LOAN PROCESSING, UNDERWRITING, DOCS, FUNDING, POST-CLOSING PROCEDURE - MORTGAGE CREDIT CERTIFICATES

Transcription

1 PNP SPECIFICATIONS PNP Name/ Histry Prcedure: Mrtgage Credit Certificates Date Issued: 12/01/2015 Date Effective: 12/01/2015 Date Revised: 04/02/2018 Prductin Channels Accuntable Persnnel/ Department Retail Crrespndent Lan Prcessing Underwriting Dcs/Funding Pst-clsing Whlesale Issuing Persnnel/ Department Subject Matter Expert (SME) Purpse Executive Vice President, Operatins Research & Develpment Lead Directr f Lan Prcessing Directr f Underwriting Underwriting Managers Directr f Clsing/Funding Pst-clsing Manager The purpse f this prcedure is t prvide a cnsistent, unifrm and cmpliant prcess fr cmpleting lans with an accmpanying Mrtgage Credit Certificate. RELATED DOCUMENTATION Guide Matrix Branch Lan Prcessing Manual AFN Apprved DPAs & MCCs

2 RELATED DEFINITIONS Mrtgage Credit Certificate (MCC) A Mrtgage Credit Certificate (MCC) prgram is a federal tax credit prgram that prvides affrdability assistance t families f lw and mderate incme. The MCC tax credit is a federal credit that can reduce ptential federal incme tax liability, creating additinal net spendable incme brrwers may use tward their mnthly mrtgage payments. This MCC tax credit prgram may enable first-time hmebuyers t cnvert a prtin f their annual mrtgage interest int a direct dllarfr-dllar tax credit n their U.S. individual incme tax returns. (Surce: The amunt f mrtgage credit allwed varies depending n the state r lcal gvernment that issues the certificates, and is capped at a maximum f $2,000 per year by the IRS if the prperty state s rate is greater than 20%. Example: If a hmebuyer receives a MCC that ffers a 30% credit n a $200, year lan with a 6% interest rate, the allwable tax credit is calculated as fllws (runded t nearest dllar): Mrtgage interest paid first year... $11,933 x MCC credit... 30% = Ttal credit... $3,579 Because the ttal credit in this example exceeds the IRS limit f $2,000 fr states with rates ver 20%, the hmebuyer wuld reprt a $2,000 credit n his/her tax return. The hmebuyer may cntinue t receive a tax credit fr as lng as he/she lives in the hme and retains the mrtgage. Table f Cntents Cnfirming Prgram Apprval... 1 Prgram Fees... 2 Submitting a Reservatin Request... 2 Submitting the Lan t Underwriting... 3 Underwriting MCC t Agency Requirements... 4 Preparing Lan Dcs fr Lans with a MCC Funding Lans with an MCC Obtaining an MCC Cmmitment Filing an IRS Frm

3 REVISED 04/02/2018; PAGE 1 OF 12 Cnfirming Prgram Apprval Lan Prcessr 1. Check the AFN Apprved DPAs & MCCs matrix t ensure the requested Mrtgage Credit Certificate (MCC) prgram and administering agency appear n the list. D nt prceed with prcessing the lan with the requested prgram if it des nt appear n the apprved list. T request apprval, the Lan Originatr (r Lan Prcessr) will: Cmplete the MCC Apprval frm Gather infrmatin regarding the MCC prgram (applicatin and prgram guidelines) Address an t Research & Develpment, Katie Ryan: kryan@afncrp.cm Attach the agency MCC Applicatin and all necessary dcumentatin prvided by the agency Include the fllwing infrmatin in yur request: Branch name Reginal Manager name Primary Lan Officer cntact infrmatin (will appear n the agency Lender Cntact Infrmatin sheet) Name f agency Agency cntact infrmatin Agency web link Branch that will be charged the applicatin fee, if applicable Type MCC Apprval Request in the subject line and send the request (Cntinued)

4 REVISED 04/02/2018; PAGE 2 OF 12 Cnfirming Prgram Apprval, (Cntinued) Lan Prcessr 1. (Cnt d) If apprved by AFN, the applicatin and applicatin fee will be sent t the agency fr apprval After the agency has apprved, the prgram will be added t Encmpass and the branch will be ntified If training is required, Kathleen Ryan will crdinate with the branch accrdingly Prgram Fees Lan Prcessr 2. Review the prgram as prvided n the AFN Apprved DPAs & MCCs matrix) t see if the agency requires a fee t be charged t the buyer. a. Crdinate any required upfrnt fee cllectin with the AFN Lan Originatr, and retain a cpy f prf f fee cllectin in the eflder. b. Fr fees due at clsing, ensure prperly disclsed t the buyer at the time f initial disclsures. 1) MCC fees shuld be charged n line 824 f the 2015 itemizatin. Submitting a Reservatin Request Lan Prcessr 3. Prir t submitting t Underwriting, submit the MCC reservatin request t the apprved agency and uplad the reservatin cnfirmatin received frm the agency t the Encmpass eflder under Gen - MCC Reservatin.

