrespective of age, race, color, religion, national origin, sex, marital status, military status or physical handicap. Borrowers must occupy the property purchased within 60 days of closing. The past three years federal income tax returns are NOT required. There is no Recapture Tax. With a Freddie Mac Conventional Program Loan, a borrower CANNOT own other property at the time of closing. Freddie MAC First-Time Homebuyers Exceptions It is not necessary to be a first-time homebuyer if the home is located in a federally designated Targeted Area. It is not necessary to be a first-time homebuyer if the homebuyer is a single parent who has only owned with a former spouse while married. It is not necessary to be a first-time homebuyer if the individual is a displaced homemaker and has only owned with a spouse. It is not necessary to be a first-time homebuyer if the individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations. It is not necessary to be a first-time homebuyer if the individual has only owned a property that was not in compliance with state, local or model building codes and which cannot be brought into compliance for less than the cost of constructing a

15 Section III The Freddie Mac Conventional Program 9 permanent structure. It is not necessary to be a first-time homebuyer if the Veteran s Exception applies. A borrower will not be disqualified for having an ownership interest in a principal residence during the preceding three years if: The borrower inherited their ownership interest in the property and shares ownership with another party; OR The borrower owns the property with another party and the debt associated with the property was assigned to the other party by a court order (e.g. a divorce decree); OR The borrower is a cosigner/guarantor on the related mortgage debt and someone other than the borrower has made payments on the debt associated with the property for the most recent twelve months, as documented with copies of canceled checks or a statement from the lender. Veterans Exception For the Veterans Exception, a veteran is defined as "a person who served in the active military, naval, or air service, and who was discharged or released therefrom under conditions other than dishonorable." For the Freddie MAC Conventional Program, there is no limit to the number of times a veteran may use the exception. Minimum FICO (Credit) Score Buyers must have a minimum FICO credit score of 640 (the mid score must be the minimum or above). If Freddie Mac has a higher minimum, follow Agency guidelines. If a participating lender has a higher minimum for other loans and wishes to require a higher minimum for Conventional Program loans, then lenders must use the higher minimum. Manual underwriting is acceptable with Loan to Value ( LTV ) at or below 95% with Debt to Income ( DTI ) of 36%. The maximum debt to income ratio is 45%. Maximum Debt to Income Ratio Eligible Properties; Property Requirements Eligible Properties include primary residences only, may be new or existing, must be one unit only, detached or attached, and may be town homes or condos (up to 95% LTV).

16 Section III The Freddie Mac Conventional Program 10 Homes are considered new if never previously occupied. Manufactured housing, mobile, recreational, seasonal or other types of vacation or nonpermanent homes are not permitted. Land may not exceed the size required to maintain basic livability. Household Income Calculation Qualifying income in the Conventional Program is established by the 1003 income used to qualify borrower(s) for the loan. It is not necessary to provide three years of tax returns for additional documentation. The remainder of this page is intended to be blank.

17 Section III The Freddie Mac Conventional Program 11 Income Limits The Income Limits and Acquisition Price Limits (Sales Price Limits) for the Freddie Mac Conventional Program are as follows: EFFECTIVE 6/11/18 Rev for loan applications on or after 6/11/18: County Freddie Mac 1-2 person Freddie Mac 3+ Person Acquisition Limits (Non- Targeted Area) Acquisition Limits (Targeted Area) Alachua $ 85,560 $ 99,820 $ 271,164 $ 331,423 Bay (Rev ) $ 77,640 $ 90,580 $ 271,164 $ 331,423 Bradford $ 75,000 $ 87,500 $ 271,164 N/A Escambia $ 78,240 $ 91,280 $ 271,164 $ 331,423 Franklin (Rev ) $ 75,000 $ 87,500 $ 271,164 N/A Gadsden $ 82,080 $ 95,760 $ 271,164 N/A Gulf (Rev ) $ 75,000 $ 87,500 $ 271,164 N/A Hernando ( ) $ 76,680 $ 89,460 $ 271,164 N/A Indian River $ 77,520 $ 90,440 $ 271,164 $ 331,423 Jackson $ 75,000 $ 87,500 $ 271,164 N/A Jefferson (Rev ) $ 82,080 $ 95,760 $ 271,164 N/A Leon $ 82,080 $ 95,760 $ 271,164 $ 331,423 Marion $ 75,000 $ 87,500 $ 271,164 $ 331,423 Martin $ 75,000 $ 87,500 $ 291,176 N/A Okaloosa $ 85,800 $ 100,100 $ 327,176 N/A Santa Rosa $ 78,240 $ 91,280 $ 271,164 N/A St. Lucie $ 75,000 $ 87,500 $ 291,176 $355,881 Wakulla $ 76,680 $ 89,460 $ 271,164 N/A Walton $ 75,000 $ 87,500 $ 327,176 N/A

