Mortgage Credit Certificate Program€¦ · 01/07/2020 · Mortgage Credit Certificate(“MCC” ) Program. BORROWER APPLICATION AFFIDAVIT The undersigned, being first duly sworn,

Mortgage Credit Certificate Program

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Illinois Housing Development Authority M o r t g a g e C r e d i t C e r t i f i c a t e ( “ M C C ” ) P r o g r a m

DATA ENTRY FORM

Instructions: Use this sheet to complete various f ie lds throughout the MCC document set . Please note , not al l f ie lds wil l autopoulate . Some information wil l require manual entry. Please read al l documents careful ly before executing.

B O R R O W E R D A T A

Borrower Full name Borrower SSN Coborrower Full Name Coborrower SSN

Coborrower Full Name Coborrower SSN

The Borrower(s) total household income (on IHDA Income Calculator)……………………….....……….....

S E L L E R D A T A

Seller Full Name Entity Name (if Seller is Entity) Seller Full Name

PROPERTY AND LOAN DATA

Property Street Address Property City Property ZIP Property County

YES NO

Final 1st Mortgage Loan Amount Final Purchase Price

New Construction?

LENDER DATA

Lender Name (company, organization) Lender Representative

Title of Lender Representative

DOCUMENTS REQUIRED Prior To CloseMCC 25 – Informational Acknowledgement MCC 26 – Borrower Application Affidavit MCC 27 – Tax Affidavit *MCC 29 – Lender Initial Certification MCC 34 – Initial Recapture (Replaces HO-034)MCC 36 – Transmittal Fee Form (with a copy of the check)

At CloseMCC 32 – Borrower Closing Affidavit MCC 33 – Lender Closing Certification MCC 35 – Final Recapture (Replaces HO-035)

Upon approval, the MCC is emailed to the Borrower’s email address provided by the Lender. Please ensure this information is accurate. The MCC Program requires a $350 fee, mail the check and transmittal to the Authority:

For UPS or FedEx JP Morgan Chase Bank ATTN: Lockbox 93397 Illinois Housing Development Authority 131 S. Dearborn, 6th Floor Chicago, Illinois 60603

For USPS Mail Only

Illinois Housing Development Authority PO Box 93397 Chicago, Illinois 60673

* not included in the doc set as it is not applicable to all borrowers. Found online as a standalone document (www.ihdamortgage.org/docs)

https://www.ihdamortgage.org/docs

Page 1 of 1 MCC-034


N O T I C E O F P O T E N T I A L R E C A P T U R E T A X O N S A L E O F H O M E

To: Prospective homebuyers who may be planning to apply for a MCC under the Illinois Housing Development Authority’s (the “Authority”) MCC Program (the “Program”).

The Authority’s MCC Program is made possible by provisions of the Internal Revenue Code that allow the Authority to issue MCCs.

The Internal Revenue Code includes a restriction relating to such MCCs. The federal government treats homebuyers who receive a MCC as having received a subsidy. This means that, subject to certain exceptions, if a homebuyer who has taken advantage of a MCC sells the residence within nine (9) years of purchase the subsidy may be recaptured by the federal government.

The recapture is accomplished by an increase in your federal income tax payment for the year in which you sell your home. The recapture applies if you sell your home at a gain and if your income increases above specified levels, or if you dispose of your home in some other way (as detailed in 26 U.S.C. 143(m)(5)).

The Authority will provide you with additional information reflecting the calculation of the recapture tax at closing, or shortly after closing, on the purchase of your residence.

IF YOU DO NOT UNDERSTAND THIS NOTICE, OR IF YOU HAVE ADDITIONAL QUESTIONS REGARDING RECAPTURE

TAX, CONSULT YOUR ATTORNEY, A TAX ADVISOR, OR THE LOCAL OFFICE OF THE INTERNAL REVENUE SERVICE.

I/We have read this Notice of Potential Recapture Tax on Sale of Home and I/we have received a signed copy of this Notice for my/our records.

BORROWER SIGNATURE CO-BORROWER SIGNATURE

DATE DATE

BORROWER PRINTED NAME CO-BORROWER PRINTED NAME

CO-BORROWER SIGNATURE

DATE

CO-BORROWER PRINTED NAME

Page 1 of 3 MCC-025


I N F O R M A T I O N A L A C K N O W L E D G E M E N T

I/we have applied for the MCC Program (the “Program”) from the Illinois Housing Development Authority (the "Authority"). I/We acknowledge and understand the following:

1. A MCC can only be used in connection with the financing for the purchase of a residence with a firstmortgage loan. The residence must become my principal residence within sixty (60) days after closing.No more than fifteen percent (15%) of the area of the residence can be used in a trade or business. Theresidence cannot be used as a vacation home, recreation home, or investment property. The residencemust not consist of more than one dwelling unit.

