Jacksonville Housing Finance Authority Mortgage Credit Certificate Program Administrator Guidelines

Transcription

1 Jacksonville Housing Finance Authority Mortgage Credit Certificate Program Administrator Guidelines Published on April 7, 2014 Updated Updates on Page 3

2 Jacksonville Housing Finance Authority MCC Program Page!2 TABLE OF CONTENTS PROGRAM UPDATES 3 WHO TO CONTACT 4 MORTGAGE CREDIT CERTIFICATES 5 What is a Mortgage Credit Certificate? 5 What is the lender involvement? 6 Homebuyer Benefit 7 What does the Homeowner have to do to claim the benefit with the IRS? 7 The Program 8 Allowable Loan Products 8 Program Requirements 8 Targeted Areas 9 Prohibited Loans 9 Recapture Tax 9 MCC Processing Timetable 9 Term of Program 9 STEP 1 - QUALIFY THE BORROWER(S) 10 STEP 3 - QUALIFY THE PROPERTY 12 STEP 4 - MAKE SURE THE PROPERTY SALES PRICE QUALIFIES 12 STEP 5 - REVIEW ALLOWABLE LOAN PRODUCTS 12 STEP 6 - SIGN AND DATE THE NOTICES TO BUYERS 12 STEP 7 - RESERVE THE MCC ONLINE 12 STEP 8 - UNDERWRITER CERTIFICATION 13 STEP 9 - PREPARE THE AFFIDAVITS/CERTIFICATION FORM FOR CLOSING 13 STEP 10 - REVIEW THE PROGRAM FEES 13 STEP 12 - USE THE COMPLIANCE FILE CHECKLIST 13 STEP 13 - CHECK THE STATUS OF LOANS - CHECK FOR EXCEPTIONS. 13 STEP 14 - MCC & FINAL RECAPTURE NOTICE ISSUE 13 SUMMARY OF THE COMPLIANCE ORIGINATION PROCESS 14 ehp Digital Docs 15 SUMMARY OF ALLOWABLE PROGRAM FEES 20 SIGNATURES ON MCC FORMS/DOCUMENTS 25 FINAL RECAPTURE FORM AND MCC 25 DOCUMENTS REQUIRED FOR MCC PROGRAM COMPLIANCE FILE 26

3 Jacksonville Housing Finance Authority MCC Program Page!3 PROGRAM UPDATES Date Page 10, Revised purchase price limits Page 10 & 11, Revised income & purchase price limits effective 7/22/15 and after Page 10, Revised Homebuyer Education Requirement Page 4, Added Contact Directory Pages 14 & 15, Reformatted Compliance Process Page 16, Reformatted ehp Fees Page 22, Reformatted documents necessary for the compliance file Page 16, Renamed ehp fee in program to Compliance/Admin Fee. Added ehp fee information Page 21, Added disclaimer regarding not reproducing program forms Page 12, Revised income limit effective for new loan applications dated 06/14/16 and after Page 16, Clarified ehousingplus Fees Page 9, Corrected MCC expiration date to Dec. 31, Page 10 & 11, Revised Homebuyer education - added an online provider Page 12, Revised income limits Throughout, Changed ehousingplus Lender Portal to ehportal Pages 14-20, 26, Added ehp Digital Docs

4 Jacksonville Housing Finance Authority MCC Program Page!4 Question General Program Compliance Questions Assistance with ehportal Assistance with User Credentials for ehportal Update an Underwriter Certified Loan Direct Questions to: ehousingplus (ehp) ehousingplus (ehp) ehousingplus (ehp) WHO TO CONTACT (Rev 12/12/18) Contact Information (954) Ashlynn Mosher (954) ext 261 Anyone at ehp Compliance Office Program Training ehousingplus (ehp) Click on this link to attend Program training. Program Training Issues ehousingplus (ehp) System Software Training for ehp Lender Portal ehousingplus (ehp) Click on this link for the once weekly Live Webinar: System Software Issues ehousingplus (ehp) Program Webpage ehousingplus (ehp) Click on this link: to view the MCC web page Questions regarding the shipping of closing loan files Questions regarding exceptions ehousingplus (ehp) for questions regarding the program compliance file ehousingplus (ehp) for questions regarding exceptions on the program compliance file Debbie Kerr X216

5 Jacksonville Housing Finance Authority MCC Program Page!5 ONLY USE THIS GUIDELINE WHEN ORIGINATING A STAND-ALONE MCC DO NOT USE THIS GUIDELINE WHEN ORIGINATING THE JACKSONVILLE HFA FIRST MORTGAGE WITH DPA THE PRODUCT MORTGAGE CREDIT CERTIFICATES Jacksonville Housing Finance Authority has authorized the issuance of Mortgage Credit Certificates (MCCs). The Program Administrator will be ehousingplus (the Administrator ). TAX DISCLAIMER This material is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of avoiding tax penalties that may be imposed on the taxpayer. This material may be used to support the promotion or marketing of the matter discussed herein. The taxpayer should seek advice from an independent tax advisor regarding the matter set forth herein based on the taxpayer s particular circumstances. What is a Mortgage Credit Certificate? A mortgage credit certificate (an MCC ) is an instrument designed to assist persons of low and moderate income to better afford individual ownership of housing. The procedures for issuing MCCs were established as an alternative to the issuance of single family mortgage revenue bonds. As distinguished from a bond program, in an MCC program no bonds are issued and mortgages are financed in the conventional or government-insured market. However, the mortgagor may take a tax credit in an amount equal to the annual amount of interest paid on the mortgage loan multiplied by the Mortgage Credit Certificate Rate. Currently, the Mortgage Credit Certificate Rate for the Program is 50%. Thus, an Applicant with a $115, year, fixed rate mortgage (monthly payment has equal monthly installments of principal and interest) and a 4.25% interest rate could realize the following federal income tax savings (numbers are rounded): Example Mortgage Amount $115,000 Interest Rate 4.25% Monthly P & I $566 Total Interest Paid First 12 mos $4,850 Mortgage Credit Rate 50% Maximum First Year Credit Amount $2,000 During the first year of the Program, the Applicant in this example would be eligible for a tax credit of up to $2,000 if not limited by tax liability. The Applicant would be able to file a revised W-4 withholding form taking into consideration the anticipated tax credit and have approximately $166 per