5 REVISED 04/02/2018; PAGE 3 OF 12 Submitting the Lan t Underwriting Lan Prcessr 4. Prir t cmpleting the Submittal milestne: a. G t the AFN - Brrwer Summary Originatin frm (screen) in Encmpass. b. Indicate Yes in the Mrtgage Credit Certificate (MCC) field under the Transactin Details heading. c. Cmplete all additinal MCC fields. d. If a builder lan, check the [ ] Builder Lan checkbx; if this requires the reservatin t be made later in the lan prcess, ensure the Underwriter is aware it is an MCC at the time f submissin (by cmpleting the Mrtgage Credit Certificate (MCC) and Mrtgage Credit Certificate Name fields) and the Underwriter can cnditin fr cmpletin f this sectin later in the prcess. D nt use this exceptin t bypass nrmal wrkflw and system requirements if it is nt a Builder Lan. (Cntinued)

6 REVISED 04/02/2018; PAGE 4 OF 12 Submitting the Lan t Underwriting (Cntinued) Lan Prcessr 4. (Cnt d) e. Request all applicable upfrnt disclsures and/r affidavits t ensure the Underwriter has all dcumentatin and infrmatin required t underwrite the lan with any applicable MCC prvisins (befre clsing dcs are rdered, t avid delays in dcs r funding). f. Uplad MCC dcumentatin t the Encmpass eflder under Gen - MCC Dcuments. 5. A minimum f 10 days must be remaining n a reservatin fr the lan t be Cleared fr Dcs by the Underwriter. An alert will appear n the file if the MCC is appraching expiratin If the alert appears befre the file is cleared t clse, extend the reservatin with the agency Be sure there is enugh time left n the reservatin t allw sufficient time fr funding and fr pst-clsing t request the final certificate Underwriting MCC t Agency Requirements Underwriter 6. Review AFN Apprved DPAs & MCCs matrix and ensure there are n underwriting stipulatins n the agency tab. Review MCC infrmatin in Encmpass and dcumentatin in the eflder fr accuracy; reslve any discrepancies with the Lan Prcessr. (Cntinued)

7 REVISED 04/02/2018; PAGE 5 OF 12 Underwriting MCC t Agency Requirements (Cntinued) Underwriter 6. (Cnt d) a. G t the Encmpass AFN - Brrw Summary Originatin frm (screen), under the Transactin Details heading, and ensure the Mrtgage Credit Certificate (MCC) field is marked Yes. b. Ensure all ther MCC fields here are cmplete. 7. a. Review the AFN Apprved DPAs & MCCs, including the prgram tab, t determine if the MCC may be used fr incme qualifying purpses. b. Cmplete MCC Incme Calculatin Wrksheet and use results t prceed in Encmpass; use calculatins t cmplete fields accrding t the Lan Type: See Step 8 fr Cnventinal (belw), Step 9 fr FHA, r Step 10 fr VA. 8. Cnventinal: c. Fllw FNMA requirements fr calculating MCC incme: 1) Treat the maximum pssible MCC incme as brrwer incme when calculating the brrwer s DTI rati (d nt treat as a reductin in the mrtgage payment). 2) Calculate additinal mnthly incme as fllws: [(Mrtgage Amunt) x (Nte Rate) x (MCC %)] 12 Fr example, a $200,000 lan with a nte rate f 4.5% and a 20% MCC is calculated as: ($200,000 x 4.5% x 20%) 12 = $150 (Cntinued)

