Training on CHFA
WELCOME Introductions Getting Started Housekeeping items Breaks
AGENDA Website www.chfa.org About CHFA-Mission/History Homebuyer Programs Reserving CHFA Funds Homebuyer Program Guidelines Income & Sales Price Limits Downpayment Assistance Program Free Homebuyer Education Classes (8 & 3 hour classes) Closing CHFA 1 st and 2 nd Mortgages 3
CHFA S MISSION To provide housing opportunities for lowand moderate-income people in Connecticut and to aid economic development. 4
What makes us different? Competitive Interest Rate Recapture Tax Provision Owner-Occupancy Requirement For the Life of the Loan with CHFA Income & Sales Price Limits DAP - 2nd Mortgage Funds
History 1969 - CHFA was created by an act of the Connecticut State Legislature 1970 - began purchasing and insuring residential mortgages 1984 - Reverse Annuity Mortgage Program began 1991 - Homeownership program was introduced for public housing tenants and disabled persons 1995 CHFA assumes full Administration of the State s Downpayment Assistance Program 1996 - Introduced Police Homeownership Program 2000 Teachers Mortgage Assistance Program Introduced 2001 Military Personnel Homeownership Opportunities Program introduced July 2013 HFA Preferred Program offered June 2014 Veterans Homeownership Pilot Program Historical: From inception of Program, CHFA has helped over 125,000 CT residents purchase their homes 6
Recent Changes and Updates 620 Minimum Credit Score for HFA Preferred with LTV <95% and HFA Preferred Uninsured (Feb 2016) AmeriNational Community Services, LLC replaces Bogman, Inc., as authorized loan servicer (Feb 2016) CHFA App Homebuyer Guide (Steps to buying your first home) (Dec 2015) Lender Training Quarterly Webinars (October 2015) CHFA s rates can change on Tuesdays and Fridays CHFA is now capturing Buyers Agent information on CHFA LOS system CHFA s new master servicer is Idaho Housing and Finance Association New Points/Rate Structure Government and Non-Government Rates Realtor inquiry email address: realtorinquiry@chfa.org Change in income qualification mortgagor (borrower) versus household income Modify DAP underwriting guidelines increased assets to $10,000 no longer look at retirement funds Downpayment Assistance Program (DAP) can now be used for closing costs only No PMI required with 20% down
Recent Changes and Updates Allow 55+ Communities USDA Guarantee fee may be put into 1st mortgage VA Funding Fee may be put into 1st mortgage Reimbursement for Federal Recapture Tax 90-day rate lock Lender/Realtor Advisory Committee Tip of the Week Lender LEAN Process delegated closing process for approved lenders Electronic Submission of Loan Files for approved LEAN Lenders
New Look - Ads /Brochures
Property Requirements CHFA requires owner occupancy of the home you purchase for the life of the loan. Eligible properties include: Existing and new single family homes, townhouses & PUDS FHA Approved Condominiums (FannieMae eligible Condominiums for HFA Preferred or Uninsured loans) VA approved condominiums for VA loans 2 4 unit existing homes (must have been occupied as residences for the past 5 years) Newly constructed 2 family homes (in Targeted Areas) 10
CHFA Mortgage Terms/Points 30 YEAR FIXED RATE (RATES ARE SUBJECT TO CHANGE WEEKLY) (Government and non-government) CHFA recently implemented a new Points/Rates structure for borrowers and a Service Release Premium for Service- Released Lenders. REGULAR HOMEBUYER PROGRAMS and HFA PREFERRED ORIGINATION FEE = 1% or sliding scale depending on points selected by borrowers. LOANS WITH 203(k) STREAMLINE ORIGINATION FEE = 1.5% LOANS WITH 203(K) FULL ORIGINATION FEE = 2.5% 11
CHFA s Rates SAMPLE CHFA offers two rate structures as well as Point Options. Rates can change on Tuesdays and Fridays. Targeted areas allow for ¼% discount on rates, BUT CANNOT BE COMBINED WITH PROGRAMS THAT OFFER THE DISCOUNTED RATES LISTED BELOW: The following programs offer a rate reduction of 1/8% discount on rates: Homeownership, Home of Your Own, Military Homeownership, Police Homeownership and Teachers Mortgage Assistance Programs. NEW RATE STRUCTURE Government Rate Non-Government Rate Points APR 3.000% 3.25% 1.00 (APR range 3.100% - 3.750%) 3.250% 3.50% 0.50 (APR range 3.350% - 4.000%) 3.375% 3.625% 0.00 (APR range 3.475% - 4.125%) 12
