UNDERWRITING/PROCESSING TRAINING Tom Wolf, Governor Brian A. Hudson, Executive Director PENNSYLVANIA HOUSING FINANCE AGENCY

UNDERWRITING/PROCESSING TRAINING

Tom Wolf, Governor Brian A. Hudson, Executive Director

PENNSYLVANIA HOUSING FINANCE AGENCY


PHFA Mission

In order to make the Commonwealth a better place to live while fostering community and economic development, the Pennsylvania Housing Finance Agency provides the capital for decent, safe and affordable homes and apartments for older adults, persons of modest means and those with special housing needs.

www.phfa.org


Agenda

What is PHFA? Allowable Fees Programs for Homebuyers Assistance Programs Underwriting Guidelines Property Guidelines Programs for Homeowners Closing Requirements

PHFA, who are we?

Created in 1972 Non-profit; Quasi Government Agency Headquarters in Harrisburg, PA Considered an “Investor”


Seller’s Guide, Chapter 1

Compensation and Allowable Fees


Compensation

The lender locks the interest rate as well as the price that PHFA will pay for the loan

Price includes the origination and the servicing release premium (SRP) The loan price includes the SRP, and .625% will be

withheld at the time of purchase and paid when the file is cleared according to the payout schedule

Borrowers will be able to pay up to two discount points in exchange for a lower rate, or they may choose a higher rate for a credit to help towards closing costs


Compensation

The maximum a lender may retain from the loan price is 103 percent of the loan amount

Additional compensation above 103 must be provided to the borrower in the form of a credit towards their closing costs and shown as such on the GFE and HUD1 If less than the minimum is given, PHFA will deduct the applicable

amount from the loan proceeds, apply it to the principal balance and require the lender to revise the HUD1 accordingly.

Credit may not be used to fund any portion of the borrower’s downpayment

An extra $250 would be paid for Access Mod loans


Allowable Fees: For Purchases

Actual amount (or your standard fees) for items including, but not limited to: Credit report Appraisal fee Filing and recording fees Wood-destroying insect report DU/LP Tax certification fees can only be charged on conventional

loans if it’s a pass thru fee to a third party. $750 Administrative fee to cover overhead such as

underwriting, processing and doc prep


Loan Process

Application

Lock Rate

Process & Underwri

teReview Loan

Close Purchase Loan

Lender

PHFALock Funds with PHFAVia Pipeline Plus

Submit to PHFA Compliance for

Approval

Form 51/BlitzDocsSubmit to PHFA for Purchase

Form 58/BlitzDocs

Turn-around time



Programs for Homebuyers


Homebuyer Products

HFA Preferred Risk SharingTM

HFA PreferredTM

Keystone Home Loan (80% max)

Keystone Home Loan

Keystone Government (K-Gov) loan

Conventional Financing Government Financing



Conventional Financing


HFA Preferred Risk SharingTM/HFA PreferredTM Loan Programs


HFA Preferred Risk SharingTM/ HFA PreferredTM

For purchase and limited cash-out refinance Rate & term refis only – more details later

Fully amortized MyCommunityMortgage…BUT No loan level pricing adjustments 30 year, fixed-rate term only

And…



HFA Preferred Risk Sharing™ No mortgage insurance is required Risk is assumed by PHFA and Fannie Mae, NOT the

lender (Normal reps & warrants per the Sellers Guide and the original MOSA apply)

HFA Preferred™ Mortgage insurance provided by a Fannie-

approved insurer Genworth, MGIC, Radian, United Guaranty, CMG, National MI & Essent



No first-time homebuyer requirement, the borrower may not have an ownership interest in any other residential dwelling at the time of loan closing.