6 Jacksonville Housing Finance Authority MCC Program Page!6 month in additional disposable income in the first year. Applying that savings to the monthly payment, decreases the payment to $400. Additionally, taxpayers who file itemized returns may continue to take a deduction equal to the amount on Line 3 of Form Because the credit rate is greater than 20%, the amount of MCC is capped at $2,000. In the example on the previous page, 100% of the mortgage interest paid is $4,850 so 50% of the mortgage interest paid is $2,425. Because the credit rate is 50%, the amount that may be claimed as a credit is capped at $2,000. According to IRS instructions on Form 8396, the amount of allowable mortgage interest deduction on Schedule A is determined by reducing by the amount on Line 3 of Form 8396 ($2,000). So the total mortgage interest paid in the first 12 months was $4,850, subtract $2,000 and the remaining $2,850 may continue to be used as a deduction. The tax credit amount of $2,000 may be used as a tax credit after all other deductions and credits have been applied and to the extent there is tax liability. If not all of the $2,000 can be used because there is not enough tax liability, it may be carried forward for up to three years. However, it cannot be added to the allowable mortgage interest deduction. If 50% of the mortgage interest paid was $1,000, then $1,000 would be shown on Line 3 on Form 8396 and $4,850 less the $1,000 credit amount means $3,850 becomes the amount of a mortgage interest deduction on Schedule A. Borrowers who receive an MCC and who continue to own and occupy the financed home will be eligible for a tax credit each year for the term of the loan. The amount of the credit actually claimed on the MCC holder s federal income tax return cannot exceed the amount of federal income taxes due after other credits and deductions have been taken into account. For example, if after taking into account other tax credits and deductions, a borrower only owes $1,000, he or she cannot use the MCC tax credits in an amount in excess of $1,000. Any unused MCC related tax credit can be carried forward up to three years to be applied against future income tax liability. A purchaser of a new or existing single family home may apply for an MCC through any mortgage lender (who is willing to sign a no cost agreement with the HFA) at the time he or she applies for a mortgage from the lender. Any lender is eligible to participate in the Program by entering into a Participation Agreement and complying with Program requirements. An MCC cannot be issued to a homebuyer who is refinancing an existing mortgage or in connection with a mortgage from a relative. Also, an MCC cannot be used in connection with a bond It s important to note that all or a portion of the MCC related tax credit may be subject to recapture if the Residence is sold within the first full nine years of purchase. This tax credit recapture is further explained in the Notice of Potential Recapture Tax and in the Recapture Tax brochure provided to an applicant. What is the lender involvement? Since the HFA will not make or hold these mortgages, neither the HFA nor the Administrator will underwrite the Loans. Rather, all Loan approvals, underwriting and execution of required State and federal mortgage documents will be performed by the Lenders originating the loans. The Administrator will receive executed MCC program certificates and affidavits from the Lender in order to determine eligibility for the MCC Program. Subject to certain Program restrictions, including a requirement that loans be 15 or 30 year, fixed-rate loans that are acceptable to FHA, VA, Fannie

7 Jacksonville Housing Finance Authority MCC Program Page!7 Mae or Freddie Mac. Lenders may apply to the Administrator for HFA approval of portfolio products designed for low to moderate income buyers. The MCC Program requirements are independent of any normal underwriting requirements of the Lender. In order to qualify for issuance of an MCC an applicant must meet all MCC requirements in addition to any Agency (FHA, Fannie, etc) standards which must be met to satisfy Agency requirements. Unlike a mortgage revenue bond program, lenders do not sell the loan or the servicing rights into the program. The Lender is responsible for filing a form with the IRS in each year in which they originate loans for which MCCs are issued, and for keeping certain records regarding the MCCs. For participating lenders, the annual form will be forwarded via by the Program Administrator for execution and filing by the Lender. To be eligible for an MCC, purchasers and their spouses must be first-time buyers, be buying their principal residence and meet household income and home purchase price limits. Underwriting consideration of the MCC by an Agency (currently may be limited to FHA) is permitted in the program. Simply follow Agency guidelines. Homebuyer Benefit The MCC can reduce the amount of federal income taxes; however, the tax benefit cannot exceed the amount of federal taxes owed for the year after other credits and deductions have been taken. But unused credit may be carried forward for up to three years. Borrowers will have to adjust federal income tax withholding in order to receive the MCC benefit on a monthly basis. This adjustment is accomplished by the borrower speaking to their payroll department at their place of work. By reducing monthly withholding, they will have more disposable (after tax) income with which to make mortgage payments. If the MCC is used as an underwriting consideration, an adjustment of federal income tax withholding will be required. The benefit of the MCC program continues for the term of the mortgage as long as the holder of the MCC continues to own and occupy the home under the mortgage for which the MCC was issued. What does the Homeowner have to do to claim the benefit with the IRS? Each year the homeowner files Form 8396 with their federal income tax return. The form is available on the IRS website. Special Rules There are special rules regarding refinancing of the loan for which an MCC was issued. The borrower should contact the Program Administrator when and if refinancing the loan for which this MCC is issued.