18 Section III The Freddie Mac Conventional Program 12 Affordable Income Subsidy (AIS) Grants Borrowers using the Freddie Mac HFA Advantage Loan who meet specific income limits may be eligible for a grant made by Freddie Mac to help with down payment and closing costs (the Affordable Income Subsidy Grant or AIS Grant ). The income limits for the AIS Grants are determined by the county location of the home. Borrowers at or below 50% of the Area Median Income ( AMI ) Limits as published by Freddie Mac are eligible for an AIS Grant in the amount of $2,500 and borrowers above 50% of AMI but at or below 80% AMI are eligible for an AIS Grant of $1,500. There is no repayment of the AIS Grant it is a grant subsidy. The AIS Grant is reserved in the ehousingplus Lender Portal using the ADDITIONAL LOAN tab after the First Mortgage and Second Mortgage are reserved. The AIS will be provided at closing by the Lender. Upon purchase of the loan, US Bank will reimburse the Lender for all qualified subsidies. The AIS funds may be used for down payment and closing cost assistance only. Cash back, reimbursement of pre-paids and reimbursement of overage of earnest money deposit is not permitted for any borrower utilizing the AIS Grant. The AIS must be reflected on Page 3, Section L of the CL as Affordable Income Subsidy. This AIS Grant must be reflected in DU or LP findings, along with the Second Mortgage provided by the Program. Any questions about the preparation of the CD should be directed to US Bank HFA Division. For purposes of the AIS Grant income calculations, AMI is not adjusted for family size. If the borrower qualifies, the borrower may receive the AIS Grant from Freddie Mac and DPA assistance and a mortgage credit certificate from the Issuer. These subsidies are stackable.

19 Section III The Freddie Mac Conventional Program 13 AIS Grant Step-by-Step Reservation Instructions

20 Section III The Freddie Mac Conventional Program 14 Affordable Income Subsidy Grant Income Limits FREDDIE MAC LOANS ONLY (Rev. 7/23/18) Effective for all new loan reservations July 29, 2018 or after 2018 Florida County Level Area Median Income (100%, 80% and 50%) County Name 100% Area Median Income (AMI) 80% of Area Median Income 50% of Area Median Income Alachua $71,300 $57,040 $35,650 Bay $64,700 $51,760 $32,350 Bradford $59,400 $47,520 $29,700 Escambia $65,200 $52,160 $32,600 Franklin $52,100 $41,680 $26,050 Gadsden $67,400 $53,920 $33,700 Gulf $64,700 $51,760 $32,350 Hernando $63,900 $51,120 $31,950 Indian River $64,600 $51,680 $32,300 Jackson $52,100 $41,680 $26,050 Jefferson $67,400 $53,920 $33,700 Leon $67,400 $53,920 $33,700 Marion $53,400 $42,720 $26,700 Martin $60,500 $48,400 $30,250 Okaloosa $65,700 $52,560 $32,850 Santa Rosa $65,200 $52,160 $32,600 St. Lucie $60,500 $48,400 $30,250 Wakulla $67,400 $53,920 $33,700 Walton $65,700 $52,560 $32,850 Financing Facts For Freddie Mac Conventional Program It is expected that lenders have reviewed some preliminary documentation and believe that applicants will also qualify for credit. Excessive cancellations will be reviewed to assure that allocation is not being utilized inappropriately. Check with your underwriter for updates to information for Freddie Mac HFA Advantage. Such information is provided by a third party (i.e. Freddie Mac, U.S. Bank, and similar entities) who do not provide updated information to ehousingplus.

