DPA options subject to change based on market conditions. Must confirm availability with Housing Authority. 30 Year Fixed

Transcription

1 Tip: To find specific information for a product, Press Ctrl+F (or use Find from the Edit Menu) and then search for the information or topic you are looking for. If you don t find the topic the first time, try variations, different terms or less words. Illinois Housing Development Agency FHA Program Must be referred to AFS for Origination (loan cannot be originated by branch) DPA options subject to change based on market conditions. Must confirm availability with Housing Authority. 30 Year Fixed LTV CLTV Purpose Unit Occupancy Credit Score DTI Ratio Purchase 1-2 O/O On purchases, the CLTV is further limited to 100% (of the adjusted value) or the standard FHA LTV limit (96.50%) (depending on the type of financing) if the subordinate lien is NOT from an instrumentality of government or government agency that is providing down payment and/or closing cost assistance in the form of secondary financing. 2. Max LTV/CLTV may be exceeded when financing the Funding Fee, however max loan amount may NOT be exceeded PRODUCT NAMES Illinois HDA FHA 30 Year Fixed Illinois HDA 1stHome Forgivable 2 nd DPA Illinois HDA Access 4% Forgivable 2 nd DPA Illinois HDA Access 5% Deferred 2 nd DPA Illinois HDA Access 10% Repayable 2 nd DPA ALLOWABLE Retail ORIGINATION CHANNELS Loans must be referred to the AFS department for origination SERVICER U.S. Bank = Master Servicer Illinois Housing Development Authority = Program Administrator/Compliance IHDA PROGRAM OVERVIEW IHDA mortgage loan programs offer safe and reliable mortgage products with affordable interest rates and can include down payment assistance to first time homebuyers, qualified veterans, and non-first-time homebuyers. Borrowers qualifying under this program must utilize one of the down payment assistance options from IHDA. The first trust deed is not allowed to be used without using one of their DPAs. Illinois HDA 1 of 34 08/07/2018

2 ACCESS 4% FORGIVABLE DOWN PAYMENT/CLOSING COST ASSISTANCE ACCESS 5% DEFERRED DOWN PAYMENT/CLOSING COST ASSISTANCE ACCESS 10% REPAYABLE DOWN PAYMENT/CLOSING COST ASSISTANCE All mortgage products are subject to income and purchase price limits. Eligibility for each product is based on the borrower s credit profile, household income, and the purchase price of the home. Four program options are available: Access 4% Forgivable - consists of a 0.00%, 10-year second mortgage that is 4% of the purchase price (up to $6,000). No monthly repayment. Assistance is forgiven pro-rata on a monthly basis over 10 years. Access 5% Deferred - consists of a 0.00%, 30-year second mortgage that is 5% of the purchase price (up to $7,500). Full amount is due at maturity date or upon repayment event. Can be pre-paid at any time. Access 10% Repayable - consists of a 10-year second mortgage that is 10% of the purchase price (up to $10,000). Monthly payment = DPA Amount / 120 months (for example, $10,000 would be payable at $83.33/month) 1stHomeIllinois consists of a 5-year forgivable second mortgage of $7,500. Loan is forgiven monthly over 5 years. Borrowers must be first-time homebuyers or exempt from the first-time homebuyer requirement. Program is countyspecific. Refer to Geographic Restrictions for eligible counties Note: In order to obtain the down payment assistance, you MUST obtain the first mortgage through Illinois HDA DPA Program. Additional loan must be created in FT360 to accommodate 2nd lien and should be created at the same time the 1 st lien is created for disclosure, document and funding purposes. Access 4% Forgivable - consists of a 0.00%, 10-year second mortgage that is 4% of the purchase price (up to $6,000). No monthly repayment. Assistance is forgiven pro-rata on a monthly basis over 10 years. DPA Assistance is only available in conjunction with a IHDA first mortgage. It is not a stand-alone DPA. First-time homebuyers and non-first-time homebuyers are allowed The first mortgage loan closes in the lender s name, and the IHDA rider is attached to, and recorded with, the first mortgage. the DPA 2nd loan will close in IHDA s name; no IHDA rider is to be attached to the second (2nd) mortgage. Note: In order to obtain the down payment assistance, you MUST obtain the first mortgage through Illinois HDA DPA Program. Additional loan must be created in FT360 to accommodate 2nd lien and should be created at the same time the 1 st lien is created for disclosure, document and funding purposes. Access 5% Deferred - consists of a 0.00%, 30-year second mortgage that is 5% of the purchase price (up to $7,500). Full amount is due at maturity date or upon repayment event. Can be pre-paid at any time. DPA Assistance is only available in conjunction with a IHDA first mortgage. It is not a stand-alone DPA. First-time homebuyers and non-first-time homebuyers are allowed The first mortgage loan closes in the lender s name, and the IHDA rider is attached to, and recorded with, the first mortgage. the DPA 2nd loan will close in IHDA s name; no IHDA rider is to be attached to the second (2nd) mortgage. Note: In order to obtain the down payment assistance, you MUST obtain the first mortgage through Illinois HDA DPA Program. Additional loan must be created in FT360 to accommodate 2nd lien and should be created at the same time the 1 st lien is created for disclosure, document and funding purposes. Access 10% Repayable - consists of a 10-year second mortgage that is 10% of the Illinois HDA 2 of 34 08/07/2018