8 Jacksonville Housing Finance Authority MCC Program Page!8 ABOUT THE MCC PROGRAM Issuer: Jacksonville HFA Program Administrator: ehousingplus The Program Entitles the recipients to take an annual federal income tax credit. A tax credit represents a reduction of actual federal income taxes due. The holder of the MCC may use the credit each year the loan is outstanding as long as they continue to live in the home. Allowable Loan Products Lenders choose loans from their own rate sheets and underwrite their own loans. Please note that FHA has allowed an underwriting consideration for the MCC. FHA has permitted underwriters to calculate the ratios on PITI minus the MCC credit. Please consult your underwriter for current FHA policy. Loans must be -- FHA, VA, and conventional loans acceptable to Fannie and Freddie that are either 15 year or 30 year, fixed-rate market loans. No adjustable rate, balloon, interest only products are permitted. Stated income loans are not permitted. MCCs may not be issued for loans funded from a mortgage revenue bond program or for loans made by persons related to the buyer. No interest may be paid to a person related to a buyer. Cosigners are allowable in an FHA transaction when meeting the following conditions: (1) a cosignor cannot have any ownership interest in the property (they cannot be on the Deed) and (2) the cosigner cannot reside in the property being purchased. A cosigner will sign only the Note in the transaction. A cosigner s income is not considered for program purposes, tax returns are not required and cosigner s do not sign any program forms. For credit purposes, follow FHA guidelines. Program Requirements Three Year Requirement. Borrowers and their spouses must not have owned their principal residence for 3 years prior to closing of the loan for which the MCC will be issued (with exceptions for homes located in Targeted Areas and Veterans Exception loans). The past 3 years federal income tax transcripts for all borrowers and spouses are required. Principal Residence. The home must be expected to become the principal residence of the Borrower within 60 days following closing. The MCC will be effective only as long as the home remains the Borrower s principal residence along with the original mortgage issued in conjunction with the MCC. Income and Purchase Price Limits. Household income and the purchase price/sales price of the home are limited. Qualified Property. The home must be located in Duval County and may be a one to four unit, single family home. Borrower must occupy one of the units.

9 Jacksonville Housing Finance Authority MCC Program Page!9 New Loans. The loan must be made to acquire a home and may not be used to refinance a home or pay off an existing home/mortgage. Targeted Areas Borrowers purchasing in targeted areas do not need to be first-time buyers. And do not need to submit the past three years tax transcripts. Targeted areas are determined by census tract number provided by HUD specifically for this program. Targeted areas are considered either economically distressed or have very low loan origination. The following census tracts constitute the HUD targeted areas for this program -- Duval County: , , , , , , , , , , , , , , Prohibited Loans MCCs may not be issued for loans funded from a mortgage revenue bond program or for loans made by persons related to the buyer. No interest may be paid to a person related to a buyer. Recapture Tax If the holder of the MCC disposes of the home within the full 9 years after issuance of the MCC or it ceases to be the MCC holder s principal residence, a portion of the tax credit may be subject to recapture pursuant to section 143(m) of the Internal Revenue Code. MCC Processing Timetable From To # Days MCC Program Reservation Underwriter Certification 10 MCC Program Reservation Loan Closed, Compliance File Delivered to Administrator 65 Loans not meeting the deadlines, will cancel automatically without further notice. Lenders should review their pipeline reports on a continuous basis in accordance with the provisions of the Agreement. Term of Program MCCs may not be made for loans closing after December 31, 2018.