21 Section III The Freddie Mac Conventional Program 15 Freddie Mac HFA Advantage Fact Sheet Appraisal The appraisal must indicate that the home has at least a 30-year remaining useful life. Buydowns Buydowns are limited to 1 or 2 years with a maximum change of 1.00% per year. Cannot be paid by borrower or paid with their DPA assistance. Cash Back Cash Back to the borrower is not permitted. However, borrowers are permitted a reimbursement of prepaids and reimbursement of overage of earnest money deposit to the extent any minimum contribution has been satisfied and permitted by Agency guidelines. Construction to permanent is not permitted. Construction to Permanent Co-signers Co-signers are not allowable under present Freddie Mac guidelines. Freddie Mac Loan Level Price Adjustment and Adverse Market Fees These fees have been waived. Documentary Stamp Tax and Intangible Tax First and second mortgages closed on or after July 1, 2018, are exempt from documentary stamp tax, so long as the First and Second Mortgage Doc Stamp Exemption affidavits, available from the ehousingplus Lender Portal, are recorded with the mortgages. (See Exhibit A hereto for forms of Affidavits and instructions for completing them.) After July 1, 2018, this legend must appear on the first mortgages:

22 Section III The Freddie Mac Conventional Program 16 THIS MORTGAGE IS EXECUTED AND DELIVERED IN CONNECTION WITH A LOAN MADE BY OR ON BEHALF OF A HOUSING FINANCE AUTHORITY. IT IS EXEMPT FROM THE DOCUMENTARY STAMP TAX PURSUANT TO THE PROVISIONS OF SECTION (2), FLORIDA STATUTES UPON THE FILING OF THE ATTACHED AFFIDAVIT. (Rev ) The first mortgage and note are NOT exempt from Intangible Tax. However, the second mortgage and note pursuant to section , Florida Statutes, are exempt from intangible tax. This legend must appear on the second mortgage: THIS MORTGAGE IS EXECUTED AND DELIVERED IN CONNECTION WITH A LOAN MADE BY OR ON BEHALF OF A HOUSING FINANCE AUTHORITY. IT IS EXEMPT FROM FLORIDA INTANGIBLE TAX PURSUANT TO THE PROVISIONS OF SECTION (1), FLORIDA STATUTES AND IS EXEMPT FROM THE DOCUMENTARY STAMP TAX PURSUANT TO THE PROVISIONS OF SECTION (2), FLORIDA STATUTES UPON THE FILING OF THE ATTACHED AFFIDAVIT. (Rev ). Final Typed Loan Application (1003) The typed application signed and dated by all parties is required. Loan interviewer must complete and sign page 3 of 4 of the If this is not possible, then an Officer must sign in place of the interviewer. All persons taking title to the property must execute all program documents. The income disclosed on the Affidavit must be the same or more than that shown on the The purchase price, loan amount, and other financial details must be the same as shown on all other documents. Homebuyer Education All borrowers and anyone listed on the deed, utilizing the Freddie Mac HFA Advantage (Conventional) Loan, must attend homebuyer education PRE-CLOSING from an educational provider approved by the Issuer. The Issuer prefers that education be taken as early in the homebuyer process as possible to maximize the benefit to the borrowers. A Homebuyer Education Certification is acceptable for a period of one year from issuance. Lender provided homebuyer education is unacceptable as is over the phone education. If an education course is not listed on the HUD face-to- face web site, it is not acceptable. As an alternative option, at least one borrower may complete the Freddie Mac CreditSmart Steps to Homeownership Tutorial per Guide Section Click on this link to attend the training: Evidence of completion of the homebuyer education program is required prior to closing the loan. (Rev )