2. The MCC, if issued, will entitle me/us to an annual federal income tax credit equal to 25% of theinterest paid or accrued on the first mortgage loan with which I/we finance the acquisition of theresidence (but not more than $2,000.00).

3. The decision to finance the acquisition of a residence is completely within the discretion of the lenderto whom I/we apply (the "Lender"). The Authority plays no role in the decision to finance theacquisition or the amount to be financed.

4. I/We am/are free to seek financing from any lender I/we choose, so long as the Lender is a participating lender with the Authority.

5. Issuance of a MCC is dependent upon the Lender submitting to the Authority all documentationrequired by the Delivery Checklist.

6. Issuance of a MCC is dependent upon my/our annual family income not exceeding the applicablelimit set forth for the Program at the time of loan closing.

7. No MCC will be issued unless the acquisition cost for the single-family residence (including land andbuilding, and in the case of incomplete construction, the cost of completion) does not exceed theapplicable limit set forth for the Program at the time of loan closing.

8. No MCC will be issued unless I/we have had no present ownership interest in a principal residenceduring the last three (3) years. This requirement will be waived if the residence for which a MCCapplication is being made is located in a targeted area or I/we am/are a qualified veteran.

9. In connection with the above, I/we will have to submit to the Lender true, complete signed copies ofmy/our federal income tax returns for the previous three (3) years or other acceptable documentation.

10. No MCC will be issued in connection with financing that is to be used for the acquisition orreplacement of my/our existing mortgage, my/our land contract or my/our lease with an option to

Page 2 of 3 MCC-025

purchase, except for construction loans, bridge loans, options to purchase or other temporary loans of twenty-four months or less.

11. No MCC will be issued if any financing for the residence is to be obtained from a qualified mortgagebond or a qualified veterans' mortgage bond. Further, no MCC will be issued if any person who is arelated person to me (as defined pursuant to Section 25 and Section 144 (a) (3) of the Internal RevenueCode of 1986) has, or is expected to have, an interest as a creditor in the first mortgage loan beingacquired for the Residence.

12. I/we acknowledge that if a MCC is issued to me/us, it will be revoked upon repayment of the firstmortgage loan (except for the refinancing of the first mortgage loan permitted under Section 25 of theInternal Revenue Code of 1986), or upon my/our failure to occupy the residence as my/our primaryresidence.

13. The MCC is not transferable without the prior written approval of the Authority and only if theAuthority executes a new MCC to the MCC transferee. I/We will have to pay to the Lender allcustomary and reasonable financing fees that the Lender charges to those applying for financing notissued in connection with a MCC. In addition, if I/we refinance the first mortgage loan and a MCCmust be re-issued there will be a non-refundable MCC re-issuance fee of $150.00.

14. I/we agree to execute a Borrower Application Affidavit, a Closing Affidavit, obtain a Seller's Affidavitfrom the seller(s) of the residence, and execute the Notice of Potential Recapture Tax On Sale Of Homepertaining to potential recapture.

15. I/we acknowledge that a material misstatement negligently made in any statement made by me/us inconnection with an application for a MCC will constitute a violation of federal law punishable by afine of up to $1,000.00 and a material misstatement fraudulently made in any statement made byme/us in connection with an application for a MCC will constitute a violation of federal lawpunishable by a fine of up to $10,000.00, revocation of the MCC, and any other criminal penaltyimposed by law. In addition, any material misstatement or any false statement which affects my/oureligibility for a MCC will result in denial of my/our application for a MCC, or if a MCC has beenissued prior to discovery of the false statement, immediate cancellation of the MCC issued. I/wefurther acknowledge that if any information or certification I/we provide contains a materialmisstatement which is due to fraud, then any MCC issued will automatically become invalid withoutany need for further action on the part of the Authority or any other person or entity.

(continues on next page)

Page 3 of 3 MCC-025

I/we certify that I/we have read and understand the above and that I/we have been provided with a copy of this Acknowledgment. Notwithstanding the above restrictions, I/we wish to proceed with the application process.


DATE DATE



DATE


1 of 5 MCC-026


B O R R O W E R A P P L I C A T I O N A F F I D A V I T

The undersigned, being first duly sworn, declares and states:

1. I/we understand that this Borrower Application Affidavit (“Affidavit”) is an essential part of anapplication for a MCC from the Illinois Housing Development Authority (the "Authority") underthe Authority's MCC Program (the "Program").

2. I/we am/are applying for a MCC in connection with the purchase of a single-family residence (the"Residence"). Permanent financing for the purchase of the Residence (the "Mortgage Loan") isbeing provided by__________________________________________________________ (“Lender”),participating in the Program, which I/we have chosen.

3. The name(s) and Social Security Number(s) (SSN) of all persons who are expected to acquire anownership interest in the Residence are as follows:

4. The Residence is located at:Street Address: City, State: , ILLINOIS

ZIP: County:

5. The Residence consists of real estate (or an interest in real estate) upon which there is, or is to be,located a single-family residence consisting of not more than one dwelling unit.

