2012 - 2019 FIRST TIME HOMEBUYER PROGRAM … · 2012-2019 Dakota County CDA First Time Homebuyer Programs Page !4 UPDATES Date Updates - Effective immediately unless otherwise noted

2012 - 2019 FIRST TIME HOMEBUYER PROGRAM

ADMINISTR ATOR GUIDELINES Published 12-18-12 Updated 09-03-19 Updates on Page 4

2012-2019 Dakota County CDA First Time Homebuyer Programs Page ! 2

TABLE OF CONTENTSTHE DAKOTA COUNTY CDA TEAM 8 WHO TO CONTACT 9 THE PRODUCTS 10 FIRST MORTGAGE 10 DOWN PAYMENT ASSISTANCE LOAN GUIDELINES 11 DPA LOAN HOUSEHOLD INCOME 11 DPA LOAN AMOUNTS MINIMUM AND MAXIMUM 12 DPA LOAN PURCHASE PRICE LIMIT 12 DPA LOAN ELIGIBLE PROPERTIES 12 DPA LOAN ELIGIBLE BUYERS 12 DPA LOAN MINIMUM INVESTMENT 12 DPA LOAN HOMEBUYER EDUCATION 12 DPA LOAN REPAYMENT OF ASSISTANCE 12 DPA LOAN APPLICATION AND APPROVAL 13 DPA LOAN CASH BACK 13 DPA LOAN GSE REQUIREMENTS 13 DEFECTIVE DPA LOANS AND REPURCHASE 13 MORTGAGE CREDIT CERTIFICATE TAX DISCLAIMER 15 What is a Mortgage Credit Certificate? 15 What is the lender involvement? 16 MCC Homebuyer Benefit 16 Special Rules 17 Eligible Borrowers 18 Veterans Exception 18 Homebuyer Education 18 Minimum Credit Score 18 HOUSEHOLD INCOME LIMITS 19 ACQUISITION LIMITS (SALES PRICE LIMITS) 19 Property Qualifications 19 FINANCING FACTS 20 Appraisal 20 Assets 20 Assumptions 20 Buydowns 20 Cash Back 20 Construction to perm 20 Cosigners 20 Prepayments 21 Recapture Tax 21 Refinances 21 Reissuance of MCC’s 21 SUMMARY OF THE COMPLIANCE ORIGINATION PROCESS 23 REQUEST DAKOTA COUNTY CDA DPA FUNDS 24 MORTGAGE CREDIT CERTIFICATE PROCESS 25 eHP Digital Docs 26 PROGRAM TIMELINE 32 DPA Reservations 32


Loan Processing, Delivery and Purchase Timetable: 32 Term of MCC Program 33 PROGRAM FEES 34 ADDITIONAL FEES 35 COMPLIANCE INCOME CALCULATION 36 PROGRAM FORMS 40 ORIGINATING COMPLIANCE FORMS 40 CLOSING COMPLIANCE FORMS 40 POST CLOSING COMPLIANCE FORMS 40 For Loans With MCC’s 40 DOCUMENTS REQUIRED FOR THE COMPLIANCE FILE 41


UPDATES

Date Updates - Effective immediately unless otherwise noted Page

09-03-19 Added Fannie Mae HFA Preferred Update Revised Income limits to include Fannie Mae 80% AMI or less Revised Compliance Process to include HFA Preferred tips Revised Termination date of MCC Program to 12/31/21 Revised Origination Fee and SRP

10 11 & 19 23 & 24 33 34

07-02-19 Revised income and purchase price limits effective 07/02/19 11 & 18

05-13-19 Various updates Throughout

03-10-19 Corrected reference to conventional loans as Fannie Mae 16

01-09-19 Changed date on cover to 2012-2019 Cover

12-12-18 Changed eHousingPlus Lender Portal to: eHPortal Added Mortgage Insurance language under DTI requirement Added eHP Digital Docs

Throughout 16 21-27, 31, 38

10-01-18 Revised Purchase price limit and 3 or more person income effective 07/18/18 10

08-28-18 Clarified MCC Issuer Fee 26

05-21-18 Revised income limits Clarified fee breakout for MCC combo loans

10, 17 26

04-16-18 Revised US Bank Tax Service Fee 27

01-18-18 Revised DPA Loan amount to $8500 & Changed income limits Revised DPA Loan Disclosure information Revised MCC Rate to 30% Updated MCC Example Revised termination date of MCC to 12/31/19 Deleted US Bank funding fee

10 12 13 13, 14 25 27

07-27-17 Changed Credit Underwriting Questions section Added information regarding appraisals and purchase price Correct DPA income limits - effective with new loans reservations 06/01/17 Revised Household Income Limits Changed title of Compliance Income Calculation section Added US Bank lender help desk number

8 10 10 17 28 34

06-21-17 Corrected Reservation to Underwriter Certification timeline to 45 days 21


04-17-17 Updated Contact Directory Update Eligible Borrower requirements for Non-Citizens Removed Fannie Mae overlay regarding ownership of other property Revised Minimum Credit Score DTI Ratio remains the same, added text Added US Bank condominium guideline expansion language Updated language under Financing Facts Added Fannie Mae HFA Preferred Fact Sheet Link Revised Reissuance of MCC’s - deleted eHousingplus and added Dakota County CDA eHousingPlus fees revised effective 05/15/17 US Bank Fees Revised effective 04/17/17 Updated US Bank HFA Division Web Site Address

8 16 16 16 16 17 18 18 19, 23, 27 26 27 34

12-22-16 Revised Reservation to Underwriter Certification timeline to 45 days, effective for all loans on 12-22-16

23

08-22-16 Revised minimum FCO for conventional loans Clarified eHousingPlus Fee

15 25

04-20-16 Revised program name to: 2012-2016 First Time Homebuyer Program Revised page header through to reflect: 2012-2016 Dakota County CDA Added Shari Larson on Who To Contact directory for question regarding CDA DPA Revised DPA Income Limits Chart Added “first mortgage” before closing disclosure in Cash Back area and revised link to find the DPA program forms Added “first mortgage” before closing disclosure in Cash Back area Added Shari Larson’s contact information in Request Dakota County CDA Funds area Revised Term of MCC Program to Dec. 31, 2018

Cover All pages 8 9 11 11 18 21 24

02-23-16 DTI corrected to be 45% for all loans 16

12-1-15 Added Language added regarding credit documentation for the Master Servicer 26

12-1-15 Manufactured housing no longer an eligible property 16

12-1-15 Revised minimum FICO and Manual Underwriting 15

11-09-15 Revised email addresses for CDA 21

11-09-15 Removed TRID requirements for second mortgage and replaced with DPA Disclosure Form

11 & 12

10-19-15 Added TRID requirements for second mortgage 11

10-15-15 Added disclaimer regarding not reproducing program forms 29

10-14-15 Added eHP fee information & revised US Bank fees 24



9-26-15 Reformatted Documents required for compliance checklist 30

9-26-15 Reformatted Programs Fees 24

9-26-15 Removed How to Reserve a Loan in the eHP Lender Portal Old 23

9-26-15 Revised Summary of Compliance Process 19 & 20

9-26-15 Reformatted, About the Fianncing 17 & 18

9-26-15 Changed HUD-1 reference to Closing Disclosure 10 & 17

9-26-15 Added Contact Directory 7

7-13-15 Updates to email addresses and web site links throughout 6, 17, 15

5-4-15 Income and purchase price limits revised. Effective for all loans reserved 5-4-15 and after.

5, 12

2-2-15 Cover, changed Guideline and “Updates” dates; Basis of DPA Loan amount; cash back policy change; on page 15, see changes to Assets, Cash Back, Cosigners, Minimum loan amount; clarified income calculation and deleted some conflicting income information to assure consistency throughout; deleted boarder’s income verbiage

1, 7 8, 15 24 27

7-30-14 HFA Preferred Language updated 13

7-29-14 Revised language concerning DPA Award Letter (highlighted in green) No proof of wire is needed

18

7-24-14 & 7-25-14

Added HFA Preferred overlays on several pages 5, 6, 8, 13 15, 16, 18 23

6-9-14 US Bank Funding Fee increased to $300 29

5/20/14 Revised income and purchase price limits FOR ALL LOANS THAT HAVE NOT CLOSED ON OR BEFORE 5/20/14

7 & 14

5/1/14 Revised income limits 7



4/1/14 Revised HH income and income calculation method. Revised DPA loan amount and purchase price limit CDA documentation revision. Maximum DTI ratios revised. Revised underwriter certification. Program timetable revised. MCC Issuer fee added and Origination fee added.