10 Jacksonville Housing Finance Authority MCC Program Page!10 STEP BY STEP PROCESS HOW TO ORIGINATE LOANS WITH MORTGAGE CREDIT CERTIFICATES There are requirements imposed by the IRS and the Issuer that are reviewed for compliance with the program guidelines. It is the response. The Administrator reviews the Compliance File to assure compliance. You follow your normal procedures and review program documents to originate loans that meet the requirements modified to include the following program qualifiers: STEP 1 - QUALIFY THE BORROWER(S) Determine if you borrower has tax liability. As a reminder, the MCC program will only benefit a borrower who has tax liability. And a tax refund does NOT determine tax liability. Look at the borrower s 2014 tax returns to determine if they have tax liability. Form 1040 line 63 Form 1040EZ line 12 Form 1040A line 39 The number indicated on the line noted above will be the borrower s tax liability. A large to small number would indicate your borrower would be a great fit for the program because they have tax liability. Zero indicates your borrower is NOT a good fit for the MCC program because they do not have tax liability.* * If the borrower has the potential to have a significant increase in income in the future, even with zero tax liability, they would benefit from the MCC First-time Homebuyer Confirm that Borrowers and their spouses meet the three-year no prior home ownership requirement and obtain tax returns. All applicants must be considered irrespective of age, race, color, religion, national origin, sex, marital status, military status or physical handicap. Homebuyer Education First-Time Homebuyers, unless qualifying under a Veteran's Exception or those who are exempt by purchasing a home in a Federally Designated Targeted Area as specified in the this Program Guide, must complete a Program-approved pre-purchase homebuyer education course. We will accept face-to-face homebuyer education if provided by a HUD approved counseling agency, a unit of local government that provides pre-purchase homebuyer education in FL, or a counseling agency designated by a unit of local government to provide homebuyer education on their behalf. Refer to HUD link below for a list of approved education providers by county. Online HBE is permitted if provided by a HUD approved agency, a unit of local government that provides pre-purchase homebuyer education in FL, a mortgage insurance provider, or an Agency or GSE sponsored course. Homebuyer education provided over the phone or by the lender is NOT acceptable. Certificates of completion are acceptable for 2 years from the date of completion. Homebuyer education continued on next page

11 Jacksonville Housing Finance Authority MCC Program Page!11 Helpful links to provide to homebuyers: Approved Face-to-Face education providers: Face to face from a HUD approved education provider Approved Online education providers: Online education from ehomeamerica Freddie Mac Credit Smart HomeTRAK online education: Online education from MGIC (Instruct your borrower to look for: MGIC Homebuyer Education for Freddie Macs Home Possible Program and certain HFA's): English Spanish: (Revised 08/04/17) Borrowers are not required to use all available assets when using the MCC program or any MCC program related DPA program. The amount of remaining reserves required, if any, is determined by the type of financing used (i.e. FHA, VA.). The MCC program itself does not have requirements for remaining reserves. Buyers must occupy the property purchased within 60 days of closing. STEP 2 - QUALIFY THE HOUSEHOLD INCOME Income used for credit qualifying a borrower is different from income used for program purposes. Follow the requirements listed in UNDERWRITERS MCC COMPLIANCE INCOME CALCULATION GUIDE found in these Guidelines. The program requires that the income of spouses regardless of where they live and of all other persons residing in the household (related or unrelated) must be included in the calculation of income for program purposes. Unlike income that is averaged for credit underwriting, the program is concerned with actual current income. Current gross monthly income is multiplied by 12 to determine "total current annualized income". Gross monthly income is the sum of monthly gross pay; any additional income from overtime, part-time employment, bonuses, income from self-employment, dividends, interest, royalties, pensions, VA compensation and net rental income, other income (such as alimony, child support, public assistance, sick pay, social security benefits, unemployment compensation, income received from trusts, and income received from business activities or investments, continuation of which is probable based on foreseeable economic circumstances based upon the Applicant s Affidavit (to such effect), all as computed at the time of application for a Mortgage Loan, adjusted per Underwriter review and confirmed at the time of Closing. Information with respect to gross monthly income may be obtained from the applicable certificates and affidavits provided and executed during the 4-month period ending on the date of the Closing of the Mortgage Loan, provided that any gross monthly income not included for credit underwriting purposes must be included in determining gross monthly income. The total annual income from all sources of spouses (regardless of where they will live) and of all persons 18 years of age or older residing in the household cannot exceed the maximum allowable income. The limit is the limit and any amount over the limit is not acceptable. Count all persons who will permanently reside in the home being purchased. Include the income of non-borrower

12 Jacksonville Housing Finance Authority MCC Program Page!12 co-habitants who will reside in the property. However, do not include (1) dependents that are claimed on tax returns but who will not permanently reside in the home the majority of the time and (2) co-signers. The Affidavit, executed by the borrower(s), and certified by the lender, must include the total verified annual household income. Household Income Limits Effective for all 1003 loan applications dated 06/14/17 and after: Non-Target Areas Targeted Areas 1-2 Person Household $70, Person Household $77,880 3 or more Person Household $80,705 3 or more Person Household $90,860 STEP 3 - QUALIFY THE PROPERTY The home purchased in the program may be a one-to-two-family residence. If a 2 unit dwelling, the buyer must occupy one of the units as their principal residence and the home must be at least 5 years old. A home may be detached, a townhouse or condominium unit. Land may not exceed that necessary to maintain basic livability. Homes are considered new if never previously occupied. Mobile, recreational or vacation homes are not eligible under the program. An important requirement is that program funds are used for the purpose of acquiring, not refinancing, owner-occupied single family homes. Temporary, construction or bridge financing with a term of 2 years or less may be refinanced. The MCC program is available only in Duval County. STEP 4 - MAKE SURE THE PROPERTY SALES PRICE QUALIFIES The sales price of the home must be at or below the Program Acquisition Limit that is not to be confused with FHA Acquisition Limits. The Total Program Acquisition Limit is the total amount paid in cash or in kind to the seller by the buyer or on behalf of the buyer and does not include financing costs. Sales Price Limit: $199,000 STEP 5 - REVIEW ALLOWABLE LOAN PRODUCTS See Page 7 of this guide. STEP 6 - SIGN AND DATE THE NOTICES TO BUYERS Have the Borrower signs and date the Notices to Buyers. Please attach a copy of the Recapture Brochure found online to the borrower s copy of the Notice. These forms and all other program forms are found on the Website. Retain the original of the Notices to Buyers. The original will be sent to the Program Administrator in the Compliance File that is submitted following closing. A Recapture Brochure is not signed and not sent in the Compliance File. It serves simply as a more complete disclosure. STEP 7 - RESERVE THE MCC ONLINE The screen will ask you for an entry as follows: Username