3 1 ST HOME ILLINOIS DOWN PAYMENT/CLOSING COST ASSISTANCE IHDA SECOND MORTGAGES DISCLOSURES AND DOCUMENTS purchase price (up to $10,000). Monthly payment = DPA Amount / 120 months (for example, $10,000 would be payable at $83.33/month) DPA Assistance is only available in conjunction with a IHDA first mortgage. It is not a stand-alone DPA. First-time homebuyers and non-first-time homebuyers are allowed The first mortgage loan closes in the lender s name, and the IHDA rider is attached to, and recorded with, the first mortgage. the DPA 2nd loan will close in IHDA s name; no IHDA rider is to be attached to the second (2nd) mortgage. Note: In order to obtain the down payment assistance, you MUST obtain the first mortgage through Illinois HDA DPA Program. Additional loan must be created in FT360 to accommodate 2nd lien and should be created at the same time the 1 st lien is created for disclosure, document and funding purposes. 1stHomeIllinois consists of a 5-year forgivable second mortgage of $7,500. Loan is forgiven monthly over 5 years. Borrowers must be first-time homebuyers or exempt from the first-time homebuyer requirement. Program is county-specific and only available in the following counties: Boone, Cook, DeKalb, Fulton, Kane, Marion, McHenry, St. Clair, Will, Winnebago. DPA Assistance is only available in conjunction with a IHDA first mortgage. It is not a stand-alone DPA. First-time homebuyers only unless purchasing in a targeted area or are qualifying under the Veterans Exception New construction not allowed The first mortgage loan closes in the lender s name, and the IHDA rider is attached to, and recorded with, the first mortgage. the DPA 2nd loan will close in IHDA s name; no IHDA rider is to be attached to the second (2nd) mortgage. Follow TRID Guidelines Must disclose the 2 nd mortgage separately using a CD and LE All products except Illinois HDA Access 10% Repayable 2nd DPA: Disclosure should be generated from FT360 (must be TRID compliant) LE/CD must be issued through FT360 Once LE is issued IHDA specific disclosures and documents to be pulled from IHDA s website. Final Loan docs not to be signed until initial and final CD has been issued to borrower and waiting period is up. Illinois HDA Access 10% Repayable 2nd DPA Product Only: Disclosure, LE and CD request must be sent to compliance@prmg.net for review/approval, but will be generated from FT360 (must be TRID compliant) - once review is complete Compliance will generate and send the Disclosures, LE and CD (as applicable) to the borrower due to specific program requirements Once LE is issued IHDA specific disclosures and documents to be pulled from IHDA s website. Final Loan docs not to be signed until initial and final CD has been issued to borrower and waiting period is up. Loan Officer (or whoever registered the loan) can pull the docs for the 2nd from the IL website. Closer to verify all information is complete and correct (some items are missing such as dates and legals, loan numbers, etc) TRAINING Training resources can be found on the IHDA website here: Personalized training can be set up with Rebecca Ortiz at IHDA. She can be reached Illinois HDA 3 of 34 08/07/2018

4 at or by phone at OBTAINING CREDENTIALS Note: Only AFS or fulfillment center staff should obtain credentials (as needed). Referring loan officer will not be able to have credentials to the housing authority site. To obtain credentials for Lender Online, AGENCY LINKS For additional reference, refer to the Illinois HDA Program guidelines posted the IHDA website: To access the IHDA Lender Portal (MITAS): A Reservation Manual can be found on the IHDA website here: The IHDA Homeownership Help Line can be reached at or by at AtHomeIllinois@IHDA.org In addition to any Product Profile requirements, you must always meet the published HUD guidelines and master servicer, U.S. Bank, lending criteria. If published HUD guidelines or U.S. Bank are more restrictive then what is allowed in the Product Profile, you must always defer to HUD Guidelines. For underwriting, delivery and funding information see U.S. Bank website ges/mrbp_division.cfm then click on U.S. Bank Lending Manuals All PRMG staff can access all end Agency guidelines though AllRegs Online at Instructions on how PRMG staff can access the AllRegs service is available in the Resource Center. Use the following link to access the HUD Housing Handbooks site, and from there, obtain access to the Handbook: s/handbooks/hsgh Access the All Regs version of the Handbook at: MINIMUM LOAN No Minimum Loan Amount AMOUNT MAX. LOAN AMOUNT Limits for max loan amounts are county specific can be found on the IHDA website here: GEOGRAPHIC RESTRICTIONS All Illinois Counties are eligible across the three Access DPA options 1stHome Illinois is available in the following counties: Boone, Cook, DeKalb, Fulton, Kane, Marion, McHenry, St. Clair, Will, Winnebago. See State Specific Requirements in Resource Center for state specific information PURCHASE PRICE LIMITS The residence being financed must be a qualified dwelling and the total purchase price must be within the applicable limit for the area (county) in which the property is located. The total purchase price must be within the applicable purchase price limit contained in the chart found here: (Both Targeted and Non-Targeted limits are listed.) If the purchase price limits change prior to IHDA s prior approval to close of the loan, then the new purchase price limits apply. In order to qualify, the residence must have a total purchase price no greater than the allowable limit at the time of application. The price includes ALL amounts paid, either in cash or in kind, to the seller as consideration for the residence. Purchase price can include the following: The cost of completing an incomplete or unfinished residence. Incomplete or unfinished means that occupancy is not permitted under the law, or that the Illinois HDA 4 of 34 08/07/2018