6,7, 14 7 & 14 9 13 17 20 23

7/1/13 Further Clarification on distribution of DPA Award Letter 18

7/1/13 ADDED INFORMATION REGARDING DPA AWARD LETTER RE: 2013-14 18,28,38

5/1/13 Tax Transcripts are required for all loans closing on or after May 1, 2013 29

3/21/13 Removed USDA;RD from Minimum Credit Score 13

3/8/13 Origination and discount fees and SRP information added 23

3/1/13 Corrected Recapture Tax form verbiage 28

2/11/13 SHIP/SUBMIT verbiage changed; US Bank DPA Funding Verification Form

18 38

2/4/13 Clarifying verbiage added regarding the use of proposed MCC benefit when qualifying the borrower

10 and 16

01/28/13 Down Payment Assistance Loan Guidelines; Added DPA Funds Request Process

6-9 18

12/20/12 First Mortgage & DPA Income and Acquisition Limits Revised; Special Low Income Mortgage Income Limits Revised

14 & 19



THE DAKOTA COUNTY CDA TEAM

�

Dakota County CDA Establishes the financing for the TBA program, which includes the first mortgage product, Mortgage Credit Certificates and down payment assistance, sets the rate, term, points, and general guidelines, and markets program. Confirms approval of down payment assistance loans prior to closing. Funds down payment assistance loans at closing.

Participating Lenders Take applications, reserve in their own systems, process, underwrite, approve, fund first mortgage loan, close and sell qualified loans to the program. Lenders are responsible for servicing loans in accordance with applicable FHA, VA , Fannie Mae and GNMA requirements until they’re purchased by the Master Servicer.

U S Bank Master Servicer

Provides information on acceptable loan products and delivery and funding, receives all mortgage files, reviews mortgage files, notifies lenders of mortgage file exceptions, approves mortgage files, purchases first mortgage loans. Provides avenue for correspondent lenders who can close loans in their own name.

eHousingPlus Program Administration

Maintains the program reservation system, websites, and posts guides, forms, training materials, provides training on compliance issues and system, answers compliance questions, receives compliance files, reviews, posts and notifies of exceptions and approves compliance file.


WHO TO CONTACT (Rev. 05/13/19)

Question Direct Questions to:

Contact Information

General Program Compliance Questions

eHousingPlus (eHP)

813-415-3549 [email protected]

Assistance with eHPortal

eHousingPlus (eHP)

(954) 217-0817 [email protected]

Assistance with User Credentials for eHPortal

Ashlynn Mosher (954) 217-0817 ext 261 [email protected]

Update an Underwriter Certified Loan

eHousingPlus (eHP) Anyone at eHP Compliance Office [email protected] 954-217-0817

Program Training eHousingPlus (eHP) Click on this link to attend Program training.

Program Training Issues eHousingPlus (eHP) 813-415-3549 [email protected]

System Software Training for eHP Lender Portal

eHousingPlus (eHP) Click on this link for the once weekly Live Webinar: http://www.ehousingplus.com/ehp-system-trainings/

System Software Issues eHousingPlus (eHP) 813-415-3549 [email protected]

Program Rates eHousingPlus (eHP) Click on this link: to view the RATES/OFFERINGS tab.

Credit Underwriting questions Participating Lenders need to refer to internal Underwriting Department or Manager

US Bank does not re-underwriter loans. For general questions, contact US Bank at 800-562-5165 Option 2 (for general questions) Please note: US Bank answers underwriting questions from the underwriter of a lender for whom US Bank provides underwriting services ONLY.

Questions regarding the shipping of closing loan files

eHousingPlus (eHP) for questions regarding the program compliance file

US Bank for questions regarding the first mortgage closed loan file

[email protected] 954-217-0817

800-562-5165 Option 1

Questions regarding exceptions

eHousingPlus (eHP) for questions regarding exceptions on the program compliance file

US Bank for questions regarding exceptions on the first mortgage closed loan file

Debbie Kerr [email protected] 954-217-0817 X216

800-562-5165 Option 1

mailto:[email protected]




http://www.ehpuniversity.com/index.html?page_id=16


http://www.ehousingplus.com/ehp-system-trainings/


https://www.ehousingplus.com/available-programs/minnesota/dakota-cda/




THE PRODUCTS

FIRST MORTGAGE DOWN PAYMENT ASSISTANCE

MORTGAGE CREDIT CERTIFICATE

FIRST MORTGAGE (Rates are subject to change, for current rate please visit ehousingplus.com)

Revolving first mortgage funds (first-come, first -served pool to be replenished as loans are pooled and delivered. The borrower receives a 30-year, fixed rate, fully amortizing first mortgage loan with 360 level monthly payments. Available first mortgage products include FHA, VA, and HFA Preferred conventional loans.

Fannie Mae HFA Preferred Conventional Loan

Fannie Mae (FNMA) will make significant changes to the HFA Preferred Conventional loan product, effective 09/05/19. This will have a direct impact on many borrowers.

Beginning September 5, 2019, Fannie Mae will eliminate the HFA Preferred pricing benefit of charter level MI coverage for loans with income ABOVE 80% AMI (as determined by Fannie Mae, see pages 11 & 19 of this guide for income limits).

Effective with loan reservations registered on September 5, 2019, the Dakota County CDA Program will continue to offer the HFA Preferred conventional loans with its current income limits. However, HFA Preferred conventional loans with income above 80% AMI will no longer receive the current benefits of charter level MI coverage and must be charged the standard mortgage insurance rate. Charter-rate mortgage insurance is still available for the households at or below the 80% AMI income limit.

Important to Note: Fannie Mae has scheduled an update to DU on September 21, 2019. Until that update has occurred, DU will still generate a message in the findings that charter minimum mortgage insurance is acceptable for loans above 80% AMI. THIS IS NOT THE CASE. Standard mortgage insurance will be required beginning on September 5 even though DU findings may state otherwise. IT IS THE LENDERS RESPONSIBILITY TO MANUALLY ADJUST MI IN DU UNTIL FANNIE MAE’S DU UPDATE RESOLVES THIS ISSUE. FAILURE TO CORRECT DU IS A NON-CURABLE DEFICIENCY. Contact US Bank HFA Division with questions related to DU Findings 800-562-5165.

Under no circumstance will US Bank Home Mortgage, master servicer, purchase a loan that has a new loan case file ID for Desktop Underwriter (DU) dated on or after September 5, 2019, that has been submitted with reduced cost MI (charter coverage) AND is over 80% AMI, as these loans will be undeliverable to Fannie Mae. Any such loan will not be purchased by US Bank and remain the responsibility of the Participating Lender. (Added 09/03/19)


DOWN PAYMENT ASSISTANCE LOAN GUIDELINES OVERVIEW

The Dakota County Community Development Agency (CDA) is committed to assisting low and moderate income households throughout Dakota County achieve the goal of homeownership. The CDA is also committed to helping to rebuild the housing market in Dakota County, which has been impacted by increased foreclosure rates. The Dakota County CDA offers down payment assistance (DPA) loans to help first time buyers purchase a home within Dakota County. The CDA provides DPA loans to bridge the affordability gap experienced by many low and moderate income buyers for the down payment and closing costs associated with the purchase of a home located in Dakota County. DPA loan funds may be used for down payment and closing costs. The funding process for DPA loans is the same regardless of the first mortgage product.

ELIGIBLE LENDERS DPA loans may only be used in conjunction with a first mortgage loan to be made by a lender approved to participate in the Dakota County CDA’s 2012 Give Yourself Credit first time homebuyer program. A list of approved lenders is available at http://www.dakotacda.org/homebuyers.htm.

DPA LOAN FUNDING DPA loans will be closed in the name of the Dakota County Community Development Agency. The CDA will fund each DPA loan directly at closing, following the submission of a request for DPA funds by the first mortgage lender at least 3 business days prior to closing.

DPA LOAN HOUSEHOLD INCOME Household income shall include the income of: (1) the mortgagor(s), (2) any person expected to both live in the residence and sign the note, and (3) any person who is both the legal spouse of a mortgagor and is expected to live in the residence. Income documentation, as indicated on the DPA File Checklist, shall be submitted to CDA staff for review and approval. CDA staff will verify household income and confirm the amount of DPA funds the household is eligible to receive. Once household income has been verified and the DPA loan file documentation is complete, CDA staff will provide an approval to close form to the Participating Lender. (Rev 04/01/14)

Income Limits for FHA, VA, USDA-RD and Fannie Mae Above 80% AMI (Effective 07/02/19)

1 or 2 person households: $100,000 3 or more person households: $115,000

Income Limits for Fannie Mae 80% AMI or Less (Effective 09/05/19) All household sizes: $ 79,440

http://www.dakotacda.org/homebuyers.htm

http://www.dakotacda.org/homebuyers.htm


DPA LOAN AMOUNTS MINIMUM AND MAXIMUM The minimum DPA loan amount is $1,000. Households may receive a maximum loan amount of $8,500. In the event an appraisal comes in lower than the purchase price and the purchase price is not renegotiated to meet the appraised value, the DPA loan proceeds cannot be applied toward the difference between the appraised value and the purchase price. See the chart below for the current household income limits. (Rev 01/18/18)

DPA LOAN PURCHASE PRICE LIMIT The purchase price limit is subject to change and will be updated by the CDA as necessary.