Homebuyer Program Guidelines Income and Sales Price Limits apply to CHFA mortgages. Borrowers must be first-time homebuyers or not have had an ownership interest in a principal residence for the past three years. First-time homebuyer requirement is waived in Targeted Areas. Borrower s may not own any other property at the time of loan closing. HFA Preferred Loan Program follows CHFA income limits guidelines. 13
CHFA Income Limits Based on the number of household members. Determining income for the CHFA Homebuyer Programs Borrower income only for repayment, And household income limit for eligibility. 14
Mortgage Insurance Requirements CHFA REQUIRES FHA, VA, RD, or CHFA INSURANCE ON ALL LOANS WITH THE FOLLOWING EXCEPTIONS: 1. Loans with 20% Downpayment may be uninsured. 2. HFA Preferred loans must have PMI. 16
Condominiums CHFA approval of condominiums is no longer required unless: The complex is deed restricted for affordability to low-to-moderate income borrowers or first-time home buyers. Condominiums must be approved by FHA, unless putting 20% down or using HFA Preferred Program--may be Fannie Mae eligible. 18
Downpayment Assistance Overview CHFA DAP 2 nd mortgages are available with CHFA first mortgages ONLY. Borrowers may apply for DAP only, DAP and Closing Cost combined or Closing Costs only. Minimum DAP $3,000 First Mortgage LTV must be maximized at 97% Conventional or 96.5% FHA Maximum interest rate of 6% 30-year fixed rate 19
Housing Counseling Programs Pre-purchase counseling: Pre-purchase housing counseling may reduce, by an average of 29%, the likelihood of the homebuyer becoming seriously delinquent. 3-hour homebuyer education class is required for all CHFA loan programs 8-hour homebuyer education class for prospective borrowers and Section 8 Homeownership Voucher Program borrowers Landlord education class is required for all CHFA borrowers purchasing 2 to 4 family units. Post-purchase counseling: Borrowers receiving foreclosure prevention counseling are 67% more likely to remain current on their mortgage 9 months after receiving a loan modification and the loan modification received had lower monthly payments. Foreclosure prevention clinics for homeowners at risk of foreclosure Foreclosure prevention individual sessions for homeowners at risk of foreclosure Financial fitness counseling for homeowners at risk of foreclosure and participants in the Mortgage Crisis Job Training Program
Required Counseling A minimum of a 3-hour Homebuyer Education class is required for all borrowers including uninsured loans. For joint applications only one borrower is required to attend the class, however, CHFA strongly recommends both borrowers participate for the greatest benefit. Borrower(s) are encouraged to take the class ASAP. Borrower(s) receive a certificate which they need to provide to lender for loan file. On-line counseling is available for borrowers who have a CHFA loan reservation. Borrower receives a code from lender Borrower(s) purchasing multi-unit properties are also required to attend a 3-hour Landlord Counseling class. Both Certificates (3-hour and Landlord) are required when purchasing a 2-4 unit home. 21
In-person class schedules can be found at www.chfa.org Look for drop-down for Homebuyer Education. 22
Homebuyer Programs Brochures available online at www.chfa.org 23
Section 8 Housing Choice Voucher Homeownership Program The Section 8 Housing Choice Voucher Homeownership Program offers home loans at below-market interest rates to Section 8 tenants who wish to purchase their own homes. This program allows eligible borrowers to use their Section 8 Housing Choice Vouchers towards a monthly mortgage payment. CHFA is committed to helping Connecticut residents achieve their dream of homeownership and values its partnership with local Public Housing Authorities (PHAs) across Connecticut as well as the qualified lender for this program. Applicants interested in the Section 8 Housing Choice Voucher Homeownership Program should contact their PHA directly. They may also contact the McCue Mortgage Company directly.