23 Section III The Freddie Mac Conventional Program 17 Manufactured Homes As of December 1, 2015, U. S. Bank will not purchase loans for manufactured housing. U.S. Bank considers manufactured housing a mobile home built entirely offsite on a permanent chassis that is pulled on the highway to a permanent location. Modular, panelized or prefabricated homes are not considered manufactured housing. Minimum Loan Amount There is no minimum loan amount in the Conventional Program. Maximum Loan Amount Maximum loan amount must follow Agency (Freddie Mac) guidelines. Must also meet maximum purchase price limits established for the Conventional Program (see above). Also considered, loans cannot exceed appraised value. DPA cannot be used as borrower s funds to make up the difference between appraised value and purchase price. Prepayments The first and second mortgages may be prepaid at any time without penalty. Real Estate Purchase Contract The full address of the property, full names of all sellers and buyers, total purchase price of the property must be included. If there is not an address for new construction, a lot number and subdivision name are required. All named persons must sign. Include the name and title whenever a representative is signing for a corporation. Recapture Tax There is no Recapture Tax liability in connection with the Freddie Mac TBA Program. Refinances The Conventional Program is for new mortgage loans. Refinances are not permitted. However, temporary, construction or bridge financing with a term of 2 years or less may be taken out with a program loan. Remaining Reserves Remaining reserves are not established by this program. Freddie Mac. If any, these are determined by

24 Section III The Freddie Mac Conventional Program 18 Tax Returns or Tax Transcripts Tax returns or tax transcripts are NOT required for this program. Only the form 1003 is required as set forth above. The remainder of this page is intended to be blank.

25 Section IV Summary of the Compliance Origination Process 19 IV. SUMMARY OF THE COMPLIANCE ORIGINATION PROCESS Mandatory Program Training Lender training is mandatory for anyone working with the ECHFA Program. ehousingplus and US Bank provide program training online 24/7. To attend click on this link. ehousingplus Lender Portal System Training Conducted once a week via live WebEx with the ehousingplus Compliance Office. We highly encourage anyone who will reserve funds, complete an underwriter certification, print forms or clear exceptions to attend this 30-minute training. Click here to register to attend. Lender Portal User Credentials Following completion of Program training at ehp University, an will be sent to lenders giving directions on how to apply for User Credentials for the lender portal. These instructions are for both new users of the system and existing users who wish to add programs to their profile. Qualify Lenders qualify applicants for the ECHFA Program. Buyers must present an executed sales agreement before being entered into the program reservation system. Disclose Lenders will have the borrowers sign the Notices to Buyers and retain original. Make a copy of the signed Notices to Buyers. This form is available online as self-populating behind security within the ehousingplus Lender Portal. Lenders are responsible for disclosing the second mortgage to the extent required by law. Follow Agency Freddie Mac)Guidelines, as applicable. Reserve To reserve funds in the Freddie Mac HFA Advantage Program online system click on this link. Log in and reserve the first mortgage. You will receive a loan number and a message that you ve completed the reservation successfully. After you reserve the first mortgage, click on Additional Mortgage to reserve the down payment and closing cost assistance. Process Lenders process the loan as they would normally, keeping in mind the program timelines.