8 REVISED 04/02/2018; PAGE 6 OF 12 Underwriting MCC t Agency Requirements (Cntinued) Underwriter 8. (Cnt d) d. G t the 1003 Page 2 frm (screen), see the Other Incme sectin, and use the drpdwn list t add the FNM Gvernment Mrtgage Credit Certificate ptin. (D nt manually type this descriptin, as the AUS will nt prperly read/apply the MCC infrmatin.) 9. FHA: e. Obtain a cpy f the MCC and place it, alng with the MCC Incme Calculatin Wrksheet, in the Encmpass eflder. Prceed t Step 11 f this prcedure. a. Fllw FHA requirements fr calculating MCC incme: 1) Review AFN Apprved DPAs & MCCs matrix t determine if the final MCC is paid directly t the servicer f the lan r t the brrwer directly. i. If paid t the brrwer: MCC shuld be treated as incme using the calculatin abve fr cnventinal lans. ii. If paid t the servicer directly: MCC shuld be treated as a reductin in the mrtgage payment. Nte: Manager apprval is required t ffset husing bligatin fr FHA lans (nt allwed fr Cnventinal r VA), and apprval can nly be given upn receipt f cnfirmatin the MCC prvider will issue the credit t the mrtgage servicer. AFN des nt currently have an apprved MCC prgram that is paid directly t the Lan Servicer. (Cntinued)

9 REVISED 04/02/2018; PAGE 7 OF 12 Underwriting MCC t Agency Requirements (Cntinued) Underwriter 9. (Cnt d) iii. Use this frmula when calculating the incme OR mrtgage payment reductin amunt t be used. Nte: The prcess belw can nly be applied when the MCC is paid directly t the servicer t ffset prperty taxes. [(Mrtgage Amunt) x (Nte Rate) x (MCC %)] 12 Fr example, a $200,000 lan with a nte rate f 4.5% and a 20% MCC is calculated as: ($200,000 x 4.5% x 20%) 12 = $150 b. G t the 1003 Page 2 frm (screen), see the Mnthly Husing Expenses sectin, and click the Edit icn next t Other in the Prpsed clumn. 1) See the Other field in the pp-up dialg bx. (Cntinued)

10 REVISED 04/02/2018; PAGE 8 OF 12 Underwriting MCC t Agency Requirements (Cntinued) Underwriter 9. (Cnt d) 2) Enter the calculated prpsed husing expense reductin amunt as a negative number; this will reduce the payment and DTI calculatins accrdingly. (D nt deduct frm existing expenses listed, as it will result in inaccurate escrw accunt calculatins.) c. G t the FNMA Streamlined 1003 frm (screen), scrll dwn t the FHA Lan Data sectin and cmplete the Mrtgage Credit field (as a psitive number). d. G t the HUD-92900LT FHA Lan Transmittal frm (screen), scrll dwn t the Underwriter Cmments sectin, and ntate MCC details and calculatins befre clearing the lan. Prceed t Step 11 f this prcedure. 10. VA: Fllw FNMA requirements fr calculating MCC incme: a. Treat the maximum pssible MCC incme as brrwer incme when calculating the brrwer s DTI rati (d nt treat as a reductin in the mrtgage payment). b. Use this frmula when calculating additinal mnthly incme: [(Mrtgage Amunt) x (Nte Rate) x (MCC %)] 12 Fr example, a $200,000 lan with a nte rate f 4.5% and a 20% MCC is calculated as: ($200,000 x 4.5% x 20%) 12 = $150 (Cntinued)

11 REVISED 04/02/2018; PAGE 9 OF 12 Underwriting MCC t Agency Requirements (Cntinued) Underwriter 10. (Cnt d) c. G t the VA Lan Analysis frm (screen), scrll dwn t the Deductins sectin, line 33 Federal Inc tax (brrwer clumn) and reduce the Federal Inc Tax deductin amunt by the calculated amunt fr MCC deductin. Fr example, if the mnthly deductin was $ and the reductin amunt is calculated as $166.67, enter the difference, which is $ d. Scrll dwn t 48. Remarks sectin, and ntate MCC details and calculatins befre clearing the lan. 11. Review agency requirements and cnditin the file accrdingly t ensure AFN meets all bligatins and fulfills all requirements fr the MCC. (Agency requirements are n the individual agency s website, as prvided n the AFN Apprved DPAs & MCCs matrix.) 12. Befre cmpleting the PTD Review milestne: a. Uplad the cmpleted MCC Incme Calculatin Wrksheet t the Encmpass eflder under "Gen-MCC Dcuments" prir t cmpleting the PTD Review milestne. b. Ensure that any applicable lender certificates (cnfirming terms and incme) required by the issuing agency are cmpleted and upladed in the eflder under Gen-MCC Dcuments. If the issuing agency requires Underwriter certificatin within their system, cmplete that step at this time. (Refer t issuing agency s guidelines t determine their requirements.) (Cntinued)