13 Jacksonville Housing Finance Authority MCC Program Page!13 Password Enter information and then Submit. Complete screens and receive online confirmation with a MCC number that may be printed. If using the HFA of Hillsborough County Home Sweet Home first mortgage, that product and the down payment assistance are reserved separately. Each time income or property changes are made to the reservation, the changes are checked by the system. Should any changes made not be within the allowable income or acquisition limits of the program, the system will post an error and will not let the change update the loan file. After a loan has been Underwriter Certified, it cannot be changed. A lender will need to contact the Compliance staff to request any other changes and will be given direction for any other necessary steps STEP 8 - UNDERWRITER CERTIFICATION Process the loan and typically after the loan receives final underwriting approval an underwriter must complete the Underwriter Certification screens found within the ehousingplus Lender Portal within 10 days of reservation. STEP 9 - PREPARE THE AFFIDAVITS/CERTIFICATION FORM FOR CLOSING STEP 10 - REVIEW THE PROGRAM FEES At Closing, Lenders charge an MCC Application Fee of $375 --$275 to be submitted to the Program Administrator with the Compliance File and lenders retain $100. Compliance files will not be reviewed and MCC s will not be issued without payment of the fee to the Program Administrator. The interest rate on the mortgage loan shall be comparable to the rate on similar loans not receiving an MCC. Lenders fees on the first mortgage can be no more than those charged on loans without MCC s. STEP 11 - CLOSE THE LOAN AND HAVE THE AFFIDAVITS/CERTIFICATION FORM EXECUTED. THE BORROWERS EXECUTE THE FIRST SECTION, THE SELLER OR BUILDER EXECUTES THE SECOND SECTION AND THE LENDER CERTIFICATION SECTION IS COMPLETED BY THE LENDER. Federal law requires that this form be completed at closing not before. STEP 12 - USE THE COMPLIANCE FILE CHECKLIST Submit all items listed on the Compliance File Checklist to ehousingplus. STEP 13 - CHECK THE STATUS OF LOANS - CHECK FOR EXCEPTIONS. You will receive an if there are any exceptions in the Compliance File. Exceptions must be cleared in order for the MCC to be issued to the borrowers. Check the online system for status. STEP 14 - MCC & FINAL RECAPTURE NOTICE ISSUE ehousingplus will mail the MCC and Final Recapture Notice once all fees have been paid and the file is approved, to the borrower at the property address once the compliance file is approved. The Program Administrator will provide the Lender with the required IRS reporting form for each year in which the Lender originates loans with MCC s.

14 Jacksonville Housing Finance Authority MCC Program Page!14 SUMMARY OF THE COMPLIANCE ORIGINATION PROCESS (Revised 12/12/18) MANDATORY PROGRAM TRAINING Lender training is mandatory for anyone working with this program. ehousingplus and US Bank provide program training online 24/7. To attend click on this link. ehousingplus ehportal and ehp Digital Docs Training We highly encourage anyone who will reserve funds, complete an underwriter certification, print forms or clear exceptions to attend this additional training. (Rev 12/10/18) Click here for ehportal Training Click here for ehp Digital Docs Training ehportal USER CREDENTIALS Following completion of Program training at ehp University training, an will be sent to lenders giving directions on how to apply for User Credentials for the ehportal. These instructions are for both new users of system and existing users looking to add programs to their profile. QUALIFY Lenders use program requirements to qualify applicants for the program. Buyers must present an executed sales agreement before being entered into the program reservation system. RESERVE MORTGAGE CREDIT CERTIFICATE To reserve funds, use the ehousingplus ehportal. Log in and reserve the mortgage credit certificate. To reserve funds in the program, the borrower is required to have a signed real estate purchase contract for a specific address. You will need a 1003 and the Real Estate Purchase contract in order to make a reservation. If the reservation is successful, you will receive a loan number and a message that you ve completed the reservation successfully. IMPORTANT - A reservation is for a borrower with a real estate purchase contract for a specific property. If the property needs to change, the loan must be cancelled and re-reserved. The lender is responsible for cancelling the loan within the ehportal. And then, the lender must (services@ehousingplus.com) or call the ehousingplus Compliance office at to have the borrower permanently removed from the ehportal. Until this process is complete, the lender will not be able to re-reserve funds for the borrower. (Added 12/10/18) PROCESS Lenders process the loan as they would normally keeping in mind the program timelines. Borrower will need to sign the Notices to Buyers and be given the Recapture Tax Brochure as close to application as possible.

