Delaware State Housing Authority. Demystifying the Advantage 4 Loan Program

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1 Delaware State Housing Authority Demystifying the Advantage 4 Loan Program

2 DSHA is committed to follow all aspects of the Fair Housing Act in our efforts to promote responsible homeownership and obtaining competitive and safe financing for same.

3 Agenda Overview of DSHA Programs Sample DSHA Rate Table Eligible 1 st Mortgage Products Advantage 4 Overview SMAL Overview Advantage 4 vs. SMAL Loan Flow Ordering Funds for Closing Closed Loan Delivery DSHA Recent Enhancement Contacts 3

4 Overview of DSHA Mortgage Programs DSHA Mortgage loan products are designed to enable incomequalified families to achieve the dream of homeownership. Advantages for DSHA borrowers include: Below market interest rates Downpayment Assistance Options 30 year fixed rate loans When DSHA funds are used to finance mortgage loans, certain criteria are required including: Loan Size limit Income limits Owner occupancy requirements Restricted to properties located in Delaware 4

5 Rates Base Rate With SMAL Advantage 4 Conventional with DSHA Paid MI FHA/VA/USDA 3.375% 4.000% 4.500% N/A Conventional 4.000% 4.625% 4.750% 5.125% (Sample rates as of 5/55/16 and are subject to change ) Loans in Targeted areas are originated at the Welcome Home Product rates based on product being utilized. 5

6 FHA Eligible 1 st Mortgage Loan Products 203(b); 203(b)(2); 234(c); 223(e); 203(ks) and other acceptable FHA products. VA Advantage 4 is a down payment option that can be used with any 1 st mortgage product. Originated and guaranteed in accordance with VA guidelines under 1810 and 181A. USDA Rural Housing Service Loans Originated and guaranteed in accordance with USDA guidelines. Fannie Mae Conventional: HFA Preferred product only 6

7 Advantage 4 Advantage 4provides a grant equal to 4% of the first mortgage amount and is applied toward required downpayment and closing costs, and then principle reduction: Only standard 1 st Mortgage documents required No Home Inspection required No Housing Counseling required* No repayment is ever required from the borrower No additional lien is recorded on the property HFA provided downpayment assistance funds are considered borrower s own funds for the purposes of qualifying agency LTV and CLTV limits. Funds must be provided at closing by DSHA. * Follow Agency Guidelines for any required Homebuyer Education 7

8 Second Mortgage Assistance Loan (SMAL) Loan amounts up to $8,000. SMAL carries a 3% simple interest rate, interest accrues daily. Repayment is deferred 30 years or until the first mortgage is refinanced, or the property is sold or transferred; whichever comes first. The SMAL is secured by a second lien against the property. All borrowers must complete HUD Homeownership Education A Home Inspection must be completed by a properly credentialed Home Inspector. 8

9 Advantage 4 cannot be combined with SMAL Since there isn t a second lien recorded, Advantage 4 may be layered with some of the Community Seconds available through other agencies. Lenders who wish to layer other downpayment assistance programs must verify that those programs allow layering. 9

10 SMAL vs. Advantage 4 SMAL (2 nd Mortgage) ADVANTAGE 4 (Grant) 1 st Mortgage Amount $200, $200, Interest Rate* 4.25% 4.5% Term (months) P & I Payment $ $1, Difference $29.49 Difference over 30 years $10, DPA Provided $8, $8, Required Repayment Amount $15, $0.00 * Actual rates in effect 10/5/15. Rates are subject to change 10

11 Loan Flow 1. Lender follows standard process for reserving loans through Mitas using a product that indicates Advantage 4 pricing. 2. Lender submit standard Compliance Review Documentation. 3. Upon approval, DSHA will issue an commitment letter indication the exact amount of the Advantage 3 grant based on 4% of the 1 st mortgage amount. 4. A minimum of 24 hours prior to closing, Lender submits the Advantage 4 Wire Request and faxes it to DSHA. 5. DSHA will wire the Advantage 4 grant funds to closing first thing in the morning on the day of closing. That s it! No additional paperwork or forms to sign at closing, and once the loan has closed, the borrower has no repayment obligation. 11

12 Advantage 4 Wire Request Lender faxes completed Advantage 4 Final Wire Request Worksheet to DSHA 24 hours prior to closing. Process 12

13 Closed Loan Delivery Closed loans must be delivered and purchased by U.S. Bank within the 75 day reservation period (or 105 days if an extension was purchased). 13

14 Recent DSHA Enhancements Reduced number of DSHA Program Forms Lender Resource Website - Lenders.destatehousing.com Delaware First-Time Homebuyer Tax Credit Advantage 4 1 st Mortgage options with 4% grant DSHA tables funds Advantage 4 Comprehensive Lender Pipeline Report o Allows lender s pipeline across all products to be viewed in one consolidated pipeline report. Secure Document Upload through the MITAS system o Reduces cost and delivery time for submission of Compliance Review Packages and Compliance Review Pending Conditions. View US Bank Funding Conditions in MITAS Reservation period extended from 60 to 75 days Program expanded to include repeat homebuyers

15 DSHA Originations Contacts Telephone: Fax: Lender Resource Website: Lenders.DeStateHousing.com Gary Hecker Housing Finance Manager Lender Support Lisa McCloskey Mortgage Finance Officer II Compliance Review/ Lender Support Karen Flowers Office Manager Initial Package Review Pending Conditions Pamela Spencer Administrative Specialist 1 Initial Package Review Pending Conditions Lorena Testardi Mortgage Loan Officer II Compliance Review/Lender Support 15

16 DSHA Post Closing Contacts Telephone: Fax: Brian Rossello Housing Finance Manager Post Closing Enid Beltran Mortgage Loan Officer II Post Closing Carol Orzechowski Administrative Assistant II Document Control 16