6. The Residence is or will be as of the Mortgage Loan closing date (Check One):A. Existing construction, previously occupied B. New construction, never occupied

7. I/We intend to occupy the Residence as my/our principal residence within not more than 60 daysafter the closing of the Mortgage Loan. I/We do not intend to use the Residence as a second home,investment property, or recreational home. I/We will promptly notify the Lender and the Authority if, and when, I/we cease to occupy the Residence as my/our principal residence.

8. I/we do not intend to use the Residence or any portion of the Residence (in excess of 15% of its totalarea) in any trade or business and I/we do not expect that any portion of the costs or expenses ofthe Residence will qualify as a home business expense for federal income tax purposes. No portionof the Residence is specifically designed for or presently devoted to any commercial use.

Nam

e(s)

SSN

(s)

2 of 5 MCC-026

9. The land upon which the Residence is located, or is to be located, is not larger than is requiredreasonably to maintain the basic livability of the Residence. I/we do not expect such land to provide any income to me/us. If the land exceeds any minimum lot size for zoning purposes by an amountsufficient to subdivide the property without a zoning variance, I/we have no intention of (i)subdividing or otherwise selling any of the land on which the Residence is located except inconjunction with a future sale of the Residence or (ii) of seeking any variance from applicablezoning, minimum lot size or set-back requirements for such purpose.

[PARAGRAPHS 10 AND 11 DO NOT APPLY IF THE RESIDENCE IS LOCATED IN A "TARGETED AREA,” IDENTIFIED BY YOUR LENDER, OR IF YOU ARE A QUALIFIED VETERAN.]

10. I/we represent that I/we will not have held a present ownership interest in my/our principalresidence at any time during the three-year period immediately preceding the Mortgage Loanclosing date.

11. I/we have attached true and correct signed copies of my/our federal income tax returns for the lastthree (3) years as filed with the Internal Revenue Service or as certified in accordance with theprocedures set forth in Section 6103, Internal Revenue Code of 1986, as amended; or in lieu thereof,I/we was/were not required to file a federal income tax return for one or more of the precedingthree (3) years. I/we will provide tax returns due after the date of this Affidavit but on or beforethe closing date of my/our Mortgage Loan, not later than I/we file such tax returns. If I/we file anextension request for a tax return due after the date of this Affidavit, I/we will provide, not laterthan the date I/we file such request, a copy of such extension request.

[PARAGRAPH 12 APPLIES ONLY IF THE RESIDENCE IS LOCATED IN A "TARGETED AREA" IDENTIFIED BY YOUR

LENDER, OR IF YOU ARE A QUALIFIED VETERAN.]

12. I/we did I/we did not have a present ownership interest in a principal residence at any time during the three-year period immediately preceding the Mortgage Loan closing date.

NOTE: WHEN COMPLETING PARAGRAPH (13) ON NEXT PAGE, THE FOLLOWING TERMS ARE DEFINED AS FOLLOWS:

• "Contract Sales Price": the amount to be paid, in cash or in kind, by me/us (or anyone actingon my/our behalf, or any party related to me/us, directly or indirectly) to the seller(s) of theResidence (or anyone acting on behalf of the seller(s), or any party related to the seller(s),directly or indirectly).

• "Personal Property": property that is not permanently attached to the real estate.• "Exempt Personal Property": an item of Personal Property that had no value when the Contract

Sales Price was agreed upon and which is included with the Residence for the convenience ofthe seller(s).

3 of 5 MCC-026

• "Land Cost": if purchased separately, the amount paid for the land upon which the Residenceis located, or is to be located, but only if the land has been, or will have been, owned by me/usfor less than two years prior to the date of commencement of construction of the Residence.

• "Incomplete or Unfinished": A Residence, which lacks fixtures or architectural appointmentsnormally included in the design of any house of the general type and style of the Residence,or needed to provide adequate living space for the family members who intend to occupy theResidence.

• "Sweat Equity": the value of services performed by me, my spouse, my parents, or children incompleting the Residence.

13. The acquisition cost of the Residence is calculated as follows:a. The Contract Sales Price...............................................................................b. Less the value of Personal Property,

excluding Exempt Personal Property included in line (a) above........... c. Plus the Land Cost, if applicable (enter 0 if NA)......................................d. Plus, if the Residence is Incomplete or Unfinished,

the cost of completing the Residence excluding Sweat Equity............... e. Total Acquisition Cost..................................................................................

14. No part of the Mortgage Loan proceeds will be used to refinance or replace my/our existing loan,mortgage or other owner financing, except that all or any part of the Mortgage Loan proceeds maybe used to pay or replace either (a) a construction period loan which I/we received or (b) a bridgeloan or similar temporary initial financing, either of which has a term of 24 months or less. I/weunderstand that conditional land sale contracts or leases with an option to purchase are consideredexisting loans or mortgages for the purposes of this section.

