Assistance Program: City of Austin Shared Equity Down Payment Assistance Code: DTXSHARED

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1 HOMEOWNERSHIP ASSISTANCE PROGRAM SUMMARY Product Description Allowable Origination Channel Program Name Second mortgage loan program to be used in conjunction with: FHA Fixed Rate Fannie Mae Fixed 30-year Conforming Product (DU) Fannie Mae Housing Authority Product Fannie Mae HomeReady with Community Second Freddie Mac Fixed 30 Conforming Product (LPA) Freddie Mac Home Possible with Community Second Retail and Wholesale (Loan Officer and Broker Training required contact AHFC directly to schedule training) o The Loan Officer and/or Broker are required to execute AHFC s Lender Participation Agreement, as each approval is applied to the Loan Officer and/or Broker after they have completed the required training. Upon completion, AHFC will add the Loan Officer and/or Broker information to the Lender Participating List available on their website. Program Approval Subject to Availability Expiration approval expires: 6/28/2019 Housing Authority Austin Housing Finance Corporation, A Department of the City of Austin 1000 East 11 th Street, Suite 200 Austin, TX Contact: Pam Skoglund Telephone: (512) Pamela.Skoglund@austintexas.gov Website: Housing Authority EIN DPA Provider Classification Nonprofit and Nonprofit Instrumentality of Government Secondary Financing Programs First Mortgage Maximum LTV First Mortgage Maximum CLTV Fannie Mae Conforming Product: Refer to Product Profile Fannie Mae HomeReady with Community Second: Refer to Product Profile o Purchase only: o 1 unit: LTV >95-97% (NO first-time home-buyer (FTHB) requirement). o Purchase and Limited Cash Out (Rate/Term): o 1 unit: 95% FRM; 90% ARM Fannie Mae Conforming Product: Refer to Product Profile for CLTV requirements, may not exceed limits in product profile Fannie Mae HomeReady: Refer to Product Profile Maximum Second Mortgage Loan Amount The CLTV may not exceed 105% on HomeReady loans, unless further restricted by product profile. The sum of all financing may not exceed 105% of the cost to acquire the property plus any normal prepaid expenses. Up to $40,000 Page 1

2 Second Mortgage Loan Interest Rate Minimum Borrower Down Payment 0% $1,000 from borrower s own funds Fannie Mae Conforming Product: Refer to Product Profile Fannie Mae HomeReady with Community Second: Refer to Product Profile NOTE: If first mortgage guidelines are higher than the Agency s for borrower s minimum investment, the first mortgage guidelines prevail. Second Mortgage Purpose Down payment Closing costs Second Mortgage Loan This second mortgage loan is a no interest no monthly payment forgivable 10-year loan with a 10- Repayment Terms year affordability period. There is shared equity which will remain on the property for a period of 30 years. As long as the borrower occupies the property as primary residence then at the end of the 10 years the principal balance will be forgiven in full. However, the shared equity will remain in effect and will be forgiven at the end of 30 years. Repayment is due in full upon sale, transfer, lease, refinancing, change of ownership or home no longer is occupied as primary residence. Loan proceeds may not be used to pay off other loans, advances or consumer debts. However, if any of the following repayment triggering events occur, the principal balance and any accrued interest shall be due and payable in full: Evidence of the act of fraud committed to falsely obtain assistance funds The property is sold Transferred title Refinancing with cash out A default on the first mortgage The borrower(s) ceases to occupy the property as their principal place of residence Upon the death of the last surviving applicant The filing of any bankruptcy by the applicants Upon divorce, unless one of the applicants continues residing in the property by the decree of divorce Loan may be pre-paid in full at anytime Loan is NOT assumable Types of Financing Purchase Money Mortgage o 30 year fixed rate (No ARM, Stated Income, Interest Only, balloon payment or prepayment penalty) Occupancy Owner occupied primary residence only All co-borrowers must occupy Borrower(s) may not have an ownership interest in any other residential dwelling at the time of loan closing Geographic Location Properties must be located within the City of Austin, Texas. Eligible Properties Acquisition Limit: Existing and New Construction Single Family Residence: $245,000 Properties shall be sited on a permanent foundation, with a permanent utility hook-up, and may include: Single family - detached, attached Condominiums or Townhomes or Planned Urban Development -detached, attached Page 2