15 Jacksonville Housing Finance Authority MCC Program Page!15 UNDERWRITE AND CERTIFY Lenders underwrite & are responsible for credit decisions of the loans in the program. Servicer does not re-underwrite loans. Following credit approval AND WITHIN 15 DAYS OF LOAN RESERVATION, Underwriter completes the online Underwriter Certification within the ehousingplus Lender Portal. CLOSE The program forms may only be found within the ehousingplus ehportal. Forms generated from any other source may void the loan and the borrower will not receive the MCC. A lender will need user credentials for the ehportal to access the forms. Provide the borrower(s) with the following form that need to be signed at closing: Jacksonville HFA MCC Affidavit/Certification COMPLIANCE FILE DELIVERY INSTRUCTIONS All compliance files are uploaded directly to ehousingplus via ehp Digital Docs. All exceptions / file deficiencies will be communicated to the Lender via and will be posted in the ehportal. Exceptions may be viewed online at the loan level and in an exceptions report. Documentation requested to clear file deficiencies are uploaded directly in ehp Digital Docs. (Added 12/12/18) ehp Digital Docs See pages of this guide for detailed information about ehp Digital Docs. (Added 12/12/18)

16 16 NEW INSTRUCTIONS FOR THE DELIVERY OF COMPLIANCE FILES, FEES AND CORRECTED DEFI S. Effective December 10, 2018 Compliance Files and Corrections to previously submitted files with erroneous or missing required documents will be managed through the NEW ehousingplus Digital Docs Portal. This NEW Portal provides lenders with all the tools necessary to deliver the required documents for the approval of the originated loan(s) in their respective affordable homebuyer programs. This Portal is a secure, easy to use and efficient way for lenders to deliver the Compliance File, Correct DEFI s and pay the required Compliance Review Fees via our new ehpay on line fee approval, and related tools. Who needs Access to ehp Digital Docs? Closers, Post-closers, Shippers, Defi/Exceptions and Accounting personnel. FIRST STEPS HELPFUL TIPS FOR UPLOADING THE COMPLIANCE FILE The site works best with the Google Chrome browser. All other browsers may encounter problems. If you cannot remember your password, you can reset from the ehp Digital Docs log in screen. You will need a Username and Password to access ehp Digital Docs a. If you are already an existing Active User of the ehportal Lender Portal, you will automatically be set up to use ehp Digital Docs. Your Username and Password will be the same, but you may be prompted to change the password if it does not meet security guidelines. b. If you are NEW to any of the ehousingplus Portals, you will need to request User Credentials at NEXT, ACCESS THE NEW EHP DIGITAL DOCS PORTAL As a participating lender to various programs, you already know that our website at is where you access both Program Info and the Systems. Click on the PROGRAM Tab and select the desired Agency s available Program(s). New Digital Delivery Instructions ehp Digital Docs ehousingplus

17 17 There are two icons you will immediately see: o This is the existing Lender Origination Portal o This is the NEW ehp Digital Docs Portal. NOW YOU ARE READY TO DELIVER YOUR COMPLIANCE FILE The Compliance File should be a PDF file composed of all required documents on the Checklist. Ø By clicking NEW UPLOAD on the Digital Docs Menu, you will be able to upload the file easily. Ø Currently, there are three file types you will upload into the new DD Portal: Compliance Files, DEFI s, and/or pre-closing documents as required. Additional uploads after the Compliance File are identified as Defis. Ø There is a NOTES Feature in case there is any pertinent information you want to add to the compliance documents. Ø Once Submitted, the System will confirm that the document was uploaded successfully, or it will present an error. Ø All Files Uploaded, can be seen immediately in UPLOADED DOCS. Ø All documents must be a PDF format and must not be locked or encrypted. Ø Documents must be uploaded upright and in a clear legible format. Ø Use the Checklist to make sure you are delivering al required documents. AND SUBMIT THE REQUIRED COMPLIANCE REVIEW FEE Ø Compliance Review Fees may now be submitted separately from the Compliance File. Ø The NEW ehpay is a secure, efficient method for lenders to pay the fees ON- LINE by enrolling in this FREE Program. Loans managed through ehpay are processed faster, without fee errors or other unnecessary delays. Accounting Staff can access ehp Digital Docs and process the compliance fees payment easily via ehpay. New Digital Delivery Instructions ehp Digital Docs ehousingplus

18 18 TIPS Not sure of the required fee for your loan? Use the FIND MY FEE feature under PAYMENT CENTRAL and get the instant answer. Ø Compliance Files Uploaded are NOT ready for review until the Compliance Review Fee Payment has been received by ehp. Ø FILES PENDING PAYMENT lists Compliance Files that have been uploaded successfully, but whose fee payment is still pending. Lenders can monitor this area to ensure their fees have been delivered in a timely manner. Ø UNIDENTIFIED PAYMENTS are payments received from your company without the proper identification to apply it to the intended loan. Lenders can monitor this area to ensure that payments made are being properly identified with OUR LOAN NUMBER. Ø SHORT PAYMENTS If an incomplete payment is submitted, it will be displayed indicating the amount paid and the correct fee amount. Ø Sign up for ehpay. This is a secure solution for the payment of fees. Talk to one of our ehousingplus Business Representatives about how you can sign up, and to answer any questions related to this new service Ø Make sure that every payment made is properly identified with OUR LOAN NUMBER. This is particularly a problem with Wires and ACH payments, as well as bundled payments. ACH/Wires do not properly identify loans in most cases and hold up the processing of your loans! Ø If submitting a paper check, print the INVOICE/RECEIPT. You can submit the fee for one or several loans at one time by attaching this receipt to your check. NOT QUITE READY TO UPLOAD YOUR COMPLIANCE FILES? During this initial transition of delivering Compliance Files Digitally on our NEW ehp Digital Docs portal, ehousingplus will continue to accept paper Compliance Files from those lenders that need a little extra time. If you are sending the paper files, please continue to ship them as you currently do to: ehousingplus 3050 Universal Boulevard, Suite 190 Weston, FL WE trust that you will soon be utilizing all the new features that have been developed to make the delivery of Compliance Files easier and less costly via our NEW ehp Digital Docs portal available for you, the participating lenders. New Digital Delivery Instructions ehp Digital Docs ehousingplus