15. My/Our total household income (the total amount of the annual gross income) of all persons listedin Paragraph 3, and any other person who is expected to live in the Residence and be secondarilyliable on the Mortgage Loan, from whatever source derived and before taxes or withholdings doesnot exceed the limits set forth for the Program.

16. No portion of the financing of the acquisition of the Residence is or will be provided from theproceeds of a qualified mortgage bond or a qualified veteran's mortgage bond. No person relatedto me (as defined pursuant to Section 25 and Section 144 (a) (3) of the Internal Revenue Code of1986) has or is expected to have, an interest as a creditor in the Mortgage Loan being acquired forthe Residence.

17. I/we understand and agree that if a MCC is issued to me, it may not be transferred except with theprior written approval of the Authority in accordance with the Program's requirements. Further,upon repayment of the Mortgage Loan (but not including refinancing of the Mortgage Loanpermitted under Section 25 of the Internal Revenue Code of 1986), or my/our failure to occupy theResidence as my/our primary residence, the MCC will be revoked.

4 of 5 MCC-026

18. I/we was/were free to select any Lender of my/our choice, so long as that Lender had executed aMortgage Purchase Agreement with the Authority.

19. I/we acknowledge that a material misstatement negligently made in any statement made by me/usin connection with an application for a MCC will constitute a violation of federal law punishableby a fine of up to $1,000.00; and a material misstatement fraudulently made in any statement madeby me/us in connection with an application for a MCC will constitute a violation of federal lawpunishable by a fine of up to $10,000.00, revocation of the MCC, and any other criminal penaltyimposed by law. In addition, any material misstatement or any false statement which affects myeligibility for a MCC will result in denial of my/our application for a MCC, or if a MCC has beenissued prior to discovery of the false statement, immediate cancellation of the MCC so issued. I/wefurther acknowledge that if any information or certification I/we provide contains a materialmisstatement, which is due to fraud, then any MCC issued will automatically become null andvoid without any need for further action on the part of the Authority or any other person or entity.


DATE DATE


NON-BORROWING SPOUSE SIGNATURE CO-BORROWER SIGNATURE

DATE DATE

NON-BORROWING SPOUSE PRINTED NAME CO-BORROWER PRINTED NAME

5 of 5 MCC-026

A C K N O W L E D G E M E N T

STATE OF }

COUNTY OF }

I , a Notary Public in and for the said county and State, do hereby certify that

personally known to me as the same person(s) whose name(s) is/are subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that they signed and delivered the said instrument as their free and voluntary act, for the uses and purposes therein set forth.

Given under my hand and official seal this day of , .

(Seal) My Commission Expires Notary Public (signature)

Page 1 of 2 MCC-029

, , ,


L E N D E R I N I T I A L C E R T I F I C A T I O N

(the “Lender”) hereby certifies as follows:

(1) (the “Borrower(s)”).

(2) The MCC application was made in connection with an application for a mortgage loan on the residence (the “Residence”) located at:

Street Address: City, State: , ILLINOIS

ZIP: County:

(3) After completion of all underwriting, investigation and verification, the Lender has calculated a mortgage loan for the Borrower(s) in the amount of:

(the “Certified Indebtedness Amount”).

(4) Check (a) or (b), whichever applies,

a. To the best of Lender’s knowledge the Borrower(s) has had no present ownership ina principal residence at any time during the three (3) years prior to the date ofapplication and the Residence is not located in a targeted area.

b. The three (3) year non-ownership rule set forth in (a) above is not applicable becausethe Residence is located in a targeted area or the Borrower(s) is a qualified veteran.

(5) The Residence is, or will be, as of the mortgage loan closing date: A. Existing construction, previously occupied B. New construction, never occupied

(6) The acquisition cost of the Residence is......................................

(7) The household income of Borrower(s) is......................................

(8) The financing which the Borrower(s) will receive will not be used for the acquisition or replacement of an existing mortgage of the Borrower(s), land contract or lease with an option to purchase, except for a construction loan, bridge loan, lease with an option to purchase, or other temporary financing of twenty-four months or less.

(9) The Borrower(s) will not receive any financing for the Residence from a qualified mortgage bond or qualified veterans' mortgage bond.

(10) No related person, as defined in 26 U.S.C. 25(e)(6), has an interest or is expected to have an interest as a creditor in the Certified Indebtedness Amount.

SSN

(s)

Nam

e(s)

Page 2 of 2 MCC-029

(11) The Lender has charged the Borrower(s) only those reasonable fees for processing of the financing as would be charged to a potential borrower(s) applying for financing not provided in connection with an MCC.

(12) The Illinois Housing Development Authority Submission Cover as fully completed by the Lender is true and correct to the best of the Lender's knowledge as of this date.

(13) Based upon the Lender's reasonable investigation, neither the Lender, the Borrower(s), nor the seller(s) of the Residence, has made any negligent or fraudulent material misstatements in connection with the Borrower’s(s’) application for a MCC.