Must meet HFA income limits Appendix B Gross, annual income projected over the next 12 months Calculated on ALL adults who intend to occupy the home within one

year from loan closing Loan amount cannot exceed the current Fannie Mae

standard loan limits High cost areas do not apply PHFA delegated authority can not be used with these loans


HFA Preferred Risk SharingTM No MI/HFA PreferredTM Lo MI

Desktop Underwriter (DU) Use the “Additional Data” screen and select “HFA Preferred Risk

Sharing” or “HFA Preferred Borrowers must have a FICO of at least 620 up to 97% LTV regardless with a DU finding of Approve/Eligible Max CLTV 105% Borrowers must contribute lesser of 1% or $1000 of own funds

Approve/Eligible only Qualifying income, ratios, reserves, and credit score determined

by DU No flexibility on PHFA’ s part No exceptions


Manual underwriting permitted Max LTV of 95%; Max CLTV of 105% Borrowers must have a FICO of at least 680

Maximum DTI for borrowers with FICO scores between 680 and 700 is 36%

Maximum DTI for borrowers with FICO scores 700 or higher is 45% Borrowers with no credit scores or “thin” files are not

acceptable Borrowers must invest lesser of 1% or $1000

Balance of required funds to close may come from PHFA Advantage loan and/or Fannie approved CommunitySeconds®




Homebuyer Education: All borrowers with middle credit scores below 680 must complete

an in person class session prior to closing Use PHFA approved counseling organizations No online courses are acceptable

All borrowers must sign Form 68, Borrower’s Authorization for Post-Purchase Counseling (purchase & refis) This gives PHFA authorization to refer the borrower to a counseling

agency if they fail to make a mortgage payment


Homebuyer Education: For loans where all borrowers have a middle credit score

of 680 or higher: must complete the counseling session prior to closing;

however, it only needs to be completed by one borrower. Use PHFA approved counseling organization OR PHFA online

course OR PHFA approved mortgage insurance company online course.

Online courses or telephonic counseling are acceptable ONLY for these borrowers

At least ONE borrower MUST attend counseling for each loan; method determined by credit score

No Homebuyer education is required on refi’s




Eligible Properties One unit properties only

No duplexes Condos and PUDs are acceptable

Condos project must be warranted by the lender, PHFA will not review and/or approve their acceptance

Must meet Fannie Mae guidelines No manufactured housing

Property must be primary residence Non-occupying borrowers are not permitted

Review Appendix I for additional property guidelines


HFA PreferredTM

Mortgage Insurance Coverage requirements: 18% coverage for LTVs > 95% and <= 97% 16% coverage for LTVs > 90% and <= 95% 12% coverage for LTVs > 85% and <= 90% 6% coverage for LTVs > 80% and <= 85%

Eligible Plans Monthly, Single Premium, and Split Premium

Single Premium must be paid by the borrower (not lender paid) Single & Split Premium: borrower may finance the upfront

premium in the first mortgage or in the subordinate Advantage Loan


Mortgage Insurance

When using HFA Preferred you must adhere to the Mortgage Insurance Companies Guidelines even if they are more restrictive; no exceptions.


Desktop Underwriter (DU)

97% LTV products require DU® access Lenders that are not DU® approved can be set up

to run DU® through PHFA Main contact should get in touch with Tammy Miller

at [email protected] Lenders will first need access to Desktop Originator

(DO®) For information on how to register for DO®, visit

https://www.efanniemae.com/is/brokcorresp/index.jsp


Keystone Home Loan: Conventional


Keystone Home Loan -Conventional

Maximum LTV is 80%, due to lack of mortgage insurance options

Borrowers must have a 620 minimum credit score Maximum DTI 45% Financing available in conjunction with FHA, VA and

RD No Keystone Advantage on Conventional KHL Appendix A for Income and Purchase Price limits Specific program guidelines will follow


Recap of Conventional Financing Products

HFA Preferred Risk Sharing/HFA Preferred

• For Purchase and limited cash out refinance

• Max LTV 97% w/DU Approve/Eligible• Minimum FICO of 620

• Max LTV 95% w/manual underwriting• Minimum FICO of 680• Max DTI 36% for scores 680 to 700• Max DTI 45% for scores 700 or higher

