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chfa firststep program loan operations training
Disclaimer
This Disclaimer applies to all content provided through CHFA webinars or other training events. The training content provided is intended to help explain CHFA’s programs, but should not be relied upon as an alternative to the CHFA Seller’s Guide. CHFA makes reasonable efforts to ensure that information provided in its trainings is up-to-date and accurate. If there are any discrepancies between information provided in a training event, including in slide presentations, and CHFA’s Seller’s Guide and/or eNews, the later documents should be relied upon.
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general chfa guidelines
Only CHFA-approved Participating Lenders can originate
All loans must meet FHA and CHFA guidelines*
Only borrower(s) may take title to the property
No one else may be included on the purchase documents/in title to property
No cosigners or non-occupying co-borrowers
30 year fixed rate mortgages only
Owner occupied primary residence only
Debt to income (DTI) requirements
Credit score of 620-659 or manually underwritten loan max DTI of 50%
Credit score of 660 or higher max DTI 55%
Business use of the subject property cannot exceed 15% as shown on tax returns
Optional Down Payment Assistance available
FirstStep Plus (CHFA Second Mortgage DPA only)
* CHFA Seller’s Guide available on AllRegs via CHFA’s website
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chfa’s income guidelines – household income calculation
Income limits based on number of occupants, county purchasing in and targeted or non-targeted area
CHFA Household Income Calculation – All household income for each applicant, spouse or civil union partner of each applicant and any other household member who is expected to be secondarily liable on the Mortgage Loan is included even if not used to qualify borrower, i.e.; child support, alimony, over-time, etc.
All income documentation for each applicant, spouse or civil union partner of each applicant and any other household member who is expected to be secondarily liable on the Mortgage Loan
Anyone with differing last names on Tax Returns, letter of explanation and Child Support docs if applicable
Profit and Loss Statement signed and dated for all self-employed applicants, self-employed spouse or civil union partner of each applicant and any other self-employed household member who is expected to be secondarily liable on the Mortgage Loan
Review Chapter 5, Section 501 of the CHFA Seller’s Guide
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program guidelines - property
Acceptable Property Types
Single family or PUDs or modular (attached and detached - only 1 living unit allowed)
Condo
Must be approved per FHA guidelines
Submit only the FHA approval in the submission file
Manufactured (permanently affixed)
Singlewide or larger
Deed Restrictions, Land Trusts, Affordable Covenants
Permitted in accordance with applicable guidelines
CHFA Form 780, Affordable Housing Restrictions Approval Certification, must be completed
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program guidelines – property (continued)
Unacceptable Property Types
Income/investment property
Properties where more than 15% of the square footage is used for a business purposes
Properties with accessory dwelling units
2-4 unit properties
Second homes
Non-warrantable condos
Excess acreage – CHFA acreage limit 50 acres
Co-ops
Properties with cistern as only water source
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homebuyer education
Required for ALL CHFA programs except refinance programs
All Borrowers must take Homebuyer Education prior to the loan closing
Classes from CHFA approved provider list on CHFA website
In person Classes
No cost to attendees
Online Class
Fee - $99 for first borrower, $50 for each additional borrower
Required one-on-one counseling session via phone by agency staff after completing online course
Follow information on providers site for scheduling counseling session
Certificates expire twelve (12) months after date of class
Borrower must be under contract prior to expiration of certificate
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chfa program compliance requirements
Must meet appropriate CHFA income limits listed on the CHFA website
Non-traditional credit is acceptable – follow FHA guidelines
Manual underwrite acceptable
Max DTI 50%
Borrower minimum contribution $1,000
Gift funds (follow agency guidelines); and/or
Earnest money deposit; and/or
Application, appraisal, or credit report fee paid to the Participating Lender; and/or
Home inspection fee, including fees paid for additional inspection services, such as sewer scopes, structural engineers report, etc.; and/or
Hazard insurance premium paid outside of closing; and/or
Thirty (30) day Loan Delivery Extension fee of .35% of the total loan amount and/or
Any homebuyer education fee, if applicable
HOA fees paid out of pocket by borrower
Temporary buy downs allowed, permanent buy downs are not allowed
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chfa program compliance submission
Prefer original appraisal uploaded with loan file – pdf format
Compliance turn times – 1 business day from receipt of a complete file. Suspended or incomplete files will result in further delays
Decision letters sent via email
Submission of suspend conditions to CHFA – deliver via:
Upload through document delivery system – preferred method
Must email CHFA Analyst from suspend letter to avoid delays in review of conditions
Secure e-mail through CHFA verified link