A C K N O W L E D G M E N T

Dated this day of , .

Signature of Lender Representative

Printed Name of Lender Representative


Lender/Organization Name

Illinois Housing Development Authority

TRANSMITTAL FEE FORM

This form must be submitted with a check for every Mortgage Credit Certificate (MCC) Program fee collected in conjunction with the Authority’s Homeownership Programs. The check must be made payable to “Illinois Housing Development Authority” and sent to the following address:

For USPS Mail OnlyIllinois Housing Development Authority

PO Box 93397 Chicago, IL 60673

_______________________

_______________________

Date:

Check number:

IHDA Loan Number: _____________________________

Loan Applicant/Borrower Name: _______________________________________ (Borrower 1)


Property Address: _______________________________________ (Street Address)

Select one of the following:

MCC Program Fee: $350.00 _____ 3911 (posting level)Initial certification fee

MCC Re-issue fee $150.00 _____ 3911 (posting level)Re-issue only

For UPS or FedExJP Morgan Chase Bank

Attn: Lockbox 93397Illinois Housing Development Authority

131 S. Dearborn, 6th FloorChicago, IL 60603

(City),IL

(ZIP)


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Page 1 of 2

Illinois Housing Development Authority M o r t g a g e C r e d i t C e r t i f i c a t e ( ‘ M C C ” ) P r o g r a m

B O R R O W E R C L O S I N G A F F I D A V I T

The undersigned, as an essential part of an application for a MCC from the Illinois Housing Development Authority (the "Authority") pursuant to the Authority's MCC Program (the “Program”), does hereby declare and state:

The Internal Revenue Service requires that you be provided with the following statement about recapture upon the closing of your mortgage loan. The recapture referred to is the same recapture described in the Notice of Potential Recapture Tax on Sale of Home that you have already received and executed.

NOTICE OF POTENTIAL RECAPTURE TAX ON SALE OF HOME Because you are receiving a MCC, you are receiving an income tax benefit not customarily available to buyers of single-family homes. If you sell or otherwise dispose of your home during the next nine (9) years, 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. Within the next ninety (90) days, you will be given additional information that will be needed to calculate the recapture tax.

I/We certify that we have received a copy of the above Notice of Potential Recapture Tax on Sale of Home on the date of closing of my/our mortgage loan.

I/we previously executed the Borrower Application Affidavit (MCC-26).

(Check and complete Section (a) or (b), whichever applies): a) I/we have reviewed the Borrower Application Affidavit and declare that the statements therein

remain true and accurate.b) I/we have reviewed the attached Borrower Application Affidavit and declare that the

statements therein remain true and accurate except as to the following changes:

I/we acknowledge that a material misstatement negligently made in any statement made by me/us in connection with an application for a MCC will constitute a violation of federal law punishable by a fine of up to $1,000.00; and a material misstatement fraudulently made in any statement made by me/us in connection with an application for a MCC will constitute a violation of federal law punishable by a fine of up to $10,000.00, revocation of the MCC, and any other criminal penalty imposed by law. In addition, any material misstatement or any false statement, which affects my/our eligibility for a MCC, will result in denial of my/our application for a MCC, or if a MCC has been issued prior to discovery of the false statement, immediate cancellation of the MCC issued. I/We further acknowledge that if any information or certification I/we provide contains a material misstatement, which is due to fraud, then any MCC issued will automatically become null and void without any need for further action on the part of the Authority or any other person or entity.

Page 2 of 2


DATE DATE



DATE


A C K N O W L E D G E M E N T

STATE OF }

COUNTY OF }

I , a Notary Public in and for the said county and State, do hereby certify that

personally known to me as the same person(s) whose name(s) is/are subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that they signed and delivered the said instrument as their free and voluntary act, for the uses and purposes therein set forth.

Given under my hand and official seal this day of , .

(Seal) My Commission Expires Notary Public (signature)

NON-BORROWING SPOUSE SIGNATURE

DATE

NON-BORROWING SPOUSE PRINTED NAME

Page 1 of 2 MCC-033

, , ,


L E N D E R C L O S I N G C E R T I F I C A T E

(the “Lender”) hereby certifies as follows:

(1) (the “Borrower(s)”).

(2) The MCC application was made in connection with an application for a mortgage loan on the residence (the “Residence”) located at:

Street Address: City, State: , ILLINOIS

ZIP: County:

(3) After completion of all underwriting, investigation and verification, the Lender has provided the Borrower(s) with a mortgage loan in the amount of:

(the “Certified Indebtedness Amount”).

(4) The mortgage loan closing date was:

(5) The Lender has received and examined true, complete, signed copies of the federal income tax returns of the Borrower(s) for the three (3) year period prior to the date of closing, or such other verification as the Illinois Housing Development Authority (the “Authority”) has approved.