26 Section IV Summary of the Compliance Origination Process 20 Underwrite and Certify Lenders underwrite and are responsible for credit decisions of the loans in the program. Servicer does not re-underwrite loans. Following credit approval AND WITHIN 20 DAYS OF LOAN RESERVATION, Underwriter completes the online Underwriter Certification form. HFA S Process Guidelines for Reserving Down Payment Assistance Funds 1. Lender will reserve the first mortgage and any assistance on the online system at: the following link then please login in. 2. Lender will process the loan(s) and update the information in the system as the loan moves through the pipeline. 3. Once the loan has been approved internally, the Lender s Underwriter will execute the Underwriter s Certification online. 4. After the Underwriter s Certification, has been completed, and with a scheduled closing date, the Lender s authorized representative must fill out and execute the DPA Funding Request Form available in the system, under LOAN FORMS. Reserve Affordable Income Subsidy (AIS) Grant Income Qualified Freddie Mac HFA Advantage Loan Only To reserve the Affordable Income Subsidy Grant funds, immediately following the second mortgage loan reservation, click on the Add Additional tab. The lender will be responsible for calculating the amount of the additional subsidy based upon borrower AMI (view AMI limits on page 14) and enter than amount in the ADDITIONAL LOAN tab. The subsidy must be for the exact amount ($1,500 or $2,500) as applicable based upon borrower AMI. (Rev. 4/16/18) Request DPA Funds for Closing The Down Payment Assistance (DPA) is table funded by the Escambia County Housing Finance Authority at closing. Within a minimum of three (3) business days (no later than 2:00 p.m. CT) prior to closing AND AFTER the Underwriter s Certification is submitted: 1) Print, complete and scan the DPA Funding Request, Underwriter s Certification Form, and DPA Loan Disclosure Form located within the ehousing Plus Lender Portal. (Rev ) 2) the DPA Request with all required forms described in paragraph 1 to:

27 Section IV Summary of the Compliance Origination Process 21 The HFA'S goal is to facilitate this process and to provide Lenders the assistance needed to ensure the DPA Funds are available at each closing. Please make sure that ehousingplus and the addresses above are added to your white lists/contacts as both systems generate s related to the DPA Program. The DPA Funding Request is reviewed and approved by the HFA. Following HFA s review and approval, funds are sent directly to the Closing Agent/Title Company via ACH or CHECK, as applicable. If requesting a check, the Funding Request should include a prepaid shipping label. IF THE CLOSING AGENT/TITLE COMPANY IS NOT SET UP WITH THEIR BANK TO RECEIVE ACHs AND THEY NEED ASSISTANCE, PLEASE HAVE THEM CONTACT PATRICIA D. LOTT, KIMBERLY MCCLAY OR FRAN JONES AT FOR ASSISTANCE. Close and Verify It is the lender s responsibility to ensure that proper instructions are provided to internal processor/closer and to the title company/closing agent. All program documents (except DPA documents) must be returned to you. At closing have borrower and seller execute (and have notarized) Affidavits/Certification Form. At closing, borrowers must also sign the DPA Legally Enforceable Obligation Letter HUD ML Directions of what to do with the letter are detailed at bottom of the form. All forms are located behind security at the ehousingplus web site. Ship / Submit Use the Compliance Checklist to assemble the compliance file. The Compliance File is submitted directly to ehousingplus. The first mortgage file and credit package are submitted to U.S. Bank. U.S. Bank checklists are on their website. The original Second Mortgage Doc Stamp Exemption Affidavit, Second Mortgage and Promissory Note must be recorded as ONE DOCUMENT in the official records of the applicable County and sent

28 Section IV Summary of the Compliance Origination Process 22 overnight within 30 days of closing to the Escambia County Housing Finance Authority, 700 South Palafox Street, Suite 310, Pensacola, FL The ehousingplus Compliance File Checklist for the TBA Program may be found behind security within the ehousingplus lender portal. The U.S. Bank Delivery Checklist and DPA Funding Verification Form may be found on the U.S. Bank web site. See last page of this guideline for instructions on how to find these forms. Exceptions Lenders are notified by ehousingplus and U.S. Bank of exceptions. Exceptions for both ehousingplus and U.S. Bank are available in the ehousingplus web-based system. ehousingplus notifies Lenders of exceptions in the following manner; as files are received and reviewed, any exceptions will be posted in the compliance working area. At the same time, the System will automatically the Lender responsible for curing the exceptions. Additionally, the Lender Portal (File Conditions to Correct) area will automatically display the same conditions via the system application. The Lender will see the exception real time, providing an immediate vehicle for the Lender to cure the exception as soon as possible. Lenders are responsible for clearing all exceptions in a timely manner. Final Documents THE RECORDED FIRST MORTGAGE DOCUMENTS SHOULD BE SUBMITTED TO U.S. BANK. THE RECORDED SECOND MORTGAGE DOCUMENTS SHOULD BE RETURNED TO THE AUTHORITY.