Loans reserved 07/02/19 and AFTER Single family homes, townhomes or condominiums: $300,000 for household of 1 - 2 persons $330,100 for household of 3 or more persons

DPA LOAN ELIGIBLE PROPERTIES Down Payment Assistance loan funds may only be used for the purchase of a single family home which will be used as the buyer’s principal residence. DPA loan funds may not be used for the purchase of duplexes.

DPA LOAN ELIGIBLE BUYERS The homebuyer must qualify as a first time homebuyer. The homebuyer cannot have had an ownership interest in a property within three (3) years prior to the buyer’s application for a Down Payment Assistance Loan.

DPA LOAN MINIMUM INVESTMENT The homebuyer must provide at least $1,000 for the purchase of the eligible property.

DPA LOAN HOMEBUYER EDUCATION All homebuyers and their spouses must complete homebuyer education prior to closing on the purchase. The Homebuyer Education Certificate should be dated within 2 years of application. Clients may extend this requirement for 1 additional year by completing pre-purchase advising prior to the 2 year passage of time. Homebuyer education may be completed through the in person Homestretch Homebuyer Education course or through the Framework online homebuyer education course. Homebuyers using the Framework online course must also complete a free one-on-one pre-purchase counseling session with a CDA Homeownership Specialist. The homebuyer education certificate and confirmation of pre-purchase counseling attendance, if applicable, must be provided prior to CDA staff approving the DPA loan for closing. Registration information for homebuyer education courses and pre-purchase counseling sessions is available on the CDA’s website.

DPA LOAN REPAYMENT OF ASSISTANCE CDA Down Payment Assistance funds are provided as a zero (0%) interest, deferred loan with no monthly payments. However, the full principal amount of the loan must be repaid at the time the homebuyer sells the property, refinances, or pays off the corresponding first mortgage loan. The term of the DPA loan will be the same as that of the related first mortgage loan. The DPA loan will be evidenced by a DPA Note and Mortgage, in the form available on the Program Website. The

https://www.dakotacda.org/housing-resources/homeownership/homebuyer-education/


DPA Note and Mortgage will be held by the Dakota County Community Development Agency. There is no forgiveness period for the DPA loan. The full principal loan amount is due upon maturity or other repayment triggering event regardless of the length of time the homebuyer lives in the property. The CDA currently does not subordinate DPA loans at refinance. Partial or full repayment of the loan may be made at any time without a penalty for prepayment.

DPA LOAN APPLICATION AND APPROVAL DPA Loan funds must be reserved directly with CDA staff. The DPA loan must also be listed as an Additional Mortgage in the homebuyer’s first mortgage reservation on the eHousing reservation system. A DPA File Checklist is available by clicking on this link: http://www.ehousing.cc/dakota15.html. The checklist outlines the documentation necessary for loan reservation and loan approval prior to closing. All forms referenced on the DPA File Checklist are available by clicking on this link: http://www.ehousing.cc/dakota15.html CDA staff verifies DPA loan documentation and provides approval of the DPA loan amount prior to closing.

DPA LOAN CASH BACK Homebuyers using Down Payment Assistance loan funds may receive cash back for prepaids at closing, as long as a $1,000 minimum borrower investment is also reflected on the First Mortgage Closing Disclosure (TRID form). (Rev 9/26/15)

DPA LOAN GSE REQUIREMENTS Down Payment Assistance loans shall meet the requirements for second mortgage loans imposed by Fannie Mae, GNMA and FHA or VA, as applicable.

DEFECTIVE DPA LOANS AND REPURCHASE In the event a related first mortgage loan is not accepted for purchase by the program Servicer, or if the Participating Lender is required to repurchase a first mortgage loan as outlined in the Participation Agreement, the Participating Lender will also be required to purchase the related Down Payment Assistance loan at its principal amount. Such repurchase shall occur within ten (10) days after the date on which the corresponding first mortgage loan is rejected by the Servicer or shall occur on the date of repurchase of the corresponding first mortgage loan, as appropriate. In the event the Servicer, Program Administrator, or CDA discovers that 1) any DPA loan does not comply with the requirements of these Guidelines, or 2) the Participating Lender has not complied with the originating, closing, or post-closing requirements of these Guidelines, the Participating Lender shall either correct the defect or non-compliance within sixty (60) days or shall purchase the DPA loan from the Servicer or CDA, as applicable. Such purchase shall take place ten (10) days after the expiration of the 60 day cure period.

Upon repurchase of a DPA loan by a Participating Lender, the CDA shall assign the DPA Mortgage to the Participating Lender and shall endorse the related promissory note to the Participating Lender, without recourse.

http://www.ehousing.cc/dakota15.html




DPA LOAN PROGRAM FORMSThe Down Payment Assistance closing documents and DPA Loan Disclosure are located in the eHousingPlus.com lender portal. The Down Payment Assistance Application forms are not. To access these DPA Loan Program forms, please click on this link: http://www.ehousing.cc/dakota15.html For the CDA’s Down Payment Assistance Loan File, the following documentation requirements are changed (added 4-1-14) (requirements for US Bank’s 1st Mortgage Loan File and eHousing Plus’s Compliance File remain the same):

• Original signatures are now only required on the DPA mortgage and DPA note.

• Two months of bank statements for each account are now required rather than three months.

• Letters of explanation for deposits made to bank accounts will be requested by CDA staff when they may impact program eligibility or the amount of DPA funds available to the borrower.

DPA LOAN DISCLOSURE FORM Effective with all loan applications dated Oct. 3, 2015 and after, the CDA requires the DPA Loan Disclosure form available within the Loan Forms section of the eHousingPlus Lender Portal. This form must be submitted to the CDA prior to receiving loan approval to close the DPA second mortgage. (Rev 01/18/18)




MORTGAGE CREDIT CERTIFICATE TAX DISCLAIMER The following material is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of avoiding tax penalties that may be imposed on the taxpayer but may be used to support the promotion or marketing of the matter discussed herein. The taxpayer should seek advice from an independent tax advisor regarding the matter set forth herein based on the taxpayer’s particular circumstances.

What is a Mortgage Credit Certificate? A mortgage credit certificate (“MCC”) is an instrument designed to assist persons of low and moderate income to better afford individual ownership of housing. The procedures for issuing MCCs were established as an alternative to the issuance of single family mortgage revenue bonds. As distinguished from a bond program, in a MCC program the mortgagor may take a tax credit in an amount equal to the annual amount of interest paid on the mortgage loan multiplied by the Mortgage Credit Certificate Rate. Currently, the Mortgage Credit Certificate Rate for the Program is 30%. Because the MCC rate exceeds 20%, the amount of the credit is limited to $2,000. (Rev 01-01-18)

As an example, an Applicant with a $200,000 30 year, fixed rate mortgage (monthly payment has equal monthly installments of principal and interest) and a 4.25% interest rate could realize the following federal income tax savings (numbers are rounded):

During the first year of the Program, the Applicant in this example would be eligible for a tax credit of up to $2,000 if not limited by tax liability.

IT IS IMPORTANT TO NOTE that while FHA, VA, etc. may allow a consideration of the MCC benefit when underwriting the loan, the CDA program does not. The CDA program prohibits the use of the proposed MCC benefit from being used in the underwriting process.

In the example, 100% of the mortgage interest paid is $8,435 so 30% of the mortgage interest paid is $2,530.50. Because the credit rate is 30%, the amount that may be claimed as a credit is capped at $2,000. According to IRS instructions on Form 8396, the amount of allowable mortgage interest deduction on Schedule A is determined by reducing by the amount on Line 3

Example

Mortgage Amount $200,000

Interest Rate 4.25%

Total Interest Paid First 12 mos $8,435.00

Mortgage Credit Rate 30%

Maximum First Year Credit Amount $2,000


of Form 8396 ($2,000). So the total mortgage interest paid in the first 12 months was $8,435, subtract $2,000 and the remaining $6,435 may continue to be used as a deduction.

The tax credit amount of $2,000 may be used as a tax credit after all other deductions and credits have been applied and to the extent there is tax liability. If not all of the $2,000 can be used because there is not enough tax liability, it may be carried forward for up to three years. However, it cannot be added to the allowable mortgage interest deduction.

For a smaller loan amount, if 30% of the mortgage interest paid was $1,000, then $1,000 would be shown on Line 3 on Form 8396.

Borrowers who receive a MCC and who continue to own and occupy the financed home will be eligible for a tax credit each year for the term of the loan.

The amount of the credit actually claimed on the MCC holder’s federal income tax return cannot exceed the amount of federal income taxes due after other credits and deductions have been taken into account. For example, if after taking into account other tax credits and deductions, a borrower only owes $1,100, he or she cannot use the MCC tax credits in an amount in excess of $1,100. In this example, the unused $900 MCC related tax credit can be carried forward up to three years to be applied against future income tax liability.

A purchaser of a new or existing single family home may apply for a MCC through any participating mortgage lender at the time he or she applies for a mortgage from the lender. A MCC cannot be issued to a homebuyer who is refinancing an existing mortgage or in connection with a mortgage from a relative. Also, a MCC cannot be used in connection with a bond program.