(6) Statement (a) or (b) as checked is true: a. To the best of Lender’s knowledge, the Borrower(s) has had no present ownership in a

principal residence at any time during the three (3) years prior to the date of closing and the residence is not located in a targeted area.

b. The three (3) year non-ownership rule set forth in (a) above is not applicable because theresidence is located in a targeted area or the borrower(s) is a qualified veteran.

(7) Statement (a) or (b) as checked is true: a. Based upon reasonable investigation, the Lender is aware of no change in the acquisition

cost of the residence, the household income of Borrower(s), or any other material circumstances upon which it relied in the executing the Lender Initial Certification (MCC-29). All statements and certifications contained in that Lender Initial Certification remain valid and true.

b. The following changes have occurred in the circumstances upon which the Lender reliedin executing the Lender Initial Certification:

SSN

(s)

Nam

e(s)

Page 2 of 2 MCC-033

The Lender hereby certifies that the above changes in circumstances do not affect the eligibility of the Borrower(s) for a MCC.

(8) Based upon the Lender's reasonable investigation, neither the Lender, nor the Borrower(s), nor the seller(s) of the residence has made any negligent or fraudulent material misstatements in connection with the application from the Borrower(s) for a MCC.

(9) The Lender hereby agrees that it will immediately forward to the Authority all information that Lender may receive during the life of the mortgage loan, which tends to indicate that the Borrower(s) may have made a misrepresentation in applying for a MCC, or that may affect the continued eligibility of the Borrower(s) for a MCC.

A C K N O W L E D G M E N T

Dated this day of , .

Signature of Lender Representative

Printed Name of Lender Representative


Lender/Organization Name

Page 1 of 3 MCC-035


NOTICE TO BORROWER OF MAXIMUM RECAPTURE TAX AND METHOD TO COMPUTE RECAPTURE TAX ON SALE OF HOME

The Illinois Housing Development Authority (the “Authority”), through provisions of the Internal Revenue Code, has the ability to issue MCCs through its MCC Program (the “Program”).

INTRODUCTION: As a recipient of a MCC, you may be subject to a recapture tax if you sell your home within nine (9) years of your closing date. The recapture is accomplished by an increase in your federal income tax payment for the year in which you sell your home. The recapture applies if you sell your home at a gain and if your income increases more than 5% per year. The recapture tax may also apply if you dispose of your home in some other way. Any references in this notice to the “sale” of your home also includes other methods of disposing of your home. For instance, you may owe the recapture tax if you give your home to a relative. Further details are located at 26 U.S.C. 143(m).

A. MAXIMUM RECAPTURE TAX & CALCULATION OF TAX DUE, IF ANY:

NO RECAPTURE TAX DUE: In the following situations, no recapture tax is due and you do not need to do the calculations listed below:

1. You sell your home more than nine (9) years after your closing date.2. Your home is disposed of as a result of your death.3. You transfer your home either to your spouse or to your former spouse in connection with a

divorce and you have no gain or loss included in your income under Section 1041 of theInternal Revenue Code, or

4. You dispose of your home at a loss.

MAXIMUM RECAPTURE TAX: The maximum recapture tax that you may have to pay is ___________. This amount is ___________ of the highest principal amount of your mortgage loan and is your federally subsidized amount with respect to the loan. Total amount of 1st mortgage loan:_____________.

THE ACTUAL RECAPTURE TAX, if any, can be determined when you sell your home, and is the lesser of (1) 50% of your gain on the sale of your home, regardless of whether you have to include that gain in your income for federal income tax purposes, or (2) your RECAPTURE AMOUNT determined below:

1. If the home is sold before the 1st anniversary of closing, or on or after the 8th anniversary butbefore the 9th, your recapture amount will be 1.25% of your original principal mortgageamount.

2. If the home is sold on or after 1st anniversary of closing but before the 2nd, or on or after the 7th

anniversary but before the 8th, your recapture amount will be 2.5% of your original principalmortgage amount.

3. If the home is sold on or after 2nd anniversary of closing but before the 3rd, or on or after the6th anniversary but before the 7th, your recapture amount will be 3.75% of your originalprincipal mortgage amount.

4. If the home is sold on or after 3rd anniversary of closing but before the 4th, or on or after the 5th

anniversary but before the 6th, your recapture amount will be 5% of your original principalmortgage amount.

Page 2 of 3 MCC-035

5. If the home is sold on or after 4th anniversary of closing but before the 5th your recapture amount will be 6.25% of your original principal mortgage amount. This is the maximum recapture amount.