5 residence lacks certain elements needed to provide adequate living space for the intended occupants. If the borrower intends to have a home built on land already owned, the cost of the land must be included in the total purchase price if the land was acquired within two (2) years prior to the commencement of construction. The cost of the land is determined based on the following: The sales contract or the closing statement can substantiate the value of the land. If the borrower acquired the land through inheritance the value must be established by an appraisal, and the acquisition date is the date of death. If the borrower acquired the land through some form of seller financing, the acquisition date is the date of the seller finance agreement. DOCUMENTATION: If the land was purchased within the two-year window, include a certified copy of the deed from the Recorder s Office and submit it to IHDA with the file. If the land was purchased more than two years ago, the cost of the land cannot be included in the total purchase price. Total purchase price does not include: usual and reasonable settlement and financing costs the unpaid value of services ( sweat equity ) performed by the borrower or members of his or her family in completing the residence items of personal property which are not fixtures and/or are not permanently affixed to the property the cost of minor repairs paid for by the borrower but performed after closing DPA cannot be used to make up the difference between sale price and value. If borrower proceeds with purchase of property valued less than sale price, they need to use their own funds. MORTGAGE TYPES 203(b) Home Mortgage Insurance 234(c) Mortgage Insurance for Condominiums FEES 1 st First Mortgage: 1.00% Origination Fee must be charged Standard PRMG Underwriting and Processing Fee to be charged (however, lender fees (excluding Origination fee) cannot exceed $1,200 - Reg. Z compliance required) IHDA Fees: $400 Funding Fee, payable to Master Servicer. Fees paid to third parties such as courier fees and title company fees are allowed and are not included in the $1, in allowable lender fees In addition to the fees above, other customary third-party fees such as credit report fee, appraisal fee, insurance fee, or similar settlement or financing costs may be charged In all cases the lender must meet federal and Illinois lending laws regarding fees and charges 2 nd No fees on the second mortgage FIRST LOAN INTEREST RATES Current interest rates can be found on the IHDA website here: Click on the links for IHDA Homeownership Newsletters to access rates DOCUMENTATION Full/Alt Doc Regardless of DU findings, all loans must have evidence that the most current year s 1040 tax returns have been validated for all borrowers with any type of qualifying income. If the results cannot be obtained due to an extension, a No Record Found message is acceptable, and a validated 4506-T on the previous year is required. For Illinois HDA 5 of 34 08/07/2018

6 a borrower who is qualified using either (1) base pay, (2) bonus, (3) overtime, or (4) commission income less than 25% of the borrower s annual employment income, then unreimbursed employee business expenses are not required to be analyzed or deducted from the borrower s qualifying income, or added to monthly liabilities. This applies regardless of whether unreimbursed employee business expenses are identified on tax returns (IRS Form 2106) or tax transcripts received from the IRS. Union dues and other voluntary deductions identified on the borrower s paystub do not need to be deducted from the borrower s income or treated as a liability. Full 1040 tax transcripts are required to support income used to qualify. When transcripts indicate Due to limitations, the IRS is unable to process this request" one of the following must be documented in the file: 1. For salaried borrowers, when available, utilize The Work Number s Instant Access Database. This will show employment and income records provided by the employer s payroll system, OR, Lender may order W-2 or 1099 transcripts when the only income used to qualify is salaried/w-2 or 1099 reported income. 2. Request the most recent 1040s from the borrower(s), and proof of filing (cancelled check for tax payment, or bank statement showing deposit of refund). 3. Request that the borrower obtain the transcripts from the IRS. Tax transcripts must be provided for the number of years of income documentation required to be in the loan file, in accordance with the AUS findings and/or Agency requirements Tax transcripts must come to lender directly from the IRS or through a third party vendor ordered/obtained by lender When business tax returns are required by AUS, business income is used to qualify or business income is used to offset a loss on personal tax returns or is included in the loan file, a separate IRS Form 4506-T must be executed (but not processed and must allow enough time to be executed post-closing after delivery to investor) for each business for the required number of years of income documented, for each selfemployed borrower on the loan transaction. Allowable signatures (per IRS): 1120/1120S: Borrower must sign name with title and only the following titles are acceptable: President, Vice President, CEO, CFO, Owner, 1065: Borrower must sign name with title and only the following titles are acceptable: General Partner, Limited Partner, Partner, Managing Member, Member Letter of explanation is required for borrowers who are self-employed or have non- W2 income/loss if there is a variance of 10% or more between the total income on the tax transcripts and the tax returns. Two years IRS 1040 Transcripts are required on all loans when the borrower is employed by a relative or closely held family business. For non-self-employed borrowers: Verbal VOE is required to be completed no more than 10 days prior to the note date for wet funding states and escrow states. If the Verbal VOE is completed more than 10 days prior to the funding date, another Verbal VOE should be completed 10 days prior to funding date for escrow states. For self-employed borrowers: No more than 30 calendar days prior to note date, verify the existence of the borrower s business from a third party that may include a CPA letter (cannot be vague, must state length of time doing taxes and be signed by CPA), regulatory agency, or appropriate licensing bureau; OR verify a phone listing and address for the borrower s business through resources such as the telephone book, directory assistance, internet, or contact the appropriate licensing bureau. Verification may not be made verbally, and a certification by PRMG indicating the information was verified is not allowed. Documentation from the source used to verify the information must be obtained and in the file. Internet sites such as 411.com, Chamber of Commerce sites and Manta.com where they allow the Illinois HDA 6 of 34 08/07/2018