It’s important to note that all or a portion of the MCC related tax credit may be subject to recapture if the Residence is sold within the first full nine years of purchase. This tax credit recapture is further explained in the Notice of Potential Recapture Tax and in the Recapture Tax brochure provided to an applicant.

It is important that borrowers understand the MCC and consider getting more information from their tax professional or the IRS.

What is the lender involvement? Simply follow the guidelines for the first mortgage as contained in the Administrator Guidelines.

The Lender is responsible for filing a form with the IRS in each year in which they originate loans for which MCCs are issued, and for keeping certain records regarding the MCCs. For participating lenders, the annual form will be forwarded via email by the Program Administrator for execution and filing by the Lender.

MCC Homebuyer Benefit The MCC can reduce the amount of federal income taxes; however, the tax benefit cannot exceed the amount of federal taxes owed for the year after other credits and deductions have been taken. But unused credit may be carried forward for up to three years.

Borrowers will have to adjust federal income tax withholding in order to receive the MCC


benefit on a monthly basis. This adjustment is accomplished by the borrower speaking to their payroll department at their place of work. By reducing monthly withholding, they will have more disposable (after tax) income with which to make mortgage payments. The benefit of the MCC program continues for the term of the mortgage as long as the holder of the MCC continues to own and occupy the home under the mortgage for which the MCC was issued.

What does the Homeowner have to do to claim the benefit with the IRS? Each year the homeowner files Form 8396 with their federal income tax return. The form is available on the IRS website.

Special Rules There are special rules regarding refinancing of the loan for which a MCC was issued. The borrower should contact the Dakota County CDA when and if refinancing the loan for which this MCC is issued.


PROGRAM REQUIREMENTS Eligible Borrowers • All buyers and their spouses (purchasing and non-purchasing) must be first-time buyers

and must be able to legally purchase a home in the US. • Follow Agency (FHA, VA, USDA-RD, Fannie Mae) and U.S. Bank guidelines for non-citizens.

U.S. Bank guidelines are located on the US Bank All Regs Web Site. • Buyers must live in the property they purchase as their principal residence. • All applicants must be considered irrespective of age, race, color, religion, national origin,

sex, marital status, military status or physical handicap. • Buyers must occupy the property purchased within 60 days of closing. • The past three years federal income tax returns are NOT required for Targeted Area buyers

or those meeting Veteran’s Exception.

Veterans Exception For the Veterans Exception, “veteran” is defined as "a person who served in the active military, naval, or air service, and who was discharged or released therefrom under conditions other than d ishonorable." The Mortgagor Aff idavi t has a checkbox that states: “Mortgagor(Co-mortgagor) meets the requirements to qualify as a “veteran” as defined in 38 U.S.C. Section 101 and has not previously obtained a loan financed by single family mortgage revenue bonds or assisted by an MCC utilizing the veteran exception to the first-time homebuyer requirement set forth in Section 416 of the Tax Relief and Health Care Act of 2006. Attached hereto are true and correct copies of my discharge or release papers, which demonstrate that such discharge or release was other than dishonorable.

Homebuyer Education Home Stretch Homebuyer Education certificate or Framework online homebuyer education certificate required for both the borrower and spouse prior to loan closing. For households using the Framework education program, a free pre-purchase advising meeting with a CDA Home ownership specialist is also required. Information on scheduling a pre-purchase advising meeting can be found on the Dakota County CDA Homebuyer Education web page (click on Pre-Purchase Counseling). The Homebuyer Education Certificate should be dated within 2 years of application. Clients may extend this requirement for 1 additional year by completing pre-purchase advising prior to the 2 year passage of time.

Minimum Credit Score Buyers must have a minimum FICO credit score of 650 on FHA (mid score must be the minimum or above); Buyers must have a minimum FICO credit score of 640 on HFA Preferred loans, (Rev. 04/17/17)

DTI Requirement • The program maximum DTI ratio is 45% for Government loan products and the Fannie Mae HFA

Preferred loan product. (Corrected 03/10/19) • Contact US Bank HFA Division with any questions regarding acceptable AUS, 800-562-5165. • Lenders must comply with Mortgage Insurance DTI requirements which may limit the maximum

DTI for borrowers with a FICO under 700. (Rev 12/12/18)

https://www.allregs.com/tpl/Home/GetIndex?Id=c29716b4-dc48-49fe-88a0-647759c97ae0

https://www.dakotacda.org/housing-resources/homeownership/homebuyer-education/


HOUSEHOLD INCOME LIMITS Household income shall include the income of: (1) the mortgagor(s), (2) any person expected to both live in the residence and sign the note, and (3) any person who is both the legal spouse of a mortgagor and is expected to live in the residence. Program income is not averaged. It is annualized. That’s different from income used for credit underwriting. More detailed guidelines for calculating program income are in the Compliance Underwriting section included in this Guide. (Rev 07/27/17)

Income Limits for FHA, VA, USDA-RD and Fannie Mae Above 80% AMI (Effective 07/02/19)

1 or 2 person households: $100,000 3 or more person households: $115,000

Income Limits for Fannie Mae 80% AMI or Less (Effective 09/05/19) All household sizes: $ 79,440

ACQUISITION LIMITS (SALES PRICE LIMITS) Program refers to Acquisition Limits - in most cases this is the Sales Price and is never FHA Acquisition limits. Has to include everything paid by the buyer or on the buyer’s behalf. Loans reserved 07/02/19 and AFTER Single family homes, townhomes or condominiums: $300,000 for household of 1 - 2 persons $330,100 for household of 3 or more persons

Property Qualifications • Eligible properties include existing single family homes, townhomes, FHA o r F a n n i e

M a e approved condominiums. • Condos with LTVs from 95.01% to 97% are allowable provided the project is approved by

USBHM, in addition to meeting Fannie Mae guidelines, as applicable. Review US Bank bulletin 2017-05 Condominium Guideline Expansion for complete details.(Rev 04/17/17)

• New construction is eligible in Apple Valley, Burnsville, Eagan, Empire Township, Farmington, Hastings, Inver Grove Heights, Lakeville, Mendota Heights, Rosemount, South St. Paul, Sunfish Lake and West St. Paul.

• Homes are considered new if never previously occupied. • Manufactured Homes - As of December 1, 2015, U. S. Bank will not purchase loans for

manufactured housing. U.S. Bank considers manufactured housing: • A manufactured home is a mobile home built entirely offsite on a permanent chassis that is

pulled on the highway to a permanent location. • Modular, panelized or prefabricated homes are not considered manufactured housing.

• Mobile, recreational, seasonal or other types of vacation or non-permanent homes are not permitted.

• Land may not exceed the size required to maintain basic livability • Properties purchased in the program must be residential units. No more than 15% of the

square footage of the home being purchased may be used in connection with a trade or business including Child Care services (other than incidental rental from eligible multi-unit structures).

Industry changes apply to program loans. There are no variances for loans in this


program. The Internal Revenue Service and the Dakota County CDA have requirements that are reviewed for compliance. It’s the responsibility of lenders to review program documents and to originate loans that meet the requirements. The Master Servicer is not obligated to purchase loans that do not comply with program terms. US Bank requirements for loan purchase may be found on the US Bank Web site.

FINANCING FACTS It’s expected that lenders have reviewed some preliminary documentation and believe that applicants will also qualify for credit. Excessive cancellations will be reviewed to assure that program funds are not being utilized inappropriately.

It is the responsibility of the lender to follow all program, Agency (FHA, VA, USDA:RD, FannieMae) and master servicer guidelines.

Check with your underwriter for updates to information for HFA Preferred. Such information is provided by third parties (i.e.Fannie Mae, U.S. Bank, etc) who do not provide updated information to eHousingPlus. (Added 04/17/17)

Fannie Mae HFA Preferred Fact Sheet: Unavailable at this time. Please contact US Bank HFA Division for guidance, 800-562-5165.

Appraisal The appraisal must indicate that the home has at least a 30 year remaining useful life.

Assets Retirement assets are not required to be included in first mortgage or MCC program calculation of income.

Assumptions FHA first mortgage loans may be assumed, with the prior approval of the Servicer, by a qualified borrower meeting qualifying requirements, first-time homebuyer, income and sales price restrictions in place at the time of the assumption. Such loans must continue to fully comply and be insured or guaranteed by the insurer/ guarantor or the mortgage insurer. Down payment assistance loans cannot be assumed.

Buydowns Not permitted.

Cash Back Homebuyers using Down Payment Assistance loan funds may receive cash back for prepaids at closing, as long as a $1,000 minimum borrower investment is also reflected on the First Mortgage Closing Disclosure (TRID form). (Rev 9/26/15)

Construction to perm Construction to perm loan type is not permitted for any loans in the program.