CHFA Insured Pilot Program (CIPP) CHFA Insured Pilot Program (CIPP) provides a mortgage loan for borrowers with credit scores that do not meet the stringent standards and credit overlays required by many Lenders and Private Mortgage Insurance Companies. Eligibility applies to credit worthy borrowers with credit scores less than or equal to 639. Borrowers that meet the CIPP criteria and underwriting guidelines are eligible for first mortgage loan financing up to 95% loan-to-value with CHFA as the Mortgage Insurance Provider. The CHFA Mortgage Insurance Premium is competitive with FHA and offers applicants the ability to eliminate the MI payment when the property value reaches 80% or less. (FHA requires retention of the mortgage insurance for the life of the loan.) * NOTE: CHFA DAP funds are not available for this loan program. 32
HFA PREFERRED LOAN PROGRAM A Fannie Mae conventional lending program that is only available through HFA s like CHFA, across the country. Affordable and expanded guidelines for first-time homebuyers who purchase anywhere in the State. Loans made under this program will be insured through Private Mortgage Insurers approved by Fannie Mae. They include: Arch Mortgage Insurance Company; Essent Guaranty, Inc. Genworth Financial; MGIC; National Mortgage Insurance Corporation; Radian; and United Guaranty (UGI). No upfront MI premium/lower overall cost to borrower (MI will sunset) vs. FHA insured (life of loan) 3% downpayment Guidelines will follow CHFA Income Limits and Sales Price Limits 34
Rate Lock & Reservation of Funds Rate lock 90 days Reservation of Funds 90 days 35
CHFA Mortgage Terms/Points 30 YEAR FIXED RATE (RATES ARE SUBJECT TO CHANGE TUESDAYS and FRIDAYS) REGULAR HOMEBUYER PROGRAMS and HFA PREFERRED ORIGINATION FEE* = 1%;.50% or 0% LOANS WITH 203(k) STREAMLINE ORIGINATION FEE = 1.5% LOANS WITH 203(K) FULL ORIGINATION FEE = 2.5% *CHFA recently implemented a new Points/Rates structure for borrowers and a Service Release Premium for Service-Released Lenders. 36
Additional Fees Authorized by CHFA Loan Processing Fee = $395.00 Loan Underwriting Fee = $395.00 These fees are applicable to CHFA 1 st mortgage loan transactions only. 37
Downpayment Assistance Overview CHFA DAP 2 nd mortgages are available with CHFA first mortgages ONLY. Borrowers may apply for DAP only, DAP and Closing Cost combined or Closing Costs only. 38
Downpayment Assistance, cont. USDA borrower(s) may apply for DAP to cover closing costs and the USDA fee that must be paid in cash. USDA funding fee may be included into the first mortgage up to the insurer s acceptable guidelines. VA borrower(s) may apply for DAP to cover the closing cost and the VA Funding fee- VA funding fee may be included into the first mortgage up to the insurer s acceptable guidelines. 39
Downpayment Assistance, cont. Minimum DAP $3,000 Maximum interest rate of 6% 30-year fixed rate Participating Lenders may charge a $200 application fee for processing DAP loans 40
UNDERWRITING GUIDELINES
DAP Loan Amount and Asset Limitation DAP loan amount must be calculated using the maximum allowable loan-tovalue under the first mortgage insurer guidelines. All available borrower assets must be used first (except for $10,000). Retirement funds will no longer be included in the asset test calculations. 42
DAP Loan Amount and Asset Limitation, cont. Liquid Assets include all assets of the proposed mortgagor(s) only. Types of asset accounts include checking; savings; CD s; Money Market Funds; Custodial Accounts; Stocks; Bonds, etc. 43
DAP Loan Amount and Asset Limitation, cont. Following the tax filing deadline date in any year, (usually April 15), borrowers will be required to provide a copy of the tax return filed for that current tax year. Any loan in the CHFA pipeline that has not been committed will be subject to this requirement. Borrower income only used to calculate housing and debt ratios will be limited to a total of 60-hours per week of income from either fulltime employment combined with overtime earnings; or full-time employment combined with part-time earnings. 44