7 business owner to add their own information are not acceptable. Also single source verifications, such as from superpages.com, yellowpages.com and searchbug.com are not allowed. If all other methods of obtaining third party verification have been exhausted, the borrower can provide letters from three clients indicating the type of service performed, length of time of business relationship, frequency of service, payment arrangements, etc. and support the income with current bank statements, deposits, etc. The underwriter must thoroughly investigate that the business, income and proof of business is legitimate. VOR/VOM required as indicated by the AU approval. Documentation must comply with AUS and TOTAL Scorecard section of the handbook. Amended tax returns cannot be used to qualify if they are amended after the application, initial credit report date or purchase contract date unless the changes made are non-material to the amount of income claimed, and qualification for the mortgage loan. Due diligence must be exercised with close examination of the original, and amended returns, to determine if the use of the amended return is warranted and the following documentation should be reviewed when income from the amended return is required: A letter of explanation regarding the reason for the re-filing; evidence of filing (must be validated with a record of account (4506T results); copy of the original 1040; any extensions filed, and evidence of payment of the taxes due (or evidence borrower is on a payment plan in lieu of full payment as long as the borrower qualifies with the payment in the ratios), and the ability to pay, if the check has not yet cancelled. Profit and loss statement and balance sheet required if more than a calendar quarter has elapsed since date of most recent calendar or fiscal-year end tax return was filed by the borrower. (A balance sheet is not required for self-employed borrowers filing Schedule C income.) Additionally, if income used to qualify the borrower exceeds the two-year average of tax returns, an audited profit and loss statement or signed quarterly tax returns obtained from IRS are required. Income documentation per AUS findings Preliminary Title policy must be no more than 90 days when the note is signed Provide a written analysis of the income used to qualify the borrower on the Transmittal Summary or like document(s) in the file. An Income Analysis must be completed for self-employed borrowers. For self-employed borrowers who have not yet filed the previous year s tax returns, a P&L for that tax year will be required When paying off any non-transaction related item (i.e., debts, third party payouts, etc.) that has a balance of $5,000 or more, paid for by either borrower or seller, to ensure that the total payoffs are accurate, copies of the actual invoices (statements), an updated (current) credit report/refresh or credit supplement reflecting the current balance with a signed amendment (or similar) authorizing disbursement for these account(s) are required. You cannot use the amount listed on the credit report to document the payoff amount. All documentation used in qualifying the borrower must be legible and if not in English, will require a full written translation of the entire documentation into English. The Borrower's liabilities must be reflected on the mortgage application and considered when qualifying the loan. The mortgage application, credit report, borrower's paystubs (if provided), and all other file documentation must be reviewed for borrower liabilities. Other file documentation can include, but is not limited to, bank statements, tax returns, divorce decrees etc. When an undisclosed reoccurring debt is identified in the loan file, it must be included in the qualification Illinois HDA 7 of 34 08/07/2018

8 TAX CODE COMPLIANCE REVIEW IHDA INCOME CALCULATOR of the loan. In instances where it negatively affects the loan qualification, a letter of explanation may be required. Must authenticate documents obtained from an Internet website and examine portions of printouts downloaded from the Internet including the Uniform Resource Locator (URL) address, as well as the date and time the documents were printed. The lender must visit the URL or the main website listed in the URL if the page is password protected to verify the website exists and print out evidence documenting the lender s visit to the URL and website. Tax Code Compliance Underwriting Review is unique to IHDA loan programs and must be performed by the lender for all IHDA programs. A lender-signed certification attesting to review and tax code compliance is required to be in each file. Tax Code Compliance Underwriting Review consists of documenting three basic determinations: Is the borrower (and spouse) a first-time homebuyer, or exempt from this requirement? OR, is the borrower a non-first time homebuyer meeting income, purchase price, and all other IHDA program restrictions? Is the borrower s total household income within the allowable limits for the area in which they intend to reside? Note that IHDA has developed the income calculator to be used in determining whether income is compliant or noncompliant. The income calculator can be found on the IHDA website For additional information on how to use the income calculator, a presentation on how to use the income calculator can be found here: under the Trainings section. Is the residence a qualified dwelling whose purchase price is within the allowable limits for the area in which it is located? IHDA s income calculator provides the means to determine whether a household income is below or above the county limit (compliant or non-compliant), as the county limits are embedded in the calculator. All IHDA programs require the income calculator be used. Lender must fully complete, sign, and date the income calculator; the calculator must be included in each and every file submitted to IHDA. A copy of the signed income calculator can be uploaded to MITAS. Do not download the calculator to your desktop; you must use it from IHDA s website each time you calculate income. Documentation that will assist in determining household size would be the loan application, the IHDA income certification, the Federal tax returns, etc. In the calculator, the following must be completed: income from all sources county in which the property is located names, ages, and total number of household members* select whether income is above or below 80% AMI select whether the property is located in a targeted area If the finding shows non-compliant, the loan is not eligible for IHDA. Note: It is strongly encouraged that a second review of the documentation is completed if income is within 4% of limit. Borrowers are required to complete and sign the income certification. The certification must include all household occupants, and the list of occupants must match that shown on the calculator. It is not necessary for the income stated on the income certification to match the income on the calculator, however discrepancies between dependents listed on tax returns, application, income cert, etc. must be Illinois HDA 8 of 34 08/07/2018