Cosigners • Cosigner/guarantor is acting in such capacity solely for purposes of providing additional



security for the Mortgage Loan • Cosigner/guarantor may not have a Present Ownership Interest or other financial interest in the Residence • Cosigner/guarantor has no intention to and will not occupy the Residence as a permanent residence, and • Cosigner’s income is not included in income calculation for program purposes, tax returns are not required and cosigners do not sign any program documents other than the cosigner affidavit. • Cosigner’s are not allowed for borrowers using Down Payment Assistance.

Final Typed Loan Application (1003) The typed application signed and dated by all parties is required. Loan interviewer must complete and sign page 3 of 4 of the 1003. If this is not possible, then an Officer must sign in place of the interviewer. All persons taking title to the property must execute all program documents. The income disclosed on the Affidavit must be the same or more than that shown on the 1003. The purchase price, loan amount, and other financial details must be the same as shown on all other documents.

Minimum Loan Amount There is no minimum first mortgage loan amount in this program. The minimum down payment assistance loan amount is $1,000.

Prepayments The first and second mortgage may be prepaid at any time without penalty.

Recapture Tax (APPLIES ONLY TO LOANS WITH MCC’S) If the property is disposed of in the first full nine years AND a net profit is made AND the borrowers income exceeds the income limits allowed at time of sale, recapture tax may have to be paid with the federal income tax return for the year in which the home is sold.

Real Estate Purchase Contract The full address of the property, full names of all sellers and buyers, total purchase price of the property must be included. If there is not an address for new construction, a lot number and subdivision name are required. All named persons must sign. Include the name and title whenever a representative is signing for a corporation.

Refinances This program is for new mortgage loans. Refinances are not permitted. However, temporary, construction or bridge financing with a term of 2 years or less may be taken out with a program loan.

Reissuance of MCC’s If the first mortgage loan is refinanced, the MCC may be reissued for a fee of $250. Contact the Dakota County CDA for all details regarding a reissue. (Rev 04/17/17)


Remaining Reserves Remaining reserves are not established by the program. If any, these are determined by the type of financing used (i.e. FHA, VA, HFA Preferred).

Tax Returns or Tax Transcripts or any combination Tax returns or tax transcripts or any combination of returns or transcripts for the preceding year are due April 15 of the current year. The past three years tax returns/transcripts are required for borrowers and spouses. Not required for those buying in Targeted Areas or those purchasing under the Veteran’s Exception. Requests for Extensions are not acceptable in lieu of tax returns/transcripts.

Underwriting Considerations for MCC’s IT IS IMPORTANT TO NOTE that while FHA, VA, etc. may allow a consideration of the MCC benefit when underwriting the loan, the CDA program does not. The CDA program prohibits the use of the proposed MCC benefit from being used in the underwriting process.


SUMMARY OF THE COMPLIANCE ORIGINATION PROCESS (Revised 12/12/18)

MANDATORY PROGRAM TRAINING Lender training is mandatory for anyone working with this program. eHousingPlus and US Bank provide program training online 24/7. To attend click on this link.

eHousingPlus eHPortal and eHP Digital Docs Training We highly encourage anyone who will reserve funds, complete an underwriter certification, print forms or clear exceptions to attend this additional training. (Rev 12/12/18) Click here for eHPortal Training Click here for eHP Digital Docs Training

eHPortal USER CREDENTIALS Following completion of Program training at eHP University training, an email will be sent to lenders giving directions on how to apply for User Credentials for the eHPortal. Please add [email protected] to your safe sender list. These instructions are for both new users of system and existing users looking to add programs to their profile.

QUALIFY Lenders use program requirements to qualify applicants for the program. Buyers must present an executed sales agreement before being entered into the program reservation system.

RESERVE FIRST MORTGAGE FUNDS To reserve funds, use the eHousingPlus eHPortal. Log in and reserve the first mortgage. To reserve funds in the program the borrower is required to have a signed real estate purchase contract for a specific address. You will need a 1003 and the Real Estate Purchase contract in order to make a reservation. If the reservation is successful, you will receive a loan number and a message that you’ve completed the reservation successfully. Print and have the buyer sign the Notices to Buyers and DPA Loan Disclosure found within the eHousingPlus eHPortal.

Fannie Mae HFA Preferred loans 09/05/19 and after: It is important that when the reservation is created in the eHPortal the correct RATE OFFERING is selected, there are two choices: Fannie 80% AMI OR Fannie OVER 80% AMI. (Added 09/03/19)

IMPORTANT - A reservation is for a borrower with a real estate purchase contract for a specific property. If the property needs to change, the loan must be cancelled and re-reserved. The lender is responsible for cancelling the loan within the eHousingPlus Lender Portal. And then, the lender must email ([email protected]) or call the eHousingPlus Compliance office at 954-217-0817 to have the borrower permanently removed from the eHousingPlus Lender Portal. Until this process is complete, the lender will not be able to re-reserve funds for the borrower. (Added 12/12/18)


https://register.gotowebinar.com/rt/2995926589510559234






RESERVE SECOND MORTGAGE ASSISTANCE Immediately following reservation of the first mortgage click on the “Add Additional” button found on the main menu to reserve the second mortgage funds. All fields will populate except for the second mortgage loan amount. Enter the loan amount and then click on the “Update” button to add the second mortgage assistance to the first mortgage loan reservation. (Added 12/12/18)

RESERVE MORTGAGE CREDIT CERTIFICATE (if applicable)

Immediately following reservation of the Second mortgage click on the “Add Additional” button found on the main menu to reserve the Mortgage Credit Certificate funds. Have the buyers sign the MCC Notices to Buyers and give the borrower the Recapture Tax Notice. (Added 12/12/18)

PROCESS Lenders process the loan as they would normally keeping in mind the program timelines.

UNDERWRITE AND CERTIFY Lenders underwrite & are responsible for credit decisions of the loans in the program. Servicer does not re-underwrite loans. Following credit approval AND WITHIN 45 DAYS OF LOAN RESERVATION, the Underwriter completes the online Underwriter Certification within the eHPortal. Once a loan is Underwriter Certified no further changes can be made. If a change needs to occur after the certification is complete, please email ([email protected]) or call the eHousingPlus Compliance office at 954-217-0817 to request to have the certification removed.

Fannie Mae HFA Preferred loans 09/05/19 and after: It is important that when the Underwriter Certification is completed an underwriter has verified the correct RATE OFFERING was selected at time of reservation (Fannie 80% AMI OR Fannie OVER 80% AMI). If incorrect, the lender will need to request a change of PRODUCT/RATE OFFERING. (Added 09/03/19)

REQUEST DAKOTA COUNTY CDA DPA FUNDS The assistance is funded by the Dakota County CDA at closing. With a minimum of three (3) business days prior to closing AND AFTER the Underwriter Certification is submitted: AFTER the underwriter certification has been submitted, print the Down Payment Assistance Request Form located in eHousingPlus eHPortal. 1) Complete the form, sign, scan and email the Down Payment Assistance Request Form for each

mortgage loan to the following email addresses: [email protected] AND [email protected]

Following verification of the information contained on the Down Payment Assistance Request Form, the Dakota County CDA will initiate the wire transfer.


https://www.ehousingplus.com/moveloan/

https://services.ehousingplus.com/Default.aspx




CLOSE It’s important to provide accurate closing instructions to closing agents. All program documents must be returned to the lender. The following forms are located within the eHPortal and must be signed by the borrower at closing:

• Mortgagor Affidavit • DPA Award Letter • DPA Mortgage • DPA Note • MCC Mortgagor Affidavit (if applicable)

MORTGAGE CREDIT CERTIFICATE PROCESS

There are requirements imposed by the IRS and the Issuer that are reviewed for compliance with the program guidelines. If the loan complies with the requirements as detailed in the Administrator’s Guidelines for the first mortgage, it qualifies for the MCC. It is the responsibility of lenders to review program documents and to originate loans that meet the requirements. The Administrator reviews the Compliance File.

It’s easy to give borrowers the MCC Tax Credit. You must reserve the MCC separately. It must be done as a complete reservation due to IRS reporting requirements. Complete the reservation screens online and submit. Reservations submitted correctly receive a MCC number. If submitted incorrectly, there is instant online feedback identifying non-compliance and/or missing information issues.

After closing, simply follow the compliance file checklist found within the eHousingPlus eHPortal. The same information will be submitted whether the buyer is using a program first mortgage loan only, program first mortgage with MCC , or MCC only. Only the fee submitted will differ, as indicated on the Compliance File Checklist.

MCC’S in this program qualify for re-issuance if the first mortgage loan is refinanced. The charge for re-issuance is $250. There is a separate re-issuance checklist. Contact the Dakota County CDA for more information.

A Replacement MCC, in the event the certificate is lost, may be obtained by the homebuyer from the Administrator for a fee of $75.

Mortgage Credit Certificates provided to borrowers using a first mortgage not associated with the CDA’s program are required to pay an Issuer Fee to the CDA in any amount equal to 1% of the purchase price amount. The corresponding first mortgage loan must comply with the requirements as detailed in the Administrator’s Guidelines for the first mortgage.