If you have not been previously approved by our IT department to send conditions via e-mail, have your IT department contact CHFA’s Information Security team to validate the e-mail communications are secure. Send request to [email protected]
Your own company secure e-mail
Fax
Suspend conditions will be reviewed in order received
Program Compliance approval conditions must be submitted with Purchase file. Please ensure closer and shipper are aware of required conditions
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common issues that delay program compliance approval
Underwriting transmittal missing information/not complete
FHA Loan Underwriting Transmittal (92900LT/LUTS)
Ratios and total monthly payment information must match AUS findings
Manually underwritten loans, transmittal must be signed
Risk assessment sections must be completed
LUTS must have the CHUMS number for the appraisal reviewer listed
Incorrect calculation of CHFA DPA
DPA based on total loan amount, whole dollar amount (rounded down)
Missing income documentation (VOE’s, paystubs, profit & loss statements, etc)
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common issues that delay program compliance approval (continued)
Household size differences between loan application and tax return
i.e., letter of explanation from borrower
Missing required federal tax returns (IRS transcripts are acceptable)
CHFA requires most current year of tax returns or transcripts
Extensions not acceptable
No W-2s or Wage and Income Transcripts in lieu of tax returns
All associated loan files are not complete – all loan files (first mortgage and second mortgage) must be complete before any file will check in for review
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CHFA FirstStepsm/FirstStep Plussm
FHA only (no 203(k)) Income and purchase price limits will apply May use DU or LPA AUS Total Scorecard findings Manual underwrites acceptable per insurer/guarantor guidelines Temporary buydowns acceptable Manufactured housing – single, double wide, or larger acceptable to FHA
guidelines
CHFA’s 5% Second Mortgage Loan available Borrower minimum investment of $1,000 Gift funds acceptable as permitted by insurer/guarantor Must be a first time homebuyer or qualified veteran
Never owned or not owned in the most recent three (3) years Exception: may be repeat homebuyer if purchasing in a targeted area
Borrower(s) may not have any ownership in residential property Some exceptions may apply
Homebuyer education required Affidavits are required MCC cannot be utilized Recapture Tax provision
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chfa firststep
fha requirements for chfa second mortgage
FHA Loan Underwriting Transmittal (LUTS) – CHFA Second Mortgage must show as secondary financing and marked as Government. Also include the EIN number for CHFA – 84-0676451
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recapture tax
What is Recapture Tax (IRS)
Factors that determine potential of Recapture Tax
Property is sold within the first 9 years; and
Household income exceeds the maximum income limits (CHFA Form 407 page 4); and
Borrower has a gain on the sale of the property
Recapture Tax disclosure given to borrowers at closing – CHFA Form 407, Notice of Recapture Tax
CHFA will reimburse any Recapture Tax paid by borrowers
Borrower(s) submits CHFA Form 950 and required documents after recapture tax is paid
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firststep program compliance documentation requirements
Follow the list of conditions/documents in the Document Delivery system or utilize the document checklist for the respective program
CHFA Form 750, Compliance Submission Review Checklist
Do not include checklist in file submission
CHFA Form 401, Initial Applicant Affidavit
CHFA Form 719, Veteran Waiver Affidavit – only required if borrower is a non-first time homebuyer who is an eligible veteran
Include copy of DD214 with this form
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chfa form 401, initial applicant affidavit
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chfa form 401, initial applicant affidavit
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chfa form 401, initial applicant affidavit
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chfa form 401, initial applicant affidavit
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chfa form 401, initial applicant affidavit
chfa form 719, affidavit of veteran for exception to first time homebuyer requirement
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Firststep program purchase documentation requirements
Follow the list of conditions/documents in the Document Delivery system or utilize the document checklist for the respective program
CHFA Form 751, Purchase Submission Review Checklist
Do not include checklist in file submission
CHFA Form 220, Tax Exempt Financing Rider
Must be attached to first mortgage loan Deed of Trust
CHFA Form 402, Final Applicant Affidavit
CHFA Form 407, Notice of Recapture Tax
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chfa form 220, tax exempt financing rider
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Must be recorded with first mortgage Deed of Trust.
chfa form 220, tax exempt financing rider
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Must be recorded with first mortgage Deed of Trust.
chfa form 402, final applicant affidavit
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chfa form 407, notice of recapture tax
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chfa form 407, notice of recapture tax
contact information
Call us with questions:
(888) 320-3688 Home Finance
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