9 addressed, and documentation provided where applicable. A copy of birth certificate for newly born member of household will be required when applicable. DOCUMENT EXPIRATIONS Preliminary Title policy must be no more than 90 days when the note is signed Credit documentation must not be more than 120 days old from the disbursement date Appraisals are valid for 120 days and must be dated within 120 days of the disbursement date AUTOMATED UNDERWRITING DESKTOP UNDERWRITER (DU) The last AUS finding, which must match the terms of the loan, must be in the loan file. For all loans, the first submission to the AUS must occur prior to the note date (it cannot be the same as the note date.) All loans must be run through FHA s TOTAL SCORECARD decisioning engine via DU. A copy of the findings must be included in the file Must receive an Approve/Eligible All conditions outlined in the Findings Report must be satisfied. If TOTAL Scorecard issues an Approve/Eligible and ANY the following applies or the DU findings indicate you need to downgrade, then the loan must be downgraded to a Refer (and is not eligible): the mortgage file contains information or documentation that cannot be entered into or evaluated by TOTAL Mortgage Scorecard; additional information, not considered in the AUS recommendation affects the overall insurability of the Mortgage; the Borrower has $1,000 or more collectively in Disputed Derogatory Credit Accounts (defined as disputed charge off accounts, disputed collection accounts, and disputed accounts with late payments in the last 24 months; exclusions from cumulative balance include: disputed medical accounts; and disputed derogatory credit resulting from identity theft, credit card theft or unauthorized use. To exclude these balances, the Mortgagee must include a copy of the police report or other documentation from the creditor to support the status of the accounts.) the date of the Borrower s bankruptcy discharge as reflected on bankruptcy documents is within two years from the date of case number assignment (see credit section for seasoning requirements) - Per HUD they do not require seasoning or a downgrade for a dismissed bankruptcy. the case number assignment date is within three years of the date of the transfer of title through a Pre-Foreclosure Sale (Short Sale) (see credit section for seasoning requirements); the case number assignment date is within three years of the date of the transfer of title through a foreclosure sale (see credit section for seasoning requirements); the case number assignment date is within three years of the date of the transfer of title through a Deed-in-Lieu (DIL) of foreclosure (see credit section for seasoning requirements); for purchase and non-cash out refinances transactions, if any mortgage trade line reported on the credit report used to score the application, including mortgage line-of-credit payments, during the most recent 12 months reflects: 3 or more late payments of greater than 30 days; OR 1 or more late payments of 60 days plus one or more 30-day late payments; OR 1 payment greater than 90 days late For a cash out transaction if a mortgage trade line reported on the credit report used to score the application reflects a current delinquency or any delinquency within 12 months of case assignment date or a current delinquency Illinois HDA 9 of 34 08/07/2018

10 LOAN PRODUCT ADVISOR (LPA) MANUAL UNDERWRITING CAIVRS/DELINQUENT FEDERAL DEBT the Borrower has undisclosed mortgage debt that reflects: (1) a current delinquency; (2) any delinquency within 12 months of the case number assignment date; or (3) more than two 30 Day late payments within 24 months of the case number assignment date business income shows a greater than 20 percent decline over the analysis period. Not allowed Formerly known as Loan Prospector (LP) Not allowed Credit Alert Interactive Voice Response System (CAIVRS) needs to be run Borrower may not be denied solely on the basis of CAIVRS information that has not been verified. Lender must contact the creditor agency using the contact phone number and debt reference number reflected in the Borrower s CAIVRS report If a Borrower is currently delinquent on an FHA-insured Mortgage, they are ineligible for a new FHA-insured Mortgage unless the delinquency is resolved. Borrowers with delinquent Federal Tax Debt are ineligible. See Qualifying Section for borrowers who have past due federal tax debt and are in a payment plan. Tax liens may remain unpaid if the Borrower has entered into a valid repayment agreement with the federal agency owed to make regular payments on the debt and the Borrower has made timely payments for at least three months of scheduled payments. The Borrower cannot prepay scheduled payments in order to meet the required minimum of three months of payments. (Payment must be included in DTI.) Mortgagees must check public records and credit information to verify that the Borrower is not presently delinquent on any Federal Debt and does not have a tax lien placed against their Property for a debt owed to the federal government To verify a delinquent student loan, or loan paid by a government claim, is not a defaulted federal loan (when not appearing in CAIVRS or clearly listed on the credit report as federal debt or even when reporting as a charge-off on credit report), contact or DCS_Help@ed.gov For delinquent federal non-tax debt, including deficiency judgments and other debt associated with past FHA-insured mortgages, must include documentation from the creditor agency to support the verification and resolution of the debt (the Borrower must resolve their federal non-tax debt in accordance with the Debt Collection Improvement Act). For debt reported through CAIVRS, the Mortgagee may obtain evidence of resolution by obtaining a clear CAIVRS report. For a borrower that had an FHA mortgage foreclosed, that borrower is not eligible to apply/order a case number for another FHA mortgage until three years after the date that HUD paid the insurance claim to the lender. LDP/GSA REQUIREMENT All parties involved with and who handle the loan file (see instructions in the Resource Center for additional information) must be checked against HUD s Limited Denial of Participation (LDP) list at and the General Services Administration s (GSA) Excluded Party List at Any entity noted on either of the LDP and GSA lists must be removed from the transaction or will cause the loan to be ineligible. The parties to verify include, but are not limited to, Buyers (including AKAs on the credit report), Sellers, Loan Officer, Buyers Agent, Sellers Agent, Escrow Officer, Title Officer, Appraiser, Processor, and Underwriter. MORTGAGE CREDIT Any mortgage credit reject or mortgage credit sanction will require a second Illinois HDA 10 of 34 08/07/2018