COMPLIANCE FILE DELIVERY INSTRUCTIONS •All compliance files are uploaded directly to eHousingPlus via eHP Digital Docs. •All exceptions / file deficiencies will be communicated to the Lender via email and will be posted in the eHPortal. Exceptions may be viewed online at the loan level and in an exceptions report. •Documentation requested to clear file deficiencies are uploaded directly in eHP Digital Docs. (Added 12/12/18)

eHP Digital Docs See pages 27 - 30 of this guide for detailed information about eHP Digital Docs. (Rev 05/13/19)

https://digitaldocs.ehousingplus.com/auth/login/all

New Digital Delivery Instructions eHP Digital Docs® eHousingPlus ™

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INSTRUCTIONS FOR THE DELIVERY OF COMPLIANCE FILES, FEES

AND CORRECTED DEFI’S.

Compliance Files and Corrections to previously submitted files with erroneous or missing

required documents will be managed through the eHousingPlus Digital Docs Portal.

This Digital Docs Portal provides lenders with all the tools necessary to deliver the

required documents for the approval of the originated loan(s) in their respective affordable

homebuyer programs. This Portal is a secure, easy to use and efficient way for lenders

to deliver the Compliance File, Correct DEFI’s and pay the required Compliance Review

Fees via our new eHPay on line fee approval, and related tools.

Who needs Access to eHP Digital Docs? Closers, Post-closers, Shippers, Defi/Exceptions and Accounting personnel.

FIRST STEPS

• You will need a Username and Password

to access eHP Digital Docs

a. If you are already an existing Active User of the eHPortal Lender Portal,

you will automatically be set up to use eHP Digital Docs. Your Username

and Password will be the same, but you may be prompted to change the

password if it does not meet security guidelines.

b. If you are NEW to any of the eHousingPlus Portals, you will need to

request User Credentials at www.ehousingplus.com/user-credentials

NEXT, ACCESS THE NEW EHP DIGITAL DOCS PORTAL

• As a participating lender to various programs, you already know that our web

page for the Dakota County CDA Program is where you access both Program

Info and the Systems.

HELPFUL TIPS FOR UPLOADING THE

COMPLIANCE FILE

• The site works best with the Google

Chrome browser. All other browsers

may encounter problems.

• If you cannot remember your

password, you can reset from the

eHP Digital Docs log in screen.


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• There are two icons you will immediately see:

o This is the existing Lender Origination Portal

o This is the NEW eHP Digital Docs Portal.

NOW YOU ARE READY TO DELIVER YOUR COMPLIANCE FILE…

The Compliance File should be a PDF file composed of all required documents on the

Checklist.

By clicking “NEW UPLOAD” on the Digital Docs Menu, you will be able to upload

the file easily.

Currently, there are three file types you will upload into the new DD Portal:

Compliance Files, DEFI’s, and/or pre-closing documents as required. Additional

uploads after the Compliance File are identified as Defis.

There is a NOTES Feature in case there is any pertinent information you want to

add to the compliance documents.

Once Submitted, the System will confirm that the document was uploaded

successfully, or it will present an error.

All Files Uploaded, can be seen immediately in UPLOADED DOCS.

All documents must be a PDF format and must not be locked or encrypted.

Documents must be uploaded upright and in a clear legible format.

Use the Checklist to make sure you are delivering al required documents.

…AND SUBMIT THE REQUIRED COMPLIANCE REVIEW FEE

Compliance Review Fees may now be submitted separately from the

Compliance File.

The NEW eHPay is a secure, efficient method for lenders to pay the fees ON-

LINE by enrolling in this FREE Program. Loans managed through eHPay are

processed faster, without fee errors or other unnecessary delays. Accounting

Staff can access eHP Digital Docs and process the compliance fees payment

easily via eHPay.


29

Not sure of the required fee for your loan? Use the FIND MY FEE feature

under PAYMENT CENTRAL and get the instant answer.

Compliance Files Uploaded are NOT ready for review until the Compliance Review

Fee Payment has been received by eHP.

FILES PENDING PAYMENT lists Compliance Files that have been uploaded

successfully, but whose fee payment is still pending. Lenders can monitor this

area to ensure their fees have been delivered in a timely manner.

UNIDENTIFIED PAYMENTS are payments received from your company without

the proper identification to apply it to the intended loan. Lenders can monitor this

area to ensure that payments made are being properly identified with OUR LOAN

NUMBER.

SHORT PAYMENTS If an incomplete payment is submitted, it will be displayed

indicating the amount paid and the correct fee amount.

TIPS

Sign up for eHPay. This is a secure solution for the payment of fees. Talk to one

of our eHousingPlus Business Representatives about how you can sign up, and to

answer any questions related to this new service

Make sure that every payment made is properly identified with OUR LOAN

NUMBER. This is particularly a problem with Wires and ACH payments, as well

as bundled payments. ACH/Wires do not properly identify loans in most cases

and hold up the processing of your loans!

If submitting a paper check, print the INVOICE/RECEIPT. You can submit the fee

for one or several loans at one time by attaching this receipt to your check.

NOT QUITE READY TO UPLOAD YOUR COMPLIANCE FILES?

During this initial transition of delivering Compliance Files Digitally on our NEW eHP

Digital Docs portal, eHousingPlus will continue to accept paper Compliance Files from

those lenders that need a little extra time. If you are sending the paper files, please

continue to ship them as you currently do to:

eHousingPlus

3050 Universal Boulevard, Suite 190

Weston, FL 33331

WE trust that you will soon be utilizing all the new features that have been developed to

make the delivery of Compliance Files easier and less costly via our NEW eHP Digital

Docs portal available for you, the participating lenders.


30

CORRECTING DEFICIENT FILES

AS OF 12/10/2018 CORRECTED LOAN DEFICIENCIES WILL NO LONGER

BE ACCEPTED VIA EMAIL.

The eHPortal (Lender Origination Portal) has various tools that alert lenders when a

Compliance File is delivered DEFICIENT. These multiple tools assist you, the lender, in

easily correcting these deficiencies and allow your file to be Compliance Approved in a

timely manner.

System generated DEFI emails sent at time of review with corrective actions.

Loan’s TIMELINE Tab depicts pending deficiencies ANYTIME you log in and view

your loan.

EXCEPTIONS/DEFICIENCY Reports are available on the REPORTS Menu.

WHEN YOU ARE READY TO SUBMIT YOUR CORRECTED DEFI’S OR MISSING DOCUMENTS

NEW: The Corrected DEFI’s will now be submitted and UPLOADED via eHP Digital

Docs, using the same easy method the Compliance File is delivered.

Log in to eHP DIGITAL DOCS

Search for your loan

NEW UPLOAD: select your file(s), and if prompted select

Corrected DEFI as ‘Type’.

The NOTES Feature is available to add any relevant information if

needed.

YOU’RE DONE!

Defi’s may be uploaded as a lender receives a document.

Corrected Defi’s may be view in eHP Digital Docs under, Uploaded

Docs.

QUICK TIPS

Save time by trying to consolidate corrections to your loan files.

Working on DEFI’s might be easier if grouped by loan & Program; typically, the

same types of errors occur based on varying Program Criteria.

Use the reports available on the eHPortal (EXCEPTIONS/DEFICIENCIES) as a

guide and deliver them easy using eHP Digital Docs.


SUBMIT MORTGAGE FILE & CREDIT PACKAGE TO SERVICER

The Mortgage File including Credit Package and it is sent to US Bank. The US Bank Delivery and Funding Checklist is found on the US Bank All Regs Web Site. Click on US Bank Lending Manuals. Pop-up box will appear, click on Continue. Web page will be redirected to US Bank All Regs site. Click on Housing Finance Authority folder.

US BANK notifies lenders of Exceptions, posts exceptions online and sends a weekly summary of outstanding exceptions.

APPROVALS

Following approval of Compliance File by eHousingPlus, lenders are notified and reminded of the purchase deadline.



PROGRAM TIMELINE

Buyers must have a fully executed sales contract for a specific property located in Dakota County in order to have funds reserved. The contract may be dated prior to the date of the loan application. Buyers may be pre-qualified. However, if the buyer does not have a contract on a property, program funds cannot be reserved for the buyer until such time as the buyer presents a valid contract.

Lenders may apply for 2. a first mortgage program loan, down payment assistance and MCC; OR 3. a first mortgage program loan and down payment assistance; OR 4. a first mortgage program loan and MCC; OR 5. a first mortgage program loan; OR 6. an MCC.

To assure that loans are purchased, please follow the Processing, Delivery and Purchase Timetable below. Please DO NOT reserve loans that cannot meet the timetable. Please consider waiting until 45 days prior to closing to reserve funds with respect to new construction, foreclosures and short sales. Loans not purchased within the timeframe below, cannot be purchased. The revolving pool of funds assures continuous funding. Fund availability makes it unnecessary to rush to reserve funds.

