program compliance loan operations training chfa conventional loan programs for processors and underwriters

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1 program compliance loan operations training chfa conventional loan programs for processors and underwriters

2 Disclaimer This Disclaimer applies to all content provided through CHFA webinars or other training events. The training content provided is intended to help explain CHFA s programs, but should not be relied upon as an alternative to the CHFA Seller s Guide. CHFA makes reasonable efforts to ensure that information provided in its trainings is up-to-date and accurate. If there are any discrepancies between information provided in a training event, including in slide presentations, and CHFA s Seller s Guide and/or enews, the later documents should be relied upon. 2

3 general chfa guidelines Only CHFA-approved Participating Lenders can originate All loans must meet Fannie Mae or Freddie Mac and CHFA guidelines* Only borrower(s) may take title to the property No one else may be included on the purchase documents/in title to property No cosigners or non-occupying co-borrowers 30 year fixed rate mortgages only Owner occupied primary residence only Business use of the subject property cannot exceed 15% as shown on tax returns Optional Down Payment Assistance Grant available CHFA Preferred Plus * CHFA Seller s Guide available on AllRegs via CHFA s website 3

4 acceptable property types Single family, PUDs or modular (attached or detached - only 1 living unit allowed) Condominiums Must be warrantable Must be approved by lender to Fannie Mae or Freddie Mac guidelines Condo Project Manager (CPM) approval OR complete and sign the CHFA certification (CHFA Form 770) stating condo meets Fannie Mae or Freddie Mac guidelines Manufactured (permanently affixed) Doublewide or larger max LTV/CLTV 95% Freddie Mac will not allow manufactured Deed Restrictions, Land Trusts, Affordable Covenants Permitted in accordance with applicable guidelines Freddie Mac does not allow Land Trusts CHFA Form 780, Affordable Housing Restrictions Approval Certification must be completed 4

5 unacceptable property types Income/investment property Properties with accessory dwelling units 2-4 unit properties Second homes Non-warrantable condos Excess acreage CHFA acreage limit 50 acres Co-ops Properties with cistern as only water source 5

6 homebuyer education Required for ALL CHFA programs except refinance programs All borrowers must take Homebuyer Education prior to the loan closing Classes from CHFA approved provider list on CHFA website In person Classes No cost to attendees Online Class Fee - $99 for first borrower, $50 for each additional borrower Required one-on-one counseling session via phone with agency staff after completing online course Certificates expire twelve (12) months after date of class Borrower must be under contract prior to expiration of certificate 6

7 chfa program compliance requirements Must meet appropriate CHFA income limits listed on the CHFA website Borrower minimum contribution $1,000 Gift funds (follow agency guidelines); and/or Earnest money deposit; and/or Application, appraisal, or credit report fee paid to the Participating Lender; and/or Home inspection fee, including fees paid for additional inspection services, such as sewer scopes, structural engineers report, etc.; and/or Hazard insurance premium paid outside of closing; and/or Thirty (30) day Loan Delivery Extension fee at.35% of the total loan amount; and/or Any homebuyer education fee, if applicable; and/or HOA fees paid out of pocket by borrower 7

8 chfa program compliance submission Prefer original appraisal uploaded with loan file pdf format Compliance turn times 1 business day from receipt of a complete file. Suspended or incomplete files will result in further delays Decision letters sent via Submission of suspend conditions to CHFA deliver via: Secure through CHFA verified link If you have not been previously approved by our IT department to send conditions via , have your IT department contact CHFA s Information Security team to validate the communications are secure. Send request to TLS_Request@chfainfo.com Your own company secure Fax Upload through document delivery system Must CHFA Analyst from suspend letter to avoid delays in review of conditions Suspend conditions will be reviewed in order received Program Compliance approval conditions must be submitted with Purchase file. Please ensure closer and shipper are aware of required conditions 8

9 chfa advantage or chfa preferred programs compliance submission documents Follow the list of conditions/documents in the Document Delivery system or utilize document checklist for the program CHFA Advantage CHFA Form 725, Submission Review Checklist CHFA Preferred programs CHFA Form 727, Submission Review Checklist Do not include checklists with document upload 9

10 common issues that delay program compliance approval Underwriting transmittal (1008) missing information/not complete Ratios and total monthly payment information must match AUS findings Incorrect calculation of CHFA DPA and/or CHFA Borrower Premiums DPA based on total loan amount, whole dollar amount (rounded down) Borrower Premiums based on total loan amount, exact dollar amount Missing income documentation (VOE s, paystubs, profit & loss statements, etc.) Household size differences between loan application and tax return i.e., letter of explanation from borrower Missing required federal tax returns (IRS transcripts are acceptable) CHFA requires most current year of tax returns Extensions not acceptable No W-2s or Wage and Income Transcripts in lieu of tax returns Missing Mortgage Insurance Certificate (when applicable) 10