• CLTV 105%• Must contribute the lesser of 1% or $1000

• Downpayment & CCA available through Advantage

• Mortgage Credit Certificate (MCC) available

Keystone Home Loan

• Max LTV 80%• Combination Loans• 80/10/10 or 80/15/5

• Appendix A for Income and purchase price limits

• No CCA available• Borrowers must have a 620 minimum credit

score• Max DTI 45%• Can not be used with MCC



Government Financing


Keystone Home Loan: Gov’t


Keystone Home Loan-Government Income and purchase price limits

Appendix A Gross annual income of all adult occupants

Borrowers must contribute at least the lesser of 1% or $1000 from their own funds for FHA loans.

Borrowers must have a 620 minimum credit score FHA, VA or RD financing available

Following gov’t entity guidelines First-time homebuyer requirement

Waived in 39 Target counties & 13 census tracts Waived for Veterans Applies to all non-target areas

3 Year rule May own other real estate; not primary residence

Downpayment and/or closing cost assistance available through Keystone Advantage


Keystone Home Loan

PHFA Forms: Form 3: Mortgagor’s Affidavit

Upfront & at closing Form 4: Recapture Tax

Upfront or at closing


Keystone Government (K-Gov) Loan


Keystone Government Loan (K-Gov)

Loans insured/guaranteed by FHA, VA or RD Borrowers must contribute the lesser of 1% or $1000

from their own funds for FHA loans. Borrowers must have a 620 minimum credit score No PHFA- specific limits No first-time homebuyer requirement FHA non-occupant co-borrowers are permitted Downpayment/CCA available through Keystone

Advantage for eligible buyers


Recap of Government Financing Products

Keystone Home Loan

• FHA, RD &VA financing• Income and purchase limits- Appendix A• Borrowers must contribute the lesser of

1% or $1000 from their own funds. • Borrowers must have a 620 minimum

credit score• Max DTI 45%• Must meet first time homebuyer

requirement, but waived in 39 targeted counties &13 census tracts

• Can own other residences but not primary residence

• Downpayment & CCA available through Advantage

• Can not be used with MCC

Keystone Gov’t (K-Gov)

• FHA, RD & VA financing• No PHFA income or purchase price

limits• Downpayment & CCA available

through Advantage• Borrowers must contribute the

lesser of 1% or $1000 from their own funds.

• Borrowers must have a 620 minimum credit score

• Max DTI 45%• Non-occupant co-borrowers

acceptable• Mortgage Credit Certificate (MCC)

available




Assistance Programs


Mortgage Credit Certificate (MCC)


What is a Mortgage Credit Certificate?

An MCC is an actual paper certificate that allows a homebuyer to claim an annual federal tax credit for the life of the original mortgage, as long as it remains the homeowner’s principal residence.

• Homeowners can claim a tax credit of up to 50% of the mortgage interest they pay each year, not to exceed $2,000 annually.

• The remaining mortgage interest paid may be claimed as a deduction per IRS guidelines.

• The tax credit can not be more than the tax liability (unlike the First-time Homebuyer Tax Credit)

MCC = Homebuyer Tax Credit


• The credit can not exceed the amount of the federal tax owed after all other credits and deductions have been taken and can never exceed $2,000 in any given year. In this example, the borrower is entitled to a maximum of $2,000 in the form of a tax credit and the remaining $4,250 as a standard mortgage deduction using Schedule “A” of their annual federal tax return.

• To claim the credit, the homeowner completes and submits IRS Form 8396 along with their federal tax returns.

MCC ExampleMortgage Amount $125,000

Mortgage Interest rate ($6,250)

X 5%

MCC percentage X .50

Eligible Credit Amount

$ 3,125


MCC Requirements

• An MCC can be used in conjunction with any PHFA purchase loan except for the Keystone Home Loan.