Credit Review CHFA will no longer require written credit explanation letters for borrower accounts that report 60 or more days past due in the most recent 12 months; instead CHFA will now allow the Lenders to follow Automated Underwriting System (AUS DU or LP) or FHA Total Scorecard findings regarding obtaining supporting documentation for prior delinquent credit if required. Reported bankruptcy must be discharged for the greater of three years from the date of the event or the amount of time required by the insurer (i.e. FHA, VA, USDA or PMI) or investor, (i.e. FNMA/FHLMC). 45
Multifamily Reserves Requirement Reserves requirement for 2 4 unit properties: CHFA allows Lenders to follow the underwriting guidelines of the insurer (i.e. FHA, VA, USDA or PMI) or investor, (i.e. FNMA/FHLMC). 46
Calculating Allowable Income Aggregate mortgagor(s) income (gross income) shall include whatever source derived from including: Regular Earnings Part-Time Earnings Unemployment Compensation Bonuses Dividends Commissions Military Allowances Welfare Payments Disability Payments Pension Annuity Retirement Social Security Benefits Overtime Income Reimbursement for services in military reserve or National Guard Any other recurring source of income disclosed by the applicants 47
Calculating Allowable Income, cont. Monthly Housing Expense-to-Income Ratio must be less than or equal to 35% of the borrower s gross monthly income Monthly Debt Payment-to-Income Ratio cannot exceed 45% of the borrower s gross monthly income. DAP loans are not eligible for exceptions with ratios that exceed 35%/43% even with compensating factors. 48
Other Programs Reverse Annuity Mortgage (RAM) Emergency Mortgage Assistance Program 49
Reverse Annuity Mortgage (RAM) Seniors 70 years of age & older Must have long-term care needs 1.5% above the regular CHFA Homebuyer Mortgage Program Rate 6 or 10-year term 50
Emergency Mortgage Assistance Program (EMAP) A foreclosure prevention program for homeowners who have experienced a financial hardship outside of their control. This loan is administered directly through CHFA. EMAP provides assistance to help pay the mortgage for a homeowner who is delinquent (or anticipates becoming delinquent) for up to 60 consecutive months. The EMAP loan does not have to be repaid until the homeowner s total housing expense is at or below 35% of their monthly gross income. Homeowner(s) must recertify with CHFA yearly to determine continued assistance. 51
Condominiums CHFA approval of condominiums is no longer required unless: The complex is deed restricted for affordability to low-to-moderate income borrowers or first-time home buyers. Condominiums must be approved by FHA, unless putting 20% down or using HFA Preferred Program Fannie Mae eligible. 52
CHFA Income Limits Determining income for the CHFA Homebuyer Programs 53
How to Calculate Income the CHFA Way (See Income Calculation Sheet in Workbook) Various Income Calculations: VOE W2 s Pay stubs Payroll Ledger Federal Income Tax Returns 54
LTV Requirements Maximize base loan amount FHA Maximum LTV 96.5% HFA Preferred Maximum LTV 97% Other Second Mortgage Programs may be used with CHFA loans (SmartMove, HouseHartford, Adopt-a-House, etc.) LTV will vary depending on amount of assistance provided. 55
Federal Recapture Tax IRS Tax Rule CHFA will now reimburse homeowners who may be subject to paying Recapture Tax. Applies if homeowner: 1. Sells the home in the first 9 full years of the CHFA mortgage; 2. Makes a net profit; AND 3. Income exceeds Federal Recapture Tax Threshold Income Limits 56