29 Section IV Summary of the Compliance Origination Process 23 Shipping Instructions for HFA DPA Documents PARTICIPATING LENDERS -- PLEASE ENSURE THE CLOSING AGENT AND/OR SHIPPER ARE GIVEN THE FOLLOWING INSTRUCTIONS: 1. THE ORIGINAL SECOND MORTGAGE DOC STAMP EXEMPTION AFFIDAVIT, SECOND MORTGAGE AND PROMISSORY NOTE MUST BE RECORDED AS ONE DOCUMENT IN THE OFFICIAL RECORDS. PLEASE FORWARD THE ORIGINAL RECORDED SECOND MORTGAGE DOC STAMP EXEMPTION AFFIDAVIT, SECOND MORTGAGE AND PROMISSORY NOTE TO THE HFA WITHIN 30 DAYS OF CLOSING. 2. IF THE MORTGAGE LOAN CLOSING DOES NOT OCCUR OR IF THE DPA FUNDS ARE NOT USED IN WHOLE OR IN PART, LENDER MUST NOTIFY THE HFA IMMEDIATELY AND MUST CAUSE THE DPA FUNDS TO BE RETURNED TO THE HFA NO LATER THAN THE CLOSE OF BUSINESS ON THE BUSINESS DAY FOLLOWING THE LOAN CLOSING DATE. IMPORTANT! IMPORTANT! IMPORTANT! IMPORTANT! THE ORIGINAL SECOND MORTGAGE DOC STAMP EXEMPTION AFFIDAVIT, SECOND MORTAGE, AND PROMISSORY NOTE (THE DPA DOCUMENTS ) SHOULD BE RETURNED TO THE ESCAMBIA COUNTY HOUSING FINANCE AUTHORITY. DO NOT INCLUDE THE ORIGINAL DPA DOCUMENTS IN THE COMPLIANCE OR MORTGAGE FILE TO BE SENT TO EHOUSING OR US BANK! THE LENDER WILL BE REQUIRED TO REPAY THE DPA TO THE HFA IF THE FIRST MORTGAGE LOAN IS NOT ULTIMATELY PURCHASED UNDER THE ECHFA PROGRAM. IT IS IMPORTANT that lenders have the borrower(s) sign the Legally Enforceable Obligation Letter HUD ML and HUD Handbook R.5. A Gift Letter (appears in the autofill Forms available on ehousingplus) and retain original with copies to borrower, US Bank and a copy in the mortgage file. If you need assistance, contact ehousingplus.

30 Section V Program Timeline 24 V. PROGRAM TIMELINE Buyers must have a fully executed sales contract for a specific property in order for a Lender to reserve funds for a homebuyer or place a buyer on a waiting list. The contract may be dated prior to the date of the loan application. Buyers may be pre-qualified. However, if the buyer does not have a contract on a property, program funds may not be held for the buyer until the buyer presents a valid contract. To assure that loans are purchased, please follow the Processing, Delivery and Purchase Timetable shown below. Please do not reserve loans that cannot meet the timetable. This is particularly important with respect to new construction and short sales. Loans not purchased within the timeframe below, cannot be purchased. Since the Program offers continuous funding and strict penalties, the Lenders are encouraged not to reserve funds until it s assured the loan can close and be delivered within 40 days. Following this procedure will help insure timely purchase. First Mortgage Loans not delivered, cleared of all exceptions, and eligible for purchase within 60 days of the Reservation Date will be automatically cancelled unless the Participating Lender requests an extension of time in writing to the Program Administrator prior to the expiration date. Extensions of up to 20 days will be considered by the Program Administrator. A penalty in the amount of $500 will be imposed if the extension is approved, whether or not the First Mortgage Loan is ultimately closed and presented for purchase. The penalty will be deducted from the Mortgage Loan purchase price at the time of purchase by the Master Servicer. For any First Mortgage Loan in which an extension has been approved but the First Mortgage Loan is not ultimately delivered for purchase, the Participating Lender shall be required to pay the fee penalty directly to the Issuer within 15 days from date of notice. The Participating Lender will be unable to make additional reservations in the Program until all extension penalties have been paid to the Issuer.