3 Must be currently occupied by the owner, vacant or occupied by the homebuyer and must not have been vacated by the previous renters within the last 30 days Properties constructed prior to 1978 are not eligible AHFC requires a Housing Quality Standards Inspection and Lead Based Paint Inspection prior to closing. ALL repairs called for by inspections MUST be completed prior to closing. Refer to product profile for additional property eligibility requirements, not all property types are allowed on all products. Underwriting Lender to pre-approve all borrowers for the first mortgage product. Standard FHA, Fannie Mae Conforming Product, and Fannie Mae HomeReady, except as described herein: AHFC requires all Loan Officers interested in participating in this program to attend lender training. Upon completion of lender training the Loan Officer s name will be added to AHFC s website as a Participating Lender. The Loan Officer will assist the borrower in completing the DPA application and submitting the DPA application along with the supporting documentation to AHFC. Borrower must apply and obtain Housing Authority s Approval Letter for the Down Payment Assistance. Upon qualification of the underwriting, the borrower will be issued a preapproval letter indicating the amount of assistance. Upon approval, a copy of DPA Approval Letter MUST be in each file. Eligible Borrowers Borrower(s) must qualify for the first mortgage selected. First Time Home Buyers (FTHB) only Borrowers may not currently own a house and may not have owned a house during the last three years prior to making application. Must be a U.S. Citizen, lawful permanent resident alien or other qualified alien. Total debt to income ratio cannot exceed 45%. Assets Borrower must have required amount of their own funds in the transaction for type of first mortgage financing selected. All assets will be considered when calculating annual income (i.e.: checking/savings accounts, IRA s, 401(k) s, CD s, cash value life insurance, etc.). Net family assets may not exceed $10,000. Income Limits 80% AMI HUD Effective June 1, Person 2 Persons 3 Persons 4 Persons 5 Persons 6 Persons 7 Persons 8 Persons $48,200 $55,050 $61,950 $68,800 $74,350 $79,850 $85,350 $90,850 NOTE: If first mortgage guidelines are more restrictive than the Agency s for borrower s income limit, the first mortgage guidelines prevail. MI Coverage FHA: Standard UFMIP and monthly if applicable Fannie Mae Housing Authority Product Refer to Product Profile Fannie Mae Conforming Product Refer to Product Profile Fannie Mae HomeReady and Conforming (DU) Products: Standard mortgage insurance requirements must be met, if applicable, as described in Product Profile Special Provisions Homeownership Counseling: Refer to product profile for specific product requirements Borrowers must successfully complete an 8-hour homebuyer education class provided by a HUD approved counseling agency Page 3

4 Borrower s Certification of Completion of Homeownership Counseling is required Fannie Mae HomeReady Only: See Product Profile for Homeownership Counseling requirements. Freddie Mac Home Possible Only: See Product Profile for Homeownership Counseling requirements. All: May be funded by a municipality, state, county or local housing finance agency, non-profit organization, a regional Federal Home Loan Bank or an employer May be used to fund all or part of the down payment or closing costs The more restrictive down payment requirement between the product and the second mortgage will apply No reporting requirements permitted DPA Processing Fee Costs incurred for down payment assistance secondary financing program may only be included in the amount of the second lien. The fee cannot be included in the first mortgage transaction or appear on the Closing Disclosure. Special Feature Code N/A Underwriting Requirements Receipt of borrowers approval from DPA provider Receipt of DPA Funds (at closing) No cash back at closing (at closing) Copy of DPA s Executed Subordination Agreement, Shared Equity Forgivable Note, Deed of Trust and Purchase Option and Right of First Refusal (at closing) First Mortgage Loan Loan documents and security instruments must conform to Agency requirements (FHA, Fannie Mae, Documents Freddie Mac loan type) Second Mortgage Loan Documents DPA Program Restrictions That Are Not Permitted Special Requirements: Loan documents and security instruments must conform to Agency requirements (FHA, Fannie Mae, Freddie Mac loan type) PRMG The may not Restrict the transfer of servicing rights of the first Mortgage Require prior notification or approval from the sponsoring authority in the event of the transfer of the first mortgage servicing rights. If there is any evidence of this verbiage in the subordinate documents, the program will no longer be eligible. The First Mortgage may not be subject to a bond program loan documents and security instruments must conform to Agency requirements (FHA, Fannie Mae loan type) PRMG executed a lender agreement in order to participate in the City of Austin AHFC. Retail Loan Officers and Brokers are eligible to participate and must complete Lender Training provided by AHFC. This Fact Sheet form and Housing Authority s Borrower Approval Letter MUST be placed in each loan file at the time of submission. Additional Comments: Approved with Closing Instructions for Closing the DPA Mortgage needs to be recorded in 2nd lien position. Page 4

5 STATUS APPROVAL ELIGIBLE The DPA IS eligible for use with the programs below INELIGIBLE The DPA IS NOT eligible for use with the programs below CONV FHA VA USDA CONV FHA VA USDA X X X X PRMG Approved By: PRMG DPA Review Department 06/28/2018 Name / Title Date Page 5