Notice of Potential Recapture Tax CONNECTICUT HOUSING FINANCE AUTHORITY NOTICE OF POTENTIAL RECAPTURE TAX ON SALE OF HOME Because you are receiving a mortgage loan from the proceeds of a tax-exempt bond, you are receiving the benefit of a lower interest rate than is customarily charged on other mortgage loans. If you sell or otherwise dispose of your home, within nine years of purchase, this benefit may be "recaptured." The recapture is accomplished by an increase in your federal income tax for the year in which you sell your home. The recapture only applies, however, if you sell your home at a gain and if your income increases above specified levels. You may wish to consult a tax advisor or the local office of the Internal Revenue Service at the time you sell your home to determine the amount, if any, of the recapture tax. At the closing of the purchase of your home, you will be given additional information that will be needed to calculate the potential recapture tax. You may be eligible to receive reimbursement from CHFA if you are required to make a recapture tax payment. To request reimbursement, you must submit a written request to CHFA no later than December 31st of the year the federal recapture tax is owed and paid. For example, if your home is sold in 2014 and the tax return is filed in 2015, the request for reimbursement must be filed no later than December 31, 2015. Please see the document provided to you at the loan closing entitled Notice to Mortgagor of Maximum Recapture Tax and Method to Compute Recapture Tax on Sales of Home for further information. The undersigned acknowledges receipt of a copy of this Notice. I/We have read and understood the above disclosure. If I/we sell or transfer the home being financed with this mortgage loan during the first nine years after the date of closing, I/we have the responsibility of computing and paying the recapture amount, if any, due the federal government. Date Applicant Date Co-Applicant CHFA Form# 051-0597 Rev. 4/2013 57
CLOSING CHFA FIRST and SECOND MORTGAGE LOANS
CHFA DAP Loans Are Closed Simultaneously With the CHFA First Mortgage Loan. Lenders are required to close Loans in accordance with their established practices. Lenders must be in compliance with the Real Estate Settlement Procedures Act (RESPA) and other federal or state laws. Borrowers must have an attorney for loans of $25,000 or more. 59
Lenders are Responsible for: ENSURING all loan documents are properly executed and witnessed VERIFYING the mortgage deed and assignment of mortgage are complete, correct, and in recordable form 60
Repurchase Requirements CHFA will require the Participating Lender to repurchase any loan that has been closed in a loan amount and/or interest rate different than the loan amount and interest rate stated in the commitment letter, and the lender will incur a penalty of $250. 61
Loan Funding for Release of Government Insured and CHFA HFA Preferred Conventional Loans to Idaho Housing and Finance Association Service Released Lenders (and Service Retained Lenders participating in the CHFA HFA Preferred Program) will ship closed loan files for the following loan programs: Federal Housing Administration (FHA) Veterans Administration (VA) United States Rural Development (USDA or RD) CHFA HFA Preferred -- Insured by Arch Mortgage Insurance; Essent Guaranty, Inc.; Genworth [GE], Mortgage Insurance Guaranty Corp. [MGIC], National MI; Radian; or United Guaranty [UGI] Lenders submitting CHFA loans to Idaho for purchase may be required to provide interim servicing of a closed loan until Idaho has cleared the loan for purchase. 62
LENDERS THAT RETAIN SERVICING ARE LIABLE FOR ENSURING BORROWERS RECEIVE LOAN PAYMENT INFORMATION IN A TIMELY MANNER TO PREVENT FIRST PAYMENT DEFAULTS ON CLOSED CHFA MORTGAGE LOANS. 63
Thank you for coming today! 64