12 REVISED 04/02/2018; PAGE 10 OF 12 Underwriting MCC t Agency Requirements (Cntinued) Underwriter 12. (Cnt d) c. Cnfirm the agency has issued a final cmmitment t prvide the MCC, which shuld be upladed t the Encmpass eflder under Gen - MCC Cmmitment Ntice. (This bucket is fr a cmmitment ntice nly; the actual MCC will nt be prvided until pst-clsing). d. Cnfirm all clsing affidavits are cnditined fr, either as PTD items r PTF t be signed with the clsing dcuments. e. If dcuments frm the agency need t be signed at clsing ensure blank cpies are upladed in the Gen- MCC- Dcuments bucket f the eflder. Prcessr t uplad these dcuments t the Lan Dc Attachments bucket f the eflder prir t clsing. 13. A minimum f 10 days must be remaining n a reservatin fr the lan t be Cleared fr Dcs by the Underwriter. An alert will appear n the file if the MCC is appraching expiratin If alert appears befre file is cleared t clse, ask the Lan Prcessr t extend the agency reservatin Be sure there is enugh time left n the reservatin t allw sufficient time fr funding and fr pst-clsing t request the final certificate Preparing Lan Dcs fr Lans with a MCC Dc Drawer 14. Review underwriting cnditins fr any required affidavits t be signed at clsing. Ensure they were upladed t the eflder by the Lan Prcessr at the time f dc request. 15. Attach all necessary affidavits t the clsing dcument package fr the settlement agent t have executed at the time f dc signing.

13 REVISED 04/02/2018; PAGE 11 OF 12 Preparing Lan Dcs fr Lans with a MCC (Cntinued) Dc Drawer 16. A minimum f 10 days must be remaining n a reservatin fr the lan dcs t be released. An alert will appear n the file if the MCC is appraching expiratin If the alert appears befre the dcs are released fr signing, ask the Lan Prcessr extend the reservatin with the agency Be sure there is enugh time left n the reservatin t allw sufficient time fr funding and fr pst-clsing t request the final certificate 17. Review the AFN Apprved DPAs & MCCs matrix and cnfirm the MCC fee amunt. Ensure this fee is listed n line 824 f the 2015 Itemizatin (if the fee was nt paid upfrnt). Funding Lans with an MCC Funder 18. Review final signed lan dcuments t verify that all necessary affidavits and frms required by the agency are included and fully executed. 19. Prir t funding, review the AFN Apprved DPAs & MCCs matrix and cnfirm the MCC fee amunt. Ensure this fee is listed n line 824 f the 2015 Itemizatin (if the fee was nt paid upfrnt). Obtaining an MCC Cmmitment Pst Clsers 20. Pst Clsers must check the pipeline daily t see if lans have funded fr which a check request shuld be prepared: If fee cllectin is required at clsing, submit a Check Request t AFN Accunting fr MCC fees that will be sent by Pst-clsing t the issuing agency. Address the t accuntspayable@afncrp.cm Type MCC check request and the lan number in the subject line

14 REVISED 04/02/2018; PAGE 12 OF 12 Obtaining an MCC Cmmitment (Cntinued) Pst Clsers 21. Upn receipt f the final Clsing Disclsure, send the MCC clsing package t the issuing agency and request the Mrtgage Credit Certificate. (This must be dne within 3 days f funding.) Cmplete all f the issuing agency s applicable Clsing Package and Cmpliance checklists t include with the MCC clsing package Timely delivery f the MCC clsing package is imperative in rder t meet all required reservatin deadlines Enter Date Ordered in Trialing Dcs sectin f Pst Clsing frm nce MCC package has been submitted/shipped t agency 22. Cnfirm and verify the MCC cnditins have been cleared by the issuing agency. Uplad a cpy f the certificate, if available, t the Encmpass eflder under Pst Clsing - MCC Cmmitment. 23. Track receipt f the MCC n the Pst Clsing frm (screen) under the Trailing Dcs sectin. 24. Send a cpy f the MCC t the AFN Accunting Department fr tracking purpses. Address the t Bb Telles at bb@afncrp.cm Type MCC received + lan number in the subject line Attach a cpy f the MCC and send the Filing an IRS Frm 8329 Accunting 25. Fr each lan that clsed with a Mrtgage Credit Certificate (MCC), accunting will file IRS Frm 8329 n r befre January 31st f the year fllwing the year in which the MCC was issued. In rder fr accunting t file IRS Frm 8329 all cmmunicatin regarding the MCC Certificate, and a cpy f the MCC Certificate itself, must be frwarded t Bb Telles: bb@afncrp.cm. Please make sure t include MCC in the subject line f the .