• Eligible borrowers must meet the requirements for the PHFA first mortgage program, in addition to the requirements for the Keystone Home Loan program since the funding for the MCC program comes from the same source.

• The following Keystone Home Loan eligibility requirements must be met: First-time Homebuyer Income Limit Purchase Price Limit


Lender Responsibilities

The Participating Lender must file an annual report with the IRS using IRS Form 8329 for prior calendar year it made any loans with associated MCC’s.

PHFA is not permitted to file the report on behalf of the lender, but we will provide the lender with the necessary data for the prior year’s MCC activity, if any

PHFA will provide reminder letters to all applicable lenders in mid December

A copy of the report must be submitted to PHFA, along with proof it was submitted to the IRS

Records of the annual reports must be maintained by the lender for six years


Reissuance of Mortgage Credit Certificate

• If the homeowner chooses to refinance, the MCC may be able to be reissued with the approval of PHFA

• There will be a reasonable fee of $100

• MCC Benefit continues after refinancing, unlike the MRB program


Program Recap

If your borrower: Is eligible for a PHFA 1st mortgage – Any program except the

Keystone Home Loan Program (not refinances) Meets the income and purchase price limits of the MRB program,

Appendix A And is a First Time Homebuyer,

They may be the very lucky recipient of a 50% mortgage interest tax credit – worth thousands of dollars via

a Mortgage Credit Certificate!


Mortgage Interest Paid

$120,000 Loan Amount

K-Gov InterestPaid (4.25%)

Effective K-GovInterest (4.25%)

With MCCSavings

Year 1 $5,061 $3,061 $2,000

Years 1-10 $46,171 $26,171 $20,000

Years 1-20 $79,307 $42,739 $36,568

Years 1-30 $92,518 $49,345 $43,173


Keystone Advantage Assistance Loan



Downpayment and/or closing cost assistance for eligible homebuyers

Borrowers must have a minimum credit score of 660 Can be used with these PHFA first mortgages:


HFA PreferredTM

Keystone Home Loan (Government loans only) Keystone-Government (K-Gov)



Amortized subordinate mortgage (Second Lien) For existing homes: Loan amount = 4% of sales

price or up to $6K, whichever is less For new construction (homes never occupied): Up

to $6K 0% interest with a 10 year term Asset Limitation

$50,000 borrowers liquid assets Retirement accounts excluded unless drawn without

penalty



Must require maximum financing FHA, VA, RD requirements apply Not available on KHL Conventional loans

Funds locked simultaneously with first mortgage Via Pipeline Plus



Eligible County Assistance Programs Acceptable Review Appendix D – Subordinate Financing

Requirements Utilize assistance programs first

Must be in 3rd lien position Copy of the note and the recorded county program

mortgage is required (need to verify PHFA is in second position)

Advantage Loan Payment Must be included in front end ratio



Assistance amount must be indicated in the “Details of Transaction” section 1003

Lender provides HUD1, TIL and GFE May use PHFA Form 56ADV or standard TIL

Actual amount must be listed on HUD1 Rounded to nearest dollar Standard Paid Outside of Closing (POCs) items may be

reimbursed to borrower Funded by the lender, reimbursed at loan

purchased



The first payment on the assistance loan begins at the same time as the first mortgage (no deferment period)


HOMEstead Loan


HOMEstead Loan

Downpayment and/or closing cost in conjunction with a PHFA first mortgage

Not eligible in all counties- Appendix 1 & 2 Conventional, FHA, VA and RD financing available Borrowers must have a 620 minimum credit score Borrowers must contribute the lesser of 1% or $1,000 from

their own funds (FHA loans only) Can be used to lower an eligible buyer’s front end ratio to 30% $1,000 to $10,000, based on need Non-interest bearing loan with no monthly payment