DPA Reservations Reservations are made by submitting information to the CDA. Shari Larson ([email protected]) is the CDA contact for DPA Loan Reservations. PLEASE, also enter information into the “Additional Mortgage” screen to “document” the transaction. System provides instant online feedback identifying non-compliance and/or missing information issues. Lenders may choose to print entry from “Loan Detail” screen. Merely utilizing the Additional Mortgage screen does NOT reserve the loan.

Loan Processing, Delivery and Purchase Timetable: Once a loan is reserved in the eHousingPlus system and is provided the Servicer’s Loan number, the loan must be: 1. Underwriter certified within 45 days of loan reservation; 2. Closed within 60 days of loan reservation; and 3. Purchased within 85 days of loan reservation. (Rev. 12/22/16)

Purchase Extension Any loan not purchased within 8 5 days is ineligible for purchase unless the lender chooses a one-time only 15-day extension. The cost of the extension is $375. The $375 extension fee is due whether or not loans are ultimately delivered and/or purchased. The $375 will be netted by the Servicer when loans are purchased. If an extension is permitted, but the loan is not purchased, the originating lender will be billed for the extension fee of $375. Any outstandingfees owed by the Lender may result in that Lender becoming ineligible to participate in the program.



At 100 days, a loan that hasn’t been delivered is cancelled and cannot be reinstated.

Again, the extension is offered once per loan and no further extensions will be allowed. Furthermore, regardless of choosing an extension, any loan not purchased within the approved timeframe will become the liability of the originating lender, including any down payment assistance provided at closing.

An extension request is available online at http://www.ehousingplus.com/available-programs/minnesota/dakota-cda/Program Docs hold the Extension Request form that is completed and submitted online. Remember that the form must be submitted BEFORE the 70th day after loan reservation.

Term of MCC Program By law the current election to use allocation for MCCs is available for loans closing through December 31, 2021. The Issuer may choose to allocate additional funds to another MCC program. (Rev 09/03/19)

http://www.ehousingplus.com/available-programs/minnesota/dakota-cda/

http://www.ehousingplus.com/available-programs/minnesota/dakota-cda/


PROGRAM FEES

ALL LOANS 09/05/19 AND AFTER Lenders are permitted to charge 1.00% origination fee and zero discount points with respect to Program Loans and will receive a 1.50% servicing release fee at the time a Program Loan is sold to the master servicer for total compensation of 2.50%. (Rev 09/03/19)

ALL LOANS PRIOR TO 09/05/19 Lenders are permitted to charge 0.5% origination fee and zero discount points with respect to Program Loans and will receive a 2% servicing release fee at the time a Program Loan is sold to the master servicer for total compensation of 2.50%. (Rev 09/03/19)

eHousingPlus Fees The program includes a Compliance/Admin Fee (see below) and a penalty fee of $100 for files that are chronically deficient. The Compliance/Admin Fee is submitted with the Compliance File. Read pages 27 - 30 of this guide for information about Payment Central located in eHP Digital Docs. (Rev 12/12/18)

The Compliance/Admin Fee is the fee charged by the Program Administrator/Compliance Agent to process the applicant/borrower from Origination to Compliance Approval, and to assess that the lenders originating such loans are following Program guidelines for the benefit of the eligible borrower(s). The Program Administrator/Compliance Agent tracks the loan via its web-based system, and assists the lender in processing the loan ensuring eligibility to the program available offerings, which can include various rate options, and down payment assistance. (Added 10/14/15)

The Compliance/Admin fee includes the review of information and documents delivered in the form of a Compliance File by the originating lender, on behalf of the borrower. Additionally the Compliance review verifies that the lender has charged only the fees allowed by the Program. Contrary to this, approval may be denied and/or fees may have to be reimbursed to the borrower. The compliance file processing consists of required affidavits, application, closing documents, certain non-mortgage documents, tax returns where applicable and other pre-defined Program documents that are disclosed to the potential borrower(s). This is required to ultimately receive Compliance Approval. These documents can support both the first mortgage and any down payment assistance available, and are required to ensure eligibility to the Program, Federal, State and Local requirements, where applicable. The Compliance review verifies that the data and documents submitted meet all requirements, and may include those for first-time homebuyer, income limits, sales price limits, targeted areas, homebuyer education, rate, term, points, fee limits, LTV, FICO score, special state, city, county program requirements for qualified military, first responders, teachers, etc.). (Rev 08/22/16)


LOAN RESERVATIONS MAY 15, 2017 AND AFTER • First Mortgage and CDA Second and MCC = $400 ($225 Compliance/Admin Fee + $175

Compliance MCC Fee) • First Mortgage and MCC = $400 ($225 Compliance/Admin Fee + $175 Compliance MCC

Fee) • First Mortgage and CDA Second = $225 Compliance/Admin Fee • MCC Only = $275 Compliance MCC Fee (And MCC Issuer Fee below) •MCC Issuer Fee for stand-alone MCC 1% of the purchase price to the CDA.

US Bank Fees $80 Tax Service Fee and NO Funding Fee. These fees will be netted out at time of purchase by US Bank. (Rev 04/16/18)

LENDER FEES Lenders are permitted to charge reasonable and customary charges for out of pocket expenses and costs. Other financing costs such as legal fees and underwriting fees may be charged and courier fees may be charged if such fees are normally charged. Lenders may charge the usual and reasonable settlement costs. Settlement costs include titling and transfer costs, title insurance, survey fees or other similar costs. Other allowable fees include doc prep fees, notary fees, hazard, mortgage and life insurance premiums, recording or registration charges, prepaid escrow deposits and other similar charges allowable by the insurer/guarantor. "Junk" fees are not a defined term and may not be charged. Excessive fees are not permitted in the program.

ADDITIONAL FEES MCC’S in this program qualify for re-issuance if the first mortgage loan is refinanced. The charge for re-issuance is $250. There is a separate re-issuance checklist. Contact the Dakota County CDA for more information. Replacement MCC, in the event the certificate is lost, may be obtained by the homebuyer from the Administrator for a fee of $75.


COMPLIANCE INCOME CALCULATION

Underwriters should remember that CALCULATION OF PROGRAM (COMPLIANCE) INCOME IS DIFFERENT THAN CALCULATION OF INCOME FOR CREDIT PURPOSES. The program requires that underwriters consider the income of: (1) the mortgagor(s), (2) any person expected to both live in the residence and sign the note, and (3) any person who is both the legal spouse of a mortgagor and is expected to live in the residence. Use the information below as a general guide. Because each case is different, please contact eHousingPlus Compliance if you have questions.

Unlike income that is averaged for credit underwriting, the program is concerned with actual current income. You should be reviewing the YTD income, the income of the last 4 months and the income shown on previous tax returns for consistency. You should not be averaging income. If there are not inconsistencies in earnings, use the guidelines for each loan type to determine current gross monthly income. Current gross monthly income is multiplied by remaining months in the year to determine "total current annualized income".

For the tax year in which the closing occurs, consider YTD income. Then establish current base income for the balance of the year using the guidelines for each type of income. Then consider any additional income. For assistance, contact the Compliance Office.

Gross monthly income is the sum of monthly gross pay; any additional income from overtime, part-time employment, bonuses, income from self-employment, dividends, interest, royalties, pensions, VA compensation and net rental income, other income (such as alimony, child support, public assistance, sick pay, social security benefits, unemployment compensation, income received from trusts, and income received from business activities or investments, continuation of which is probable based on foreseeable economic circumstances based upon the Mortgagor's Affidavit (to such effect), all as computed at the time of application for a mortgage loan and confirmed at the time of closing.

We will check information with respect to gross monthly income obtained from the reservation form, Underwriter’s Certification and applicable certificates and affidavits executed the date of the Closing of the Mortgage Loan, provided that any gross monthly income not included for credit underwriting purposes must be included in determining gross monthly income. The limit is the limit and any amount over the limit is not acceptable. However, do not include (1) dependents that are claimed on tax returns but who will not permanently reside in the home the majority of the time and (2) co-signers. The Affidavit, executed by the borrower(s), and certified by the lender, must include the total verified annual household income.

The program requires that underwriters consider the income of: (1) the mortgagor(s), (2) any person expected to both live in the residence and sign the note, and (3) any person who is both the legal spouse of a mortgagor and is expected to live in the residence.

Questions regarding the calculation of income for program purposes should be directed to the Compliance office 954-217-0817. There are many variables and the Compliance office will be pleased to assist.

The Servicer requires the complete closing and credit documentation as identified on their specific loan delivery checklists. Lenders may rely on the same documentation for program compliance purposes.Although mentioned in this section of the guidelines, VOE’s and VOD’s , current pay stubs which delineate “current period”, W-2's, for all borrowers from all employers, and bank statements to verify assets may be included to the extent required by the Servicer for their purposes. Figures shown on all documents should be consistent. (Rev. 12/1/2015)

Because a program qualifier is “income”, even if not required for credit purposes (i.e. automated underwriting), you should be seeking the two most current paystubs with YTD. Do not include in the compliance file, keep copies for your records.


Although reference is made to the last 4 to 6 weeks income, Underwriters should be reviewing the income tax returns submitted to verify that there are no unexplained and/or unacceptable differences current income to past income.

