Product Description Allowable Origination Channel HOMEOWNERSHIP ASSISTANCE PROGRAM SUMMARY 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 VA Retail (Loan Officer training required contact Authority directly) Wholesale (Broker must be approved by Authority in order to participate, send email to DPArequests@prmg.net to begin the application process for the broker) Program Name : 1. Citywide DPA (CWDPA) - assists first time homebuyers 2. Memphis Housing Authority (MHA) assists current and former MHA residents 3. Targeted Area DPA (TADPA) assists buyers purchasing newly constructed homes in targeted areas 4. Homebuyer Incentive Program Citizens (HIPC) any homebuyer meeting the income requirements and purchasing a home within the designated areas within the city limits. Program Approval Subject to Availability Expiration approval expires: 7/05/2019 Housing Authority City of Memphis 170 N. Main Street Memphis, TN 38103 Contact: Juanita Hamilton Telephone: (901) 636-7473 Fax: (901) 521-8039 Email: juanita.hamilton@memphistn.gov Website: http://www.memphistn.gov/government/housingcommunitydevelopment.aspx Housing Authority EIN 62-6000361 DPA Provider Classification Government Entity Secondary Financing Programs First Mortgage Maximum LTV First Mortgage Maximum CLTV FHA: Refer to Product Profile Fannie Mae Housing Authority Product. Refer to Product Profile 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 FHA: Refer to Product Profile Fannie Mae Housing Authority Product. Refer to Product Profile 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 Page 1
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. Maximum Second Mortgage Loan Amount Second Mortgage Loan Interest Rate Minimum Borrower Down Payment Up to $10,000 0% Minimum of 1% of their own funds FHA: Refer to Product Profile Fannie Mae Housing Authority Product. Refer to Product Profile Fannie Mae Conforming Product: Refer to Product Profile Fannie Mae HomeReady with Community Second: Refer to Product Profile Page 2 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 0% simple interest no monthly payment deferred 5-year loan with a Repayment Terms 5-year affordability period. As long as the property remains borrower s primary residence then 20% of the original amount will be forgiven each year on the anniversary date. 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 Memphis, Tennessee
CWDPA, TADPA, MHA applicants are eligible to purchase anywhere inside Memphis city limits. HIPC applicants are eligible to purchase in the following neighborhoods and zip codes: Beltline, Binghampton/Highland Heights, Carnes Neighborhood, Hickory Hill, 38106, 38107, 38108, 38109, 38114, 38116, 38118, 38122, 38126, 38127, and 38128 Eligible Properties Acquisition Limit: Existing and New Construction: FHA 203(b) mortgage limit $275,665 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 If the house was built prior to January 1, 1978, a lead based paint inspection will be required. Housing Quality Standards (HQS) inspection will be conducted to verify condition of property. ALL repairs called for by inspection MUST be completed prior to closing. Underwriting Refer to product profile for additional property eligibility requirements, not all property types are allowed on all products. Lender to pre-approve all borrowers for the first mortgage product. Standard FHA, Fannie Mae Conforming Product, Fannie Mae HomeReady and VA, except as described herein: The Loan Officer will submit application to the Authority on behalf of the borrower. The following forms need to be completed at time of application. o City of Memphis DPA File Submission Checklist o DPA Inspection Request Form Borrower must apply and obtain Housing Authority s Approval Letter for the Down Payment Assistance. Refer to Housing Authority approval letter for specific program details. Upon qualification of the underwriting, the homebuyer 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. Borrower must be a legal resident of the United States. Maximum DTI ratios 33%/43%. 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.) Income Limits Solano County Effective June 15, 2017 80% AMI for CWDPA, TADPA, MHA and 200% Homebuyer Incentive Program Citizens (HIPC) Household Size 80% AMI 200% AMI 1 $33,600 $84,000 2 $38,400 $96,000 3 $43,200 $108,000 4 $48,000 $120,000 5 $51,850 $129,600 6 $55,700 $139,200 7 $59,550 $148,800 8 $63,400 $158,500 Page 3
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 a face to face 8-hour homebuyer education class provided by a HUD approved counseling agency 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 borrower s approval from DPA provider Receipt of DPA Funds (at closing) No cash back at closing (at closing) Copy of DPA s Executed Note and Subordinate Deed of Trust (at closing) First Mortgage Loan Loan documents and security instruments must conform to Agency requirements (FHA, Fannie Documents Mae, Freddie Mac, VA as applicable by loan type) Second Mortgage Loan Loan documents and security instruments must conform to Agency requirements (FHA, Fannie Documents Mae, Freddie Mac, VA as applicable by loan type) PRMG DPA Program Restrictions That Are Not Permitted 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 Page 4
Special Requirements: loan documents and security instruments must conform to Agency requirements (FHA, Fannie Mae as applicable by loan type) PRMG executed a Lender Participation Agreement. : 1. Citywide DPA - assists first time homebuyers 2. Memphis Housing Authority assists current and former MHA residents 3. Targeted Area DPA assists buyers purchasing newly constructed homes in targeted areas 4. Homebuyer Incentive Program Citizens (HIPC) any homebuyer meeting the income requirements and purchasing a home within the designated areas within the city limits. Wholesale Brokers currently approved to participate: 1. Premier Mortgage Financial - Broker Code: PREMTG-700 This Fact Sheet form and any attachments 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 5
ELIGIBLE APPROVAL INELIGIBLE The DPA IS eligible for use with the programs below The DPA IS NOT eligible for use with the programs below CONV (DU) FHA VA USDA CONV FHA VA USDA X X X X PRMG Approved by: PRMG DPA Review Department 07/5/2018 Name / Title Date Page 6