HOMEstead Loan

Forgiven at 20% a year, over five years Income and purchase limits apply For areas that don’t receive federal HOME funds First time homebuyers only Homebuyer Education required regardless of FICO Liquid assets after closing may not exceed $5,000 Can’t be tenant occupied when Sales Agreement is signed Built after January 1, 1978 (some exceptions) Amount determined by Need Assessment Form (Appendix 3)


For Persons with Disabilities

Access Modification Loans


Access Home Modification Loan

With any PHFA home purchase program Conventional, FHA or RD $1,000 to $10,000 soft/silent subordinate

mortgage Repayment is not required as long as buyer

occupies home Modifications to be completed within 90 days of

closing


Access Downpayment &CCA

Used with a PHFA first AND a PHFA Access Home Modification Loan

Household income can’t exceed $53,280 $1,000 to $15,000 Subordinate loan Borrowers must need maximum financing (may

not have more than 3-5% down) No>$5,000 in liquid assets after closing


Asset Documentation

$50,000 asset limitation for all borrowers under the Keystone Advantage

$5,000 household liquid assets to other PHFA Assistance programs

Must be provided for all adult occupants Verification of Deposit (VOD) with average balance completed OR Two months of bank statements

Please note:For FHA loans: large deposits can not be greater than 2% of the sales

priceFor Conventional loans: large deposits can not be greater than 50% of

the borrowers total monthly qualifying income



• The lesser of 4% of sales price, max $6K, for existing homes

• 0% interest with a 10 year term• Must have a minimum credit score of 660• Used with KHL (gov’t), K-Gov and HFA Preferred

Risk SharingTM and HFA PreferredTM

HOMEstead • Up to $10K• Forgiven 20% a year over 5 years

Access Modification Loan

• Up to $10K -Soft second• Modification completed within 90 days• Used with Conventional, FHA and RD financing

purchase products

Access Downpayment and Closing Cost

Assistance

• Can be used with the Access Modification Loan• Up to $15K- Soft lien

Recap of Downpayment and/or Closing Cost Assistance Programs




Underwriting Guidelines


Preliminary Determinations

PHFA does not issue preapproval or prequalification letters.

Form 1 can be used to review questionable PHFA compliance issues prior to uploading the underwriting package

The lender must determine if the loan is approved under FHA, VA, RD or Fannie Mae guidelines

For HFA conventional loans-DU approval is required with 97% LTV loans


Underwriting Guidelines

Job Stability Two year history showing stability Tenure, opportunity, education, training, etc.

If a non-liable co-occupant is listed on the deed they should also appear on the mortgage, title, assignment of mortgage and TIL but not the note A processor’s certification must be in the underwriting

file with name and SS# A Residential Mortgage Credit Report is required


Procedures

Lender underwrites the file and uploads underwriting package via BlitzDocs to PHFA for review

Use Form 51 (Compliance Package Checklist- Purchase) for required documents and submission instructions Use Form 51R for Refinance programs

All loans must be locked with PHFA prior to uploading Compliance package

Allow up to 5 business days for PHFA to make a decision


Form 51/Form 51R

Complete the top portion and follow the instructions below it

Check off each applicable item Place COPIES of documents in the correct order (or

originals for conventional loans) Upload and submit to PHFA via BlitzDocs


Underwriting Results

All notices and reports can be retrieved via Pipeline Plus

Approval Notice: The loan is eligible for sale to PHFA Contains Purchase Conditions (these documents should

be uploaded with the Purchase package)


Underwriting Results Suspense Notice:

PHFA can not complete its review due to missing documentation or incomplete info

This notice specifies the additional required info or documents

All documents for suspended loans should be uploaded via BlitzDocs at one time

Denial Notice: PHFA can not approve the loan May be based on underwriting criteria or program

compliance issues


Income Documentation

Programs Income DocsFor Borrower(s)

Income Docs forAdult Occupants

Use Income for PHFA limits

HFA Preferred Risk Sharing

Full VOE OR Verbal VOE, Current Paystubs, 2yrs W-2s

Current Paystubs, 2yrs W-2s

Yes

HFA Preferred Full VOE OR Verbal VOE, Current Paystubs, 2yrs W-2s


Yes

Keystone Home Loan

Full VOE OR Verbal VOE, Current Paystubs, 2yrs W-2s


Yes

K-Gov Full VOE OR Verbal VOE, Current Paystubs, 2yrs W-2s

N/A N/A

* Self-employed borrowers two years of tax returns. Profit and Loss statement after the first quarter.