B. INCOME CALCULATION. You can calculate the income percentage as follows: SUBTRACT the applicable ADJUSTED QUALIFYING INCOME in the taxable year in which you sell your home, as listed on the “Income Limit Attachment” to this form, FROM your MODIFIED ADJUSTED GROSS INCOME in the taxable year in which you sell your home. Your MODIFIED ADJUSTED GROSS INCOME means your adjusted gross income shown on your federal income tax return for the taxable year in which you sell your home, with the following two adjustments: (a) your adjusted gross income must be INCREASED by the amount of any interest that you receive or accrue in the taxable year from tax exempt bonds that is excluded from your gross income (under Section 103 of the Internal Revenue Code); and (b) your adjusted gross income must be DECREASED by the amount of any gain included in your gross income by reason of the sale of your home. Your ADJUSTED QUALIFYING INCOME can be obtained from the Income Limit Attachment to this form. Start by finding the county in which your home is located. Then choose the family size at the time of sale, whether it be 1 to 2 members or 3 or more. Once you have the correct row selected for household income, choose the correct column by selecting the year in which you are selling your home. Use this figure for your ADJUSTED QUALIFYING INCOME.

C. LIMITATIONS AND SPECIAL RULES ON RECAPTURE TAX. 1. If you give away your home (other than to your spouse or ex-spouse incident to divorce), you

must determine your actual recapture tax as if you had sold your home for its fair market value.

2. If your home is destroyed by fire, storm, flood, or other casualty there generally is no recapture tax if, within two years, you purchase additional property for use as your principal residence on the site of the home financed with your original subsidized mortgage loan.

3. In general, except as provided in future federal regulations, if two or more persons own a home and are jointly liable for the subsidized mortgage loan, the actual recapture tax is determined separately for them based on their interests in the home.

4. If you repay your loan in full during the nine year recapture period and you sell your home during this period, your holding period percentage may be reduced under the special rule in Section 143(m)(4)(C)(ii) of the Internal Revenue Code.

5. Other special rules may apply in particular circumstances. You may wish to consult with an attorney, tax advisor, or the local office of the Internal Revenue Service when you sell or otherwise dispose of your home to determine the amount, if any, of your actual recapture tax. See Section 143(m) of the Internal Revenue Code, generally.

(continues on next page)

Page 3 of 3 MCC-035

THIS EXPLANATION AND THE ACCOMPANYING CALCULATIONS REPRESENT THE AUTHORITY’S CURRENT

UNDERSTANDING OF THE RECAPTURE PROVISION OF THE INTERNAL REVENUE CODE. THE EXPLANATION IS NOT A COMPLETE STATEMENT OF THE RECAPTURE PROVISION, AND THE AUTHORITY CANNOT BE CERTAIN THAT IT

WILL BE CONSISTENT WITH ANY REGULATIONS THE TREASURY DEPARTMENT MAY PROMULGATE UNDER THE RELEVANT SECTIONS OF THE INTERNAL REVENUE CODE.

IF YOU DO NOT UNDERSTAND THIS NOTICE, OR IF YOU HAVE ADDITIONAL QUESTIONS ABOUT RECAPTURE, YOU SHOULD CONSULT YOUR ATTORNEY, A TAX ADVISOR, OR THE LOCAL OFFICE OF THE INTERNAL REVENUE

SERVICE.

I/We have read this Notice of Potential Recapture Tax on Sale of Home, and I/we have received a signed copy of this Notice for my/our records.


DATE DATE



DATE


IHDA RECAPTURE WORKSHEET #1 NON-TARGETEDINCOME LIMITS* Effective: July 1st, 2020

APPLICANT'S INCOME

County in Which the Residence is Located YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR1 2 3 4 5 6 7 8 9

1 OR 2 $91,000.00 $95,550.00 $100,327.50 $105,343.88 $110,611.07 $116,141.62 $121,948.70 $128,046.14 $134,448.453 OR MORE $104,650.00 $109,882.50 $115,376.63 $121,145.46 $127,202.73 $133,562.87 $140,241.01 $147,253.06 $154,615.711 OR 2 $84,100.00 $88,305.00 $92,720.25 $97,356.26 $102,224.08 $107,335.28 $112,702.04 $118,337.15 $124,254.003 OR MORE $96,715.00 $101,550.75 $106,628.29 $111,959.70 $117,557.69 $123,435.57 $129,607.35 $136,087.72 $142,892.101 OR 2 $88,900.00 $93,345.00 $98,012.25 $102,912.86 $108,058.51 $113,461.43 $119,134.50 $125,091.23 $131,345.793 OR MORE $102,235.00 $107,346.75 $112,714.09 $118,349.79 $124,267.28 $130,480.65 $137,004.68 $143,854.91 $151,047.661 OR 2 $107,300.00 $112,665.00 $118,298.25 $124,213.16 $130,423.82 $136,945.01 $143,792.26 $150,981.88 $158,530.973 OR MORE $123,395.00 $129,564.75 $136,042.99 $142,845.14 $149,987.39 $157,486.76 $165,361.10 $173,629.16 $182,310.611 OR 2 $95,300.00 $100,065.00 $105,068.25 $110,321.66 $115,837.75 $121,629.63 $127,711.11 $134,096.67 $140,801.503 OR MORE $109,595.00 $115,074.75 $120,828.49 $126,869.91 $133,213.41 $139,874.08 $146,867.78 $154,211.17 $161,921.731 OR 2 $84,100.00 $88,305.00 $92,720.25 $97,356.26 $102,224.08 $107,335.28 $112,702.04 $118,337.15 $124,254.003 OR MORE $96,715.00 $101,550.75 $106,628.29 $111,959.70 $117,557.69 $123,435.57 $129,607.35 $136,087.72 $142,892.101 OR 2 $84,100.00 $88,305.00 $92,720.25 $97,356.26 $102,224.08 $107,335.28 $112,702.04 $118,337.15 $124,254.003 OR MORE $96,715.00 $101,550.75 $106,628.29 $111,959.70 $117,557.69 $123,435.57 $129,607.35 $136,087.72 $142,892.10