31 Section V Program Timeline 25 Timely Delivery Procedures (60 days from Reservations to First Mortgage Loan Purchase) Mortgage Rate is not guaranteed and/or locked until you reserve the loan on ehousingplus Lender Portal IMPORTANT: YOU DO NOT NEED TO MAKE A RESERVATION UNTIL IT IS REASONABLY CERTAIN THAT THE LOAN CAN CLOSE AND BE DELIVERED WITHIN 40 DAYS. REMEMBER THIS PROGRAM INVOLVES CONTINUOUS FUNDING. Number of Days Allowed from: Reservation to Underwriter Certification 20 days Reservation to Closed & Delivered First Mortgage Loan days Reservation to Exceptions Cleared & First Mortgage Loan Purchased...60 days Late for Purchase (extension required)..61+ days

32 Section VI Program Fees 26 VI. PROGRAM FEES First Mortgage Program Fees First and second mortgages closed on or after July 1, 2018, are exempt from documentary stamp tax, so long as the First and Second Mortgage Doc Stamp Exemption affidavits from the ehousingplus Lender Portal, are recorded with the mortgages. After July 1, 2018, this legend must appear on the first mortgages: THIS MORTGAGE IS EXECUTED AND DELIVERED IN CONNECTION WITH A LOAN MADE BY OR ON BEHALF OF A HOUSING FINANCE AUTHORITY. IT IS EXEMPT FROM THE DOCUMENTARY STAMP TAX PURSUANT TO THE PROVISIONS OF SECTION (2), FLORIDA STATUTES UPON THE FILING OF THE ATTACHED AFFIDAVIT. (Rev ) The first mortgage and note are NOT exempt from Intangible Tax. However, the second mortgage and note pursuant to section , Florida Statutes, are exempt from intangible tax. This legend must appear on the second mortgage: THIS MORTGAGE IS EXECUTED AND DELIVERED IN CONNECTION WITH A LOAN MADE BY OR ON BEHALF OF A HOUSING FINANCE AUTHORITY. IT IS EXEMPT FROM FLORIDA INTANGIBLE TAX PURSUANT TO THE PROVISIONS OF SECTION (1), FLORIDA STATUTES AND IS EXEMPT FROM THE DOCUMENTARY STAMP TAX PURSUANT TO THE PROVISIONS OF SECTION (2), FLORIDA STATUTES UPON THE FILING OF THE ATTACHED AFFIDAVIT. (Rev ) Extension Fee If approved, fee for extension is $ whether or not the loan is purchased. Second Mortgage Fees Effective October 1, 2018, the Lender is permitted to charge a Second Mortgage Application Fee equal to the lesser of $75 or 1% of the DPA loan. Due to changes in applicable law, the only fees that may be charged in connection with the origination of the DPA loan are (i) governmental recording fees; and (ii) a bona fide and reasonable application fee in connection with the application for the DPA loan/second mortgage that may not exceed the lesser of $75 or 1% of the DPA loan. This application fee remains with the Lender. (Rev )