19 19 CORRECTING DEFICIENT FILES ü AS OF 12/10/2018 CORRECTED LOAN DEFICIENCIES WILL NO LONGER BE ACCEPTED VIA . The ehportal (Lender Origination Portal) has various tools that alert lenders when a Compliance File is delivered DEFICIENT. These multiple tools assist you, the lender, in easily correcting these deficiencies and allow your file to be Compliance Approved in a timely manner. Ø System generated DEFI s sent at time of review with corrective actions. Ø Loan s TIMELINE Tab depicts pending deficiencies ANYTIME you log in and view your loan. Ø EXCEPTIONS/DEFICIENCY Reports are available on the REPORTS Menu. WHEN YOU ARE READY TO SUBMIT YOUR CORRECTED DEFI S OR MISSING DOCUMENTS NEW: The Corrected DEFI s will now be submitted and UPLOADED via ehp Digital Docs, using the same easy method the Compliance File is delivered. Log in to ehp DIGITAL DOCS Search for your loan NEW UPLOAD: select your file(s), and if prompted select Corrected DEFI as Type. The NOTES Feature is available to add any relevant information if needed. YOU RE DONE! Defi s may be uploaded as a lender receives a document. Corrected Defi s may be view in ehp Digital Docs under, Uploaded Docs. QUICK TIPS Ø Save time by trying to consolidate corrections to your loan files. Ø Working on DEFI s might be easier if grouped by loan & Program; typically, the same types of errors occur based on varying Program Criteria. Ø Use the reports available on the ehportal (EXCEPTIONS/DEFICIENCIES) as a guide and deliver them easy using ehp Digital Docs. New Digital Delivery Instructions ehp Digital Docs ehousingplus

20 Jacksonville Housing Finance Authority MCC Program Page!20 SUMMARY OF ALLOWABLE PROGRAM FEES First Mortgage - Lenders are permitted to charge their usual, customary and reasonable fees charged to other buyers of similar 15 year or 30 year, fixed-rate products without MCC s. ehousingplus Fee The program includes a Mortgage Credit Certificate Compliance/Admin Fee of $275 and a penalty fee of $100 for files that are chronically deficient. The Compliance/Admin Fee is submitted with the Compliance File. Read pages of this guide for information about Payment Central located in ehp Digital Docs. (Rev 12/10218) 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. (Added 10/14/15) 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.). (Rev 08/22/16) Lender MCC Application Fee The program includes a Lender MCC Application Fee of $100.

21 Jacksonville Housing Finance Authority MCC Program Page!21 UNDERWRITERS MCC COMPLIANCE INCOME CALCULATION GUIDE Underwriters should remember that CALCULATION OF PROGRAM (COMPLIANCE) INCOME IS DIFFERENT THAN CALCULATION OF INCOME FOR CREDIT PURPOSES. The MCC program requires that underwriters consider the income of borrowers and their spouses (regardless of their address) and all household members 18 years of age or older(related or unrelated). Also, spouses must qualify as first-time homebuyers and must be able to reside in the US permanently. This is true whether or not a spouse is a party to the transaction or named on the Warranty Deed. Use the information below as a general guide. Because each case is different, please contact the Compliance office if you have questions. Unlike income that is averaged for credit underwriting, the MCC program is concerned with actual current income. You should be reviewing the YTD income, the income of the last 4 months and the income shown on previous tax returns for consistency. You should not be averaging income. If there are not inconsistencies in earnings, use the guidelines for each loan type to determine current gross monthly income. Current gross monthly income is multiplied by remaining months in the year to determine "total current annualized income". For the tax year in which the closing occurs, consider YTD income. Then establish current base income for the balance of the year using the guidelines for each type of income. Then consider any additional income. For assistance, contact the Compliance Office. Gross monthly income is the sum of monthly gross pay; any additional income from overtime, parttime employment, bonuses, income from self-employment, dividends, interest, royalties, pensions, VA compensation and net rental income, other income (such as alimony, child support, public assistance, sick pay, social security benefits, unemployment compensation, income received from trusts, and income received from business activities or investments, continuation of which is probable based on foreseeable economic circumstances based upon the Mortgagor's Affidavit (to such effect), all as computed at the time of application for a mortgage loan and confirmed at the time of closing. We will check information with respect to gross monthly income obtained from the reservation form, Underwriter s Certification and applicable certificates and affidavits executed the date of the Closing of the Mortgage Loan, provided that any gross monthly income not included for credit underwriting purposes must be included in determining gross monthly income. The limit is the limit and any amount over the limit is not acceptable. Include the income of non-borrower co-habitants who will reside in the property. However, do not include (1) dependents that are claimed on tax returns but who will not permanently reside in the home the majority of the time and (2) co-signers. The Affidavit, executed by the borrower(s), and certified by the lender, must include the total verified annual household income. This program considers HOUSEHOLD INCOME not income of the borrower. Household income includes the income of borrower, spouse. Remember if persons are not divorced they are married. We count the income of the spouse whether they reside in property or not. Also include the income of all who will reside in the home 18 years of age or older (children, parents on social security, etc).