Examples below not intended to serve as exclusive methodology. Please contact the Compliance office 954-217-0817 with questions regarding individual cases.

Please note that the income reported for income calculation CAN NEVER BE LOWER THAN THE INCOME USED TO QUALIFY FOR CREDIT PURPOSES.

Hourly Employees For the tax year in which the loan is closing, use the Year to Date base income. If consistent, utilize the base to determine the balance of the year by 1. Using last 4 to 6 weeks' pay stubs, identify hourly rate of pay and average number of regular hours

worked per week. Multiply hourly rate times regular weekly hours. Multiply result times number of weeks for balance of year and add to YTD for an annualized base salary.

2. If the person has no other sources of income (for example: overtime, bonus, commissions, second jobs, interest, dividends, child support, alimony, public assistance), this will be the Current Total Annual Income.

3. Compare the total annual income in #2 above to Paystubs, VOE’s, previous year’s income per W2's and tax returns. You should not find significant differences. In some cases, the Current Total Annual Income will be higher than the previous year's income. Variances should be attributable to increases/ decreases in pay or number of hours worked.

You should not find significant differences. In some cases, the Current Total Annual Income will be higher than the previous year's income. Variances should be attributable to increases/decreases in pay or number of hours worked.

Salaried Employees 1. Using last 4 to 6 weeks' pay stubs, identify weekly (or other frequency) rate of pay. Multiply rate

times 2. the number of regular pay periods in the year (52 weeks, 12 months, 24 semi-

months) 3. If the person has no other sources of income (for example: overtime, bonus, commissions, second

jobs, interest, dividends, child support, alimony, public assistance), this will be the Current Total Annual Income.

4. Compare the total annual income in #2 above to Paystubs, VOE’s, previous year’s income per W2's and tax returns. You should not find significant differences. In some cases, the Current Total Annual Income will be higher than the previous year's income. Variances should be attributable to increases/ decreases in pay or number of hours worked

Business, Self Employment 1. Use the quarterly tax returns and financial statements to identify the current NET year to date

income. 2. Divide the year to date income by the number of months during which it was earned and 3. multiply times remaining number of months in year. Add to actual YTD. ADD

DEPRECIATION. 4. If the person has no other sources of income (for example: overtime, bonus, commissions, second

5. jobs, interest, dividends, child support, alimony, public assistance), this will be the Current Total Annual Income.

6. Compare the total annual income in #2 above to the previous year's income per W2's and tax returns.

You should not find significant differences.


Verified Termination of Overtime, Commission, Bonus, Seasonal, Periodic, One Time Overtime, Bonus, Commissions Using last 4 to 6 weeks' pay stubs, identify the year to date total earnings of the borrower. Subtract the Current Total Base Income (see above) to arrive at the total year to date extraordinary income. If verification of termination of overtime, commission or bonus is provided in writing (i.e. a letter from an employer) or such termination is due to a change of employment, use the current YTD overtime, commission or bonus, do not annualize and add as a lump sum to the Current Total Annual Income.

Regular Overtime, Bonus, Commissions 1. Using last 4 to 6 weeks' pay stubs, identify the year to date total earnings of the borrower. Subtract

the Current Total Base Income (see above) to arrive at the total year to date extraordinary income. 2. Divide the year to date extraordinary income by the number of pay periods during which it was

earned (to obtain an average). Multiply times the appropriate factor (Balance of year weeks, months, semi- months, etc.) for balance of year figure and add to actual YTD extraordinary income for annual income.

3. If the person has no other sources of income (for example: second jobs, interest, dividends, child support, alimony, public assistance), this will be the Current Total Annual Income.

4. Compare the total annual income in #2 above to Paystubs, VOE’s, previous year’s income per W2's and tax returns. You should not find significant differences. In most cases, the Current Total Annual Income will be higher than the previous year's income. It will also generally be higher than the annualized year to date income. The variances should be attributable to increases/decreases in pay.

Interest, Dividends 1. Use current earnings statements issued by the bank, investment broker or agent. Identify the year to

date interest or dividend earnings. Divide by the investment term year to date (for an average) and multiply times appropriate factor to annualize the earnings.

2. If statements are not available, and the terms of the investment agreement are available, multiply the 3. principal amount of the asset times the annual interest yield factor for a projected interest earnings

amount. 4. If neither are available, use the previous year's earnings statements or tax returns to identify total

annual interest and dividend income. If the assets are still invested in the same instruments, use the previous year's figure.

5. Add the result of the computation in either #1, #2 or #3 above to the Current Total Annual Income.

Alimony, Child Support 1. Use the monthly amount appearing in the divorce decree, separation agreement or other support

document. 2. If the borrower receives more than the amount stipulated in the agreements, use the monthly figure

that the borrower declares and can be verified. 3. If the borrower receives less than the amount stipulated in the agreements and there is a verifiable

history of the underpayments for at least 2 years (as evidenced by Court records), then use the past 2 years' historical monthly earnings. If there is no such history that can be verified, use the amount stipulated in #1 above.

4. Multiply the monthly amount of alimony or child support times 12. Add to the Current Total Annual Income (plus any other income sources).


Pensions, Temporary Payments 1. Use the benefits statement issued by the benefits provider (pensions, workers compensation, disability

compensation, social security, AFDC, etc.) to identify the amount of the benefit, payment frequency and expected term of the benefit.

2. Multiply the amount of the benefit times the payment frequency for the balance of year and add to actual YTD for an annualized amount. Add to the Current Total Annual Income (plus any other income sources).

3. If the benefit is absolutely not payable to the recipient beyond a given date (that means a complete and permanent stop of benefits without extensions, exceptions, waivers or other conditions) and such date is within 12 calendar months of the anticipated closing date, then calculate the benefits expected through the end of the benefits term. That will be the total annual income amount from the specific benefits source. Add to the Current Total Annual Income (plus any other income sources).


PROGRAM FORMS The program forms may only be found within the eHousingPlus eHPortal. Forms generated from any other source may void the loan making it not purchasable in the program. A lender will need user credentials for the eHPortal to access the forms.

This topic addresses the specific compliance forms required for the program for originating, processing, closing and loan delivery.

All first mortgage forms are located within the eHousingPlus Lender Portal, Loan Forms sections. The forms are behind security so that system data is accessed when the forms are printed. The forms auto-fill and are ready for execution. It’s important that Underwriters and Closers are certain that the data in the system is correct before forms are printed.

The simple rule of who signs forms – if the person is named on the Mortgage or Warranty Deed or is the spouse of the Mortgagor (even if a non-borrowing spouse), they sign the compliance forms. Also, remember cosigners cannot live in property, do not sign documents or take title. Having people sign documents who should not sign is as incorrect as not having all sign who should. Under no circumstances may a cosigner have an ownership interest in the property.

Original, personal signatures of all borrowers and sellers are required and must match on all documents associated with the transaction. Whenever a party is known in any of the documents by more than a single name, a Name Affidavit Will Be Required. Powers of Attorney and/or Personal Representatives for the Borrower Are Not Acceptable. Exception: Active Duty Military Personnel may provide an “Alive and Well” letter.

ORIGINATING COMPLIANCE FORMS In addition to all the standard disclosures, the program has specific disclosures all contained in the Notices to Buyers that are auto-filled by the system and executed at a time as close as possible to loan application. To the borrower’s copy attach the two-page Recapture Brochure that is available in the eHousingPlus eHPortal. The original of the Notices to Buyers should be included in the package that goes to the Underwriters and ultimately included in the Compliance File. (Rev 05/13/19)

CLOSING COMPLIANCE FORMS (are auto-filled and ready for execution)

Affidavit/Certifications written to include fulfill MCC requirements if one is used. With regard to Foreclosures/REO’s, Seller Affidavit not required for REO’s sold by Fannie, Freddie, HUD, bank DPA Award Letter must be executed by borrower at loan closing POST CLOSING COMPLIANCE FORMS Compliance File Checklist is available online. For Loans With MCC’s • MCC and Final Recapture Notice sent by Program Administrator to borrower at new property address


DOCUMENTS REQUIRED FOR THE COMPLIANCE FILE

Read pages 27 - 30 of this guide for information the compliance file submission to eHP Digital Docs. (Rev 12/10/18)

These are the required documents for this program. For accuracy with the payment of the Compliance Review Fee, please visit ‘PAYMENT CENTRAL’ and ‘FIND MY FEE’ in eHP Digital Docs.

• Homebuyer Education Certificate

• Dakota County CDA Program Affidavit Mortgagor, Seller, Lender

• Taxes for Borrower(s) & Spouse - 3 years IRS transcripts or Signed 1040

• Dakota County CDA Program Notices to Buyers

• Real Estate Purchase Contract

• FINAL SIGNED 1003

• FINAL SIGNED CLOSING DISCLOSURE (TRID form)

• Warranty Deed

• Discharge Papers (DD214) only if Veteran is qualifying under the Veteran’s Exception

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