11 chfa conventional loans comparison CHFA Advantage 97% LTV 105% CLTV Minimum LTV 80.01% CHFA Preferred / Preferred Plus 97% LTV 105% CLTV No Minimum LTV No Mortgage Insurance Mortgage insurance borrower(s) have a choice of selecting single pay premium or monthly reduced coverage per DU or LP findings; underwritten by mortgage insurer, unless lender is approved delegated underwriter for private mortgage insurance company Arch MI, Essent, Genworth, National MI, MGIC, Radian or UGI CHFA grant not applicable CHFA grant applicable Community Seconds (DU) and Affordable Seconds (LP) are acceptable; follow Fannie Mae/Freddie Mac guidelines 3% can be a gift funds No first time buyer requirement Borrowers permitted to own one additional non CHFA property (Fannie Mae only) No buy downs Must meet income limits based on household size Manufactured housing (Fannie only; not permitted with Freddie) Double-wide or larger - 95% max LTV/CLTV DU Approve /Eligible ; LP Accept DU AUS HFA Preferred Risk Sharing LP AUS Home Possible Advantage for HFA s Minimum credit score 680 DU Approve /Eligible ; LP Accept DU AUS HFA Preferred LP AUS - Home Possible Advantage for HFA s Minimum credit score 620 Refinance programs available 11

12 chfa advantage or chfa preferred programs underwriting fannie mae Underwritten through DU Community Lending Information Section CHFA Advantage - HFA Preferred Risk Sharing Under Community Lending Product (Special Feature Code 820 on findings) CHFA Preferred/Preferred Plus - HFA Preferred under Community Lending Product (Special Feature Code 741 on findings) Complete all other appropriate options Desktop Originator (DO) Use Colorado Housing and Finance Authority as the sponsor (only if using CHFA DU) Must receive an Approve Eligible only acceptable finding No manually underwritten loans accepted No buy downs allowed CHFA Down Payment Assistance Grant not available on CHFA Advantage loans Fannie Mae approved Community Seconds allowed for Advantage or Preferred programs can be combined in conjunction with CHFA DPA Grant on a CHFA Preferred loan Community Seconds checklist on Fannie Mae s website to be completed, signed and dated and in file 12

13 chfa advantage fannie mae example los screenshot 13

14 chfa preferred fannie mae example los screenshot 14

15 chfa advantage fannie mae DU findings example Must also reference Special Feature Code of 820 HFA Preferred Risk Sharing in the Observations section of findings. Must reference HFA Preferred Risk Sharing in the Risk/Eligibility section of the findings as well as no reference to MI. 15

16 chfa preferred fannie mae DU findings example Must also reference Special Feature Code of 741 HFA Preferred in the Observations section of findings. Must reference HFA Preferred in the Risk/Eligibility section of the findings as well as the amount MI coverage needed. 16

17 chfa advantage or chfa preferred programs underwriting freddie mac Underwritten through LPA (formerly LP) Offering Identifier Mortgage Type and Loan Terms 241 Home Possible Advantage for HFAs Risk Class must show as Accept Purchase Eligibility will show as Ineligible Only Ineligible if not selling to an HFA Verify eligibility exception must state acceptable if selling to an HFA No manually underwritten loans accepted No buy downs allowed CHFA Advantage loans - do not include MI payment/information on findings Findings will state MI is needed, disregard for the CHFA Advantage program CHFA Preferred programs MI is required for LTV s above 80% AUS findings will determine required coverage amount CHFA Down Payment Assistance Grant not available on CHFA Advantage loans Freddie Mac Affordable Seconds allowed for Advantage or Preferred programs can be combined in conjunction with CHFA DPA Grant 17

18 chfa advantage or chfa preferred programs freddie mac example LPA screenshot 18

19 chfa advantage or chfa preferred programs freddie mac LPA findings example Disregard for CHFA Advantage loans. 19

20 chfa preferred mortgage insurance guidelines MI only available through these approved companies: Arch Essent Guaranty Genworth MGIC National Mortgage Insurance Corp Radian Guaranty Inc United Guaranty Delegated underwriting of MI allowed AUS determines the MI coverage amount Minimum required coverage for CHFA Preferred programs 95.01% - 97% LTV 18% MI coverage 90.01% - 95% LTV 16% MI coverage 85.01% - 90% LTV 12% MI coverage 80.01% - 85% LTV 6% MI coverage Single paid premium option available 20

21 chfa advantage and preferred refinances Any loan eligible for refinance, not just CHFA loans! Same guidelines as CHFA Advantage or CHFA Preferred purchase Conventional loan Minimum credit score Advantage 680 Preferred 620 MI required Preferred loans only Reduced monthly MI or Single paid premium No CHFA Down Payment Assistance Grant Differences Some CHFA second mortgages may be eligible for subordination Non CHFA second mortgages cannot be subordinated No new MCC available, but existing MCC may be reissued borrower completes after closing No homebuyer education required 21

22 chfa advantage and preferred refinances (continued) Limited Cash-Out transaction Purchase Money subordinate liens, closing costs, pre-paids and escrows may be included LTV must not exceed 97%, 95% on manufactured homes No manufactured homes for Freddie Mac Cash back to borrower - follow Fannie Mae/Freddie Mac guidelines No LTV lower than 80.01% on Advantage loans 22

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