11 REJECT/SANCTION signature from an Operations Manager. The underwriter must justify on their LT why they want to overturn another lender s decline and document the file accordingly. PROPERTY TYPES In order for a property to be considered a qualified dwelling, ELIGIBLE the borrower must acquire a fee simple interest in the real estate; the home must become (be) the principal place of residence of the borrower within 60 days after the closing of the IHDA loan; the residence must be located in Illinois; and designed for residential use. The following types of residences can be considered qualified dwellings: Single family detached home Townhome Condominium unit (FHA/HUD approved); must be warrantable/approved Planned Unit Development (PUD) Duplex unit or zero lot line home, provided that a maintenance agreement is of public record Two-unit (one building) if existing residential structure, or new construction that is located in a targeted area INELIGIBLE 3-4 Units Co-ops Manufactured Homes Condos without HUD Approvals Mobile homes, campers and similar vehicles Home used as investment property Recreational, vacation or second homes Non-permanent homes Condotels Mixed-Use Leased Land/leaseholds Land Trusts Log Homes Properties that do not meet FHA requirements Properties that have a Property Assessed Clean Energy (PACE) loan are not eligible (such as the Home Energy Renovation Opportunity (HERO) Program) CONDOS Must be HUD Approved: Condo projects involved in monetary litigation may be eligible, if litigation is reviewed and approved through condoreviews@prmg.net. Documentation regarding the litigation (i.e., court documents) must be submitted to condoreviews@prmg.net for review and approval. (If project was by HUD approved after litigation date, the litigation would be considered in the approval and not required to be reviewed as there would be no changes to the project.) Underwriter must certify that there have been no changes to the project since HUD approval that would cause the project to no longer be HUD approved For HUD REOs, condominium projects do not need to be currently approved by HUD Detached condos, meeting HUD s definition of a site condo, do not have to have project approval. MAXIMUM ACREAGE 1 or 2-unit property situated on less than five (5) acres PROPERTIES WITH UN- Allowed. PERMITTED ADDITIONS Must meet HUD Guidelines. PROPERTIES WITH MORE THAN ONE LIVABLE STRUCTURE Properties containing a main structure and a coach house are eligible with IHDA as long as the other livable structure (the coach house) has never been occupied as a residence. This may be puzzling since a two-flat is eligible under the program even if Illinois HDA 11 of 34 08/07/2018

12 LEGAL RESTRICTIONS ON CONVEYANCE (FREE ASSUMABILITY) both units have previously been occupied as residences. Why the difference in eligibility? The IRS has made the determination that units sharing a wall (i.e. two-flat) are considered one dwelling. However, if the units do not share a common wall (i.e. main house & coach house) the IRS views them as two separate dwellings. If the coach house was once used as a residence, the buyer is purchasing two separate housing units in the eyes of the IRS. The units MUST be contiguous. There may be no legal restrictions on conveyance (transfer of title) in accordance with 24 CFR , which would include items like Private Transfer Fees and Community Enhancement Fees unless specifically allowed per 24 CFR (see AllRegs for additional information on 24 CFR ) Underwriter must review and confirm that if are legal restrictions on conveyance, they are allowed in accordance with 24 CFR and are not further restricted by the product profile (for instance allowable deed restriction types). NEW CONSTRUCTION This must be the first time the unit will be occupied as a residence for it to qualify as new construction. A model home qualifies, provided it was never rented nor occupied as a residence prior to being sold. Likewise, conversion of an old factory into condominiums qualifies as new construction because it was not previously occupied as a residence. New construction is not eligible for borrowers using the 1stHome Illinois option APPRAISED VALUE EXCEEDS PURCHASE PRICE LIMIT/NON-ARMS LENGTH TRANSACTION CONSTRUCTION TO PERMANENT FINANCING If the appraised value exceeds the purchase price limit, but the acquisition cost is below the limit AND the transaction is clearly arms-length (not a relative), the dwelling may qualify for an IHDA loan. A statement from the buyer(s) and seller(s) indicating that no relationship exists will be required. Not allowed OCCUPANCY Primary Residence (O/O) ELIGIBLE BORROWERS Total household income must be below program county limit. Home must be a qualified dwelling situated on less than or equal to five (5) acres of land. Purchase price of home must be below the program county limit. Borrowers may not own other property at the time of closing FIRST TIME HOMEBUYER REQUIREMENT BORROWER CONTRIBUTION Access Programs: First-Time and Non-First-Time Homebuyers allowed. (Lenders must still disclose borrower status) Borrowers using the 1stHome Illinois DPA option must be first-time homebuyers. Buyers who are purchasing in a targeted area or who are qualifying under the Veterans Exception are exempt from the first-time homebuyer requirement. Buyer must contribute the greater of 1% of the purchase price or $1,000 to the transaction, which will be evidenced on the Loan Estimate and Closing Disclosure. The borrower may not use the tax proration toward the borrower's contribution of 1% or $1, (whichever is greater) into the transaction, those funds must be from the borrower's own funds or if allowable by AUS from gift funds. U.S. CITIZENS Allowed RESIDENT ALIENS Allowed Permanent Resident Aliens are eligible and must provide evidence of a valid Social Security number. Non-Permanent Resident Aliens may be eligible provided: The Property will be the Borrower s Principal Residence; The Borrower has a valid SSN, except for those employed by the World Bank, a foreign embassy, or equivalent employer identified by HUD; The Borrower is eligible to work in the United States, as evidenced by the Illinois HDA 12 of 34 08/07/2018