22 Jacksonville Housing Finance Authority MCC Program Page!22 Questions regarding the calculation of income for MCC program purposes should be directed to the Compliance office at There are many variables and the Compliance office will be pleased to assist. Alternate Documentation (Alt Docs) as defined by FHA and other secondary market entities is acceptable. Lender verification for compliance purposes, provided that such documentation includes the necessary, acceptable income tax returns. The Servicer requires a credit package as indicated on the various loan delivery checklists. However, the Servicer does not re-underwrite the loans for credit purposes. See bolded paragraph below. Although reference is made to VOE s and VOD s in the guidelines below, they are not required if acceptable alternate documentation is in the file. This documentation includes, but may not be limited to, current pay stubs which delineate current period, W-2's, for all borrowers and all employers, and bank statements to verify assets. If W-2's are present in the loan file, lending personnel should verify that the total of W-2's presented equals the total income shown on borrower s tax returns. If a VOE is in the file, the borrower does not have to provide W-2's unless the underwriter deems this necessary for prudent underwriting. Figures shown on all documents should be consistent. See bolded paragraph below. Because a program qualifier is income, even if not required for credit purposes (i.e. automated underwriting), you should be seeking the two most current paystubs with YTD. Do not include in the compliance file, keep copies for your records. Although reference is made to the last 4 to 6 weeks income, Underwriters should be reviewing the income tax returns submitted to verify that there are no unexplained and/or unacceptable differences between current income and past income. Examples below not intended to serve as exclusive methodology. Compliance office with questions regarding individual cases. Please contact the Please note that the income reported for MCC program income calculation CAN NEVER BE LOWER THAN THE INCOME USED TO QUALIFY FOR CREDIT PURPOSES. Hourly Employees For the tax year in which the loan is closing, use the Year to Date base income. If consistent, utilize the base to determine the balance of the year by 1. Using last 4 to 6 weeks' pay stubs, identify hourly rate of pay and average number of regular hours worked per week. Multiply hourly rate times regular weekly hours. Multiply result times number of weeks for balance of year and add to YTD for an annualized base salary. 2. If the person has no other sources of income (for example: overtime, bonus, commissions, second jobs, interest, dividends, child support, alimony, public assistance), this will be the Current Total Annual Income. 3. You should not find significant differences. In some cases, the Current Total Annual Income will be higher than the previous year's income. Variances should be attributable to increases/ decreases in pay or number of hours worked.

23 Jacksonville Housing Finance Authority MCC Program Page!23 Salaried Employees 1. Using last 4 to 6 weeks' pay stubs, identify weekly (or other frequency) rate of pay. Multiply rate times the number of regular pay periods in the year (52 weeks, 12 months, 24 semi-months) 2. If the person has no other sources of income (for example overtime, bonus, commissions, second jobs, interest, dividends, child support, alimony, public assistance), this will be the Current Total Annual Income. 3. Compare the total annual income in #2 above to Paystubs, VOE s, previous year s income per W2's and tax returns. You should not find significant differences. In some cases, the Current Total Annual Income will be higher than the previous year's income. Variances should be attributable to increases/decreases in pay or number of hours worked. Business, Self Employment 1. Use the quarterly tax returns and financial statements to identify the current NET year to date income. 2. Divide the year to date income by the number of months during which it was earned and multiply times remaining number of months in year. Add to actual YTD. ADD DEPRECIATION. 3. If the person has no other sources of income (for example: overtime, bonus, commissions, second jobs, interest, dividends, child support, alimony, public assistance), this will be the Current Total Annual Income. 4. Compare the total annual income in #2 above to the previous year's income per W2's and tax returns. You should not find significant differences. Verified Termination of Overtime, Commission, Bonus, Seasonal, Periodic, One Time Overtime, Bonus, Commissions Using last 4 to 6 weeks' pay stubs, identify the year to date total earnings of the borrower. Subtract the Current Total Base Income (see above) to arrive at the total year to date extraordinary income. If verification of termination of overtime, commission or bonus is provided in writing (i.e. a letter from an employer) or such termination is due to a change of employment, use the current YTD overtime, commission or bonus, do not annualize and add as a lump sum to the Current Total Annual Income. Regular Overtime, Bonus, Commissions 1. Using last 4 to 6 weeks' pay stubs, identify the year to date total earnings of the borrower. Subtract the Current Total Base Income (see above) to arrive at the total year to date extraordinary income. 2. Divide the year to date extraordinary income by the number of pay periods during which it was earned (to obtain an average). Multiply times the appropriate factor (Balance of year weeks, months, semi-months, etc.) for balance of year figure and add to actual YTD extraordinary income for annual income. 3. If the person has no other sources of income (for example: second jobs, interest, dividends, child support, alimony, public assistance), this will be the Current Total Annual Income. 4. Compare the total annual income in #2 above to Paystubs, VOE s, previous year s income per W2's and tax returns.