Sources of Funds

Seller concessions (Conventional loans) 3% if LTV > 90% 6% if LTV < 90%

If FHA, VA, RD those guidelines apply County programs acceptable if approved by PHFA

or Fannie Mae depending on loan program See Appendix D – Subordinate Financing

Requirements for details


Proof of Mortgage Insurance

For FHA loans, the signature section of the Loan Underwriting Transmittal Summary (LUTS) must either indicate a DU Accept or LP Approve AND the ZFHA number, OR it must be signed by the DE underwriter (either way, the DE underwriter must also complete the Conditional Commitment)

Electronic signatures are acceptable on all conventional compliance documents

FHA insured/guaranteed loans, electronic signatures will be accepted on third party docs only, such as sales agreement, per FHA guidelines.



Property Guidelines


Appraisal

Full appraisal on all PHFA loans; the only acceptable form is 1004. Also 1004MC (Market Condition Addendum) For HFA PRS &HFA Preferred programs also submit appraisal

through FNMA’s Universal Collateral Data PortalSM (UCDP) A “successful” UCDP Summary Report must be submitted in

underwriting package All additional commentary must be included Submitted in the underwriting package For existing properties, original photographs of the front,

rear and street scene along with internal photos of the subject property must be included


Appraisal

The census tract (if applicable) must be listed Include the Conditional Commitment/Direct

Endorsement Statement of Appraised Value for FHA loans (HUD 92800.5b)

Include the Certificate or Notification of Reasonable Value for VA loans

Appendix I - PHFA Appraisal Review Sheet

Cont’d


Manufactured Homes

Loan files for Manufactured Homes must contain the following documentation: the original vehicle title was retired for the file to be

purchased by PHFA completed and endorsed PennDOT Form MV 16

If the home was purchased new from a dealer and in the dealer’s possession for less than 6 months, the original certificate of origin is required as proof it was never titled.


Manufactured Homes

The VIN number should be referenced in the deed and the legal description of the mortgage

Closings for this home type should not be scheduled until proper documentation is obtained

If the title was never retired, it must be located to determine the date it was titled and if there are any liens

Additional research with PennDOT may be required Manufactured Home Affidavit of Affixation Rider to be

used for all manufactured homes (PHFA Form 60)


Property Eligibility

ProgramsAcceptable

Property Types Notes

HFA Preferred Risk SharingTM & HFA PreferredTM

1 units only, PUDs, Condos Must meet FNMA guidelinesNo manufactured housing

Keystone Home Loan One or two units; condos, PUDs, manufactured housing

Must meet respective gov’t entity guide or conventional guidelines (FNMA standards)

K-Gov One or two units, condos, PUDs, manufactured housing

Must meet respective gov’t entity guidelines


Property Eligibility

New or existing located in PA Principal residence occupied by owner within 60

days of closing and for life of loan No > 4 acres (up to 10 if meet exceptions) Remaining economic life > 30 years No > 15% of home used for business Taxes and insurance are ALWAYS escrowed


Property Standards

Wood Destroying Insect Certification Existing homes only - all buildings included in appraisal

E.g. detached garage Report must be dated within 120 days of closing A CLEAR wood-destroying insect certification must be included

in the Purchase Submission, signed by the inspector.


Property Standards

If evidence of infestation was observed, the commentary must be provided. This should be signed by the borrower(s) and the inspector.

If infestation was active, proper control measures must have