*If household income is less than that shown in corresponding cell, NO recapture tax is due.

Boone, Winnebago

**All Other Counties

MAXIMUM HOUSEHOLD INCOME LIMITS

**All other counties includes the following eighty-nine (90) counties: Adams, Alexander, Bond, Brown, Bureau, Calhoun, Carroll, Cass, Champaign, Christian, Clark, Clay, Clinton, Coles, Crawford, Cumberland, De Witt, Douglas, Edgar, Edwards, Effingham, Fayette, Ford, Franklin, Fulton, Gallatin, Greene, Hamilton, Hancock, Hardin, Henderson, Henry, Iroquois, Jackson, Jasper, Jefferson, Jersey, Jo Daviess, Johnson, Kankakee, Knox, La Salle, Lawrence, Lee, Livingston, Logan, Macon, Macoupin, Madison, Marion, Marshall, Mason, Massac, McDonough, Menard, Mercer, Montgomery, Monroe, Morgan, Moultrie, Ogle, Peoria, Perry, Piatt, Pike, Pope, Pulaski, Putnam, Randolph, Richland, Rock Island, Saline, Sangamon, Schuyler, Scott, Shelby, St. Clair, Stark, Stephenson, Tazewell, Union, Vermillion, Wabash, Warren, Washington, Wayne, White, Whiteside, Williamson, Woodford.

Cook, DuPage, Kane, Lake, McHenry, Will

Dekalb

Grundy

Kendall

McLean

IHDA RECAPTURE WORKSHEET #1A TARGETEDINCOME LIMITS* Effective: July 1st, 2020

APPLICANT'S INCOME

MAXIMUM HOUSEHOLD INCOME LIMITSCounty in Which the Residence is Located YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR

1 2 3 4 5 6 7 8 91 OR 2 $109,200.00 $114,660.00 $120,393.00 $126,412.65 $132,733.28 $139,369.95 $146,338.44 $153,655.37 $161,338.133 OR MORE $127,400.00 $133,770.00 $140,458.50 $147,481.43 $154,855.50 $162,598.27 $170,728.18 $179,264.59 $188,227.821 OR 2 $100,920.00 $105,966.00 $111,264.30 $116,827.52 $122,668.89 $128,802.34 $135,242.45 $142,004.57 $149,104.803 OR MORE $117,740.00 $123,627.00 $129,808.35 $136,298.77 $143,113.71 $150,269.39 $157,782.86 $165,672.00 $173,955.601 OR 2 $114,360.00 $120,078.00 $126,081.90 $132,386.00 $139,005.29 $145,955.56 $153,253.34 $160,916.00 $168,961.803 OR MORE $133,420.00 $140,091.00 $147,095.55 $154,450.33 $162,172.84 $170,281.49 $178,795.56 $187,735.34 $197,122.111 OR 2 $100,920.00 $105,966.00 $111,264.30 $116,827.52 $122,668.89 $128,802.34 $135,242.45 $142,004.57 $149,104.803 OR MORE $117,740.00 $123,627.00 $129,808.35 $136,298.77 $143,113.71 $150,269.39 $157,782.86 $165,672.00 $173,955.601 OR 2 $100,920.00 $105,966.00 $111,264.30 $116,827.52 $122,668.89 $128,802.34 $135,242.45 $142,004.57 $149,104.803 OR MORE $117,740.00 $123,627.00 $129,808.35 $136,298.77 $143,113.71 $150,269.39 $157,782.86 $165,672.00 $173,955.60

*If household income is less than that shown in corresponding cell, NO recapture tax is due.

**All other counties includes the following twenty-eight (28) counties: Adams, Alexander, Champaign, Christian, Coles, Fayette, Franklin, Jackson, Jefferson, Kankakee, Knox, Livingston, Macon, Madison, Marion, McDonough, Menard, Morgan, Peoria, Richland, Rock Island, Saline, St. Clair, Stephenson, Vermillion, White, Whiteside, Williamson

Cook, Kane, Lake, Will

De Kalb

McLean

Winnebago

**All Other Counties