33 Section VII Program Forms 27 ehousingplus Fee The program includes a first mortgage Compliance/Admin Fee and a penalty fee of $100 for files that are chronically deficient. The Compliance/Admin Fee is collected at closing, payable to ehousingplus and submitted with the Compliance File. ONLY Cashier s or Corporate checks are acceptable and the fee may not be financed. Escambia County HFA Big Splash Program Loan $300 Combined Escambia County HFA Big Splash Program Loan AND Affordable Income Subsidy Grant $375 (Added 06/11/18) The Compliance/Admin Fee is the fee charged by the Program Administrator/Compliance Agent to process the applicant/borrower from Origination to Compliance Approval, and to assess that the lenders originating such loans are following Program guidelines for the benefit of the eligible borrower(s). The Program Administrator/Compliance Agent tracks the loan via its web-based system and assists the lender in processing the loan ensuring eligibility to the Program available offerings, which can include various rate options and down payment assistance. The Compliance/Admin fee includes the review of information and documents delivered in the form of a Compliance File by the originating lender, on behalf of the borrower. Additionally, the Compliance review verifies that the lender has charged only the fees allowed by the Program. Contrary to this, approval may be denied and/or fees may have to be reimbursed to the borrower. The compliance file processing consists of required affidavits, application, closing documents, certain non-mortgage documents, tax returns where applicable and other pre-defined Program documents that are disclosed to the potential borrower(s). This is required to ultimately receive Compliance Approval. These documents can support both the first mortgage and any down payment assistance available, and are required to ensure eligibility to the Program, Federal, State and Local requirements, where applicable. The Compliance review verifies that the data and documents submitted meet all requirements, and may include those for first-time homebuyer, income limits, sales price limits, targeted areas, homebuyer education, rate, term, points, fee limits, LTV, FICO score, special state, city, county program requirements for qualified military, first responders, teachers, etc. Please note that if the borrower is applying for a Mortgage Credit Certificate in connection with a mortgage from the Program, the ehousing Plus Compliance/Admin Fee may be combined with the fee for the mortgage credit certificate. The amount of the combined fee is set forth in the Guidelines for the Mortgage Credit Certificate Program at

34 Section VII Program Forms 28 US Bank Fees US Bank charges an $80.00 Tax Service Fee (per US Bank LOU L ). US Bank also charges a $400 Funding Fee. These fees will be netted out at time of purchase by US Bank. See US Bank Bulletin L TAX SERVICE FEE REDUCTION for further details. Click on this link: Click on U.S. Bank Lending Manuals, a pop-up box will appear, click on Continue. Web page will be redirected to U.S. Bank All Regs site. Click on Housing Finance Authority folder. Click on appropriate program. Lender Fees Lenders are permitted to charge reasonable and customary charges for out of pocket expenses and costs. Other financing costs such as legal fees and underwriting fees may be charged and courier fees may be charged if such fees are normally charged. Lenders may charge the usual and reasonable settlement costs. Settlement costs include titling and transfer costs, title insurance, survey fees or other similar costs. Other allowable fees include doc prep fees, notary fees, hazard, mortgage and life insurance premiums, recording or registration charges, prepaid escrow deposits and other similar charges allowable by the insurer/guarantor. "Junk" fees are not a defined term and may not be charged. Excessive fees are not permitted in the program. For the Second Mortgage Only: Effective October 1, 2018, please note that the only fees that are permitted to be charged at origination of an Escambia County HFA DPA second mortgage loan are (i) governmental recording fees; and (ii) a bona fide and reasonable lender application fee that may not exceed the lesser of $75 or 1% of the DPA loan. The amount of these fees must be shown on the required DPA Loan Disclosure Form. (Rev ) Lender Compensation Freddie Mac Program Lenders Net 2.50% with 1.00% Origination (Origination only no Discount permitted) and SRP of 1.50% from US Bank for a total Lender Compensation of 2.50%. The lender may also charge a bona fide and reasonable application fee in connection with the application for the DPA loan/second mortgage that may not exceed the lesser of $75 or 1% of the DPA loan. (Rev ) This fee remains with the lender.