13 NON-OCCUPYING CO- BORROWERS NON-OCCUPYING CO- SIGNERS Employment Authorization Document issued by the USCIS; and the Borrower satisfies the same requirements, terms and conditions as those for U.S. citizens. The Employment Authorization Document is required to substantiate work status. If the Employment Authorization Document will expire within one year and a prior history of residency status renewals exists, the Mortgagee may assume that continuation will be granted. If there are no prior renewals, the Mortgagee must determine the likelihood of renewal based on information from the USCIS. A Borrower residing in the U.S. by virtue of refugee or asylee status granted by the USCIS is automatically eligible to work in this country. The Employment Authorization Document is not required, but documentation substantiating the refugee or asylee status must be obtained. Borrowers under Deferred Action, the Dreamer s Act or DACA (EAD Code C33, C14, etc.) are not eligible. Although, these individuals may have been granted permission to remain in the U.S. for a period of time, DACA/Deferred Action does not grant a legal status. PRMG requires all borrowers to document proof of legal residency in the U.S. Additionally, they must follow the applicable guidelines for income (typically 2 year history and likely to continue for 3 years as applicable.) A borrower with DACA/Deferred Action status would not be able to meet the borrower eligibility documentation requirements (i.e., green card or meet applicable agency standard guidelines for income) and therefore is not be eligible. For wholesale or retail loans, see the Niche product suite, which allows borrowers under deferred action if all nonpermanent resident alien requirements of that program are met. Not allowed Allowed, per FHA Guidelines The non-occupant co-signor cannot occupy the property, be on the purchase agreement, be on title or have a vested interest in the subject property. CO-SIGNER Not allowed HOMEBUYER EDUCATION Pre-purchase homeownership counseling is required for all borrowers PRIOR TO CLOSE Approved education counselors can be found on the IHDA website here: Other providers include MGIC, Essent, Arch, Genworth, National MI and Radian OPTIONAL HOME WARRANTY INSURANCE COVERAGE All first-time homebuyer(s) can obtain a one-year home warranty protection policy if they wish, but it is not required. Home Warranty to be paid through the close of escrow Home Warranty must be disclosed on Final Settlement Statement or copy of insurance declaration page required POWER OF ATTORNEY Power of Attorney must be reviewed and approved by fulfillment center Operation Manager or PRMG's Compliance Group Allowed with the following requirements: Power of Attorney (POA) must be limited or specific to the transaction All transaction types allowed Power of Attorney may not be used to sign loan documents if no other borrower executed such documents unless, the Attorney in Fact is a relative or Attorney at Law. POA can be used only for closing documents The attorney-in-fact may not be the seller, appraiser, broker, etc. or have any Illinois HDA 13 of 34 08/07/2018

14 LEXIS-NEXIS SEARCH REQUIREMENT other direct or indirect financial interest in the transaction A statement that the POA is in full force and effect on the closing date, survives subsequent disability (durable), and has to be revoked in writing, or gives a specific expiration date which survives the closing date A statement of the borrower s name exactly as it will appear on all closing documents Notarized signature of borrower (if executed outside the U.S., it must be notarized at a U.S. Embassy or a military installation) Recorder s stamp, if previously recorded The attorney-in-fact must execute all closing documents at settlement Title policy must not contain any exceptions based on use of POA POA must be recorded along with or immediately prior to the closing documents If a lender determines a Power of Attorney is required by applicable law (so cannot be restricted by investor requirements), lender must include a written statement explaining use of the Power of Attorney and may also be required to provide supporting documentation. A written statement that explains the circumstances of the use of the POA must be included in the loan file. Must met all Agency requirements For any of the following transaction types an request (which includes a screenshot or snip of the loan in the FastTrac pipeline) must be sent to QC to have a LexisNexis search run on involved parties to the transactions to ensure there is no relationship between the buyer and seller. (Not all items listed may be applicable to this product, review product profiles for what is allowed): Short Sale Purchase Property Flips <= 180 days Contractors on a 203K loan For Sale by Owner (FSBO) required for all except: If the borrower and seller are related or are landlord and tenant, and the relationship is disclosed and is acceptable per PRMG guidelines An investor, such as HUD, FNMA, FHLMC, etc. REO lender who acquired the subject property by Trustee Sale as the Beneficiary QC AUDIT REQUIRED A QC audit is required if the loan has any of the following high risk characteristics (not all items listed may be applicable to this product, review product profiles for what is allowed): 5-10 financed properties for second home and investment transactions. 3-4 Units 2-4 Unit properties in New Jersey 203K loans (Lexis Nexis is required on all contractors as well) VOE only used (when allowed by AUS) and not supported by paystub/w2 for Wholesale and Correspondent channels only (not required for retail channel) If the borrower is employed by a party to the transaction When the borrower is also a Real Estate Agent for the loan transaction Retail loans referred to the AFS department any time the referring Loan Officer or the AFS Loan Officer are in New or Watch status When the Real Estate Agent is also the Loan Officer on the transaction (not allowed on retail). NOTE: The above list applies to credit qualifying loans only. QC REVALIDATION REQUIRED A QC validation is required if the loan has any of the following characteristics (not all items listed may be applicable to this product, review product profiles for what is Illinois HDA 14 of 34 08/07/2018

15 INCOME REQUIREMENTS/LIMITS allowed): A revalidation of the VOE (in addition to the audit) is required by the QC Department if the following is used: VOE only used (when allowed by AUS) and not supported by paystub/w2 and Wholesale and Correspondent channels only (not required for retail channel) A revalidation of the VOD is required by the QC Department for the if the following is used: VOD only used (when allowed by AUS) and not supported by bank statements and Wholesale and Correspondent channels only (not required for retail channel) Note: A Borrower Authorization in name of PRMG may be required to obtain VOD or VOE revalidation if requested by the verifying institution. Underwriter has the discretion when evaluating the loan file to utilize a more conservative approach to income/expenses for qualification purposes based on the circumstances of the loan. All income sources used to qualify borrowers must be legal at the local, state, and federal level. Any income derived from an activity or source that violates Federal, state, or local laws cannot be considered for loan qualification for both selfemployed borrowers and wage earners working for a company. Income calculations must be included in the file If a borrower is currently on temporary disability (including maternal/parental leave), the borrower must provide a letter of intent to return to work and the employer must provide a letter or other communication of the borrower's right to return to work and a description of the employment terms (same as prior to leave). The temporary disability benefits must be used for loan qualification and must not terminate prior to the borrower returning to work, unless the borrower(s) has liquid reserves sufficient to offset reduced income, covering the gap between the benefits expiration and the return to work dates. See for specific requirements. For borrowers with gaps in employment of six months or more (an extended absence), the borrower s current income can be used for qualifying if it can verify and document that: (1) the borrower has been employed in the current job for at least six months at the time of case number assignment; and (2) a two year work history prior to the absence from employment using standard or alternative employment verification. Follow HUD requirements for non-reimbursed business expenses. If the borrower has claimed automobile depreciation on Form 2106, this expense should be added to the borrower's income. Vehicle depreciation can be calculated one of two ways by using the standard mileage deduction or actual depreciation expense. The method used by the borrower will be disclosed on the second page of Form If the borrower used the standard mileage deduction, multiply the business miles driven by the depreciation factor for the appropriate year and add the calculated amount to Total Income. If the borrower claimed the actual depreciation expense, add this amount to Total Income. For borrowers with rental income, if a lease agreement is required then the lease agreement must be executed by the landlord and the tenant and all pages of the lease agreement must be included. Housing Assistance Payments (HAPs), which are often known as Section 8 Homeowner Vouchers, where a portion of the mortgage payment is paid directly to the borrower/lender as a subsidy for the mortgage payment on the subject property is not allowed. MAXIMUM PROGRAM Income limit charts are available on our website for general income limits in Illinois HDA 15 of 34 08/07/2018

16 COMPLIANCE INCOME LIMITS targeted and non-targeted areas. The link to general income limits for targeted and for non-targeted areas can be found Some borrowers fall into an income category that is below 80% of the Area Median Income (AMI), and the link to that chart is here: currently under the Program Matrix, Income Limits, Guides & Marketing Materials section. Before a loan is closed, it is critical that the borrower be in the correct income category, and that it is correctly reserved/committed in MITAS. You must update MITAS for ANY changes to loan PRIOR to uploading file for review. For each income category, the lender must be certain income is below the county limit. For borrowers with income higher than the below 80% AMI limit, but below the general income limit, the lender will register the loan for the above 80% category. Program income limits typically change annually. These are always posted to our website. Income must be below the county limit at the time the loan is committed. N/A SEASONING REQUIREMENTS RECENTLY DELISTED N/A PROPERTIES TITLE SEASONING N/A ANTI-FLIPPING POLICY For purchases - The property Seller must have taken title to the subject property more than 90 days prior to the contract date on the sale of the property to the applicant. Property flipping is a practice whereby a recently acquired property is resold, often for a considerable profit. If there is a partial continuity of ownership, a quit claim deed transaction is not a sale and is not subject to the rules prohibiting property flipping. The use of a quit claim will not be deemed a flip as long as at least one of the original owners retains an ownership interest in the property after the quitclaim is recorded. The seller s date of acquisition is defined as the settlement date on the seller s purchase of that property. Must obtain a 12-month chain of title documenting compliance with time restrictions on resales. If the seller has taken title within the past 91 to 180 days and the new sales price exceeds the previous sales price by 100% or more, a second FHA appraisal (by another appraiser) is required. The borrower is not allowed to pay for the Second appraisal. The Anti-Flipping requirements do not apply to the exceptions below: properties acquired by an employer or relocation agency in connection with the relocation of an employee; resales by HUD under its REO program; sales by other U.S. government agencies of Single Family Properties pursuant to programs operated by these agencies; sales of Properties by nonprofits approved to purchase HUD owned Single Family Properties at a discount with resale restrictions; sales of Properties that are acquired by the seller by inheritance; sales of Properties by state and federally-chartered financial institutions and Government-Sponsored Enterprises (GSE); sales of Properties by local and state government agencies; and sales of Properties within Presidentially-Declared Major Disaster Area, only upon Illinois HDA 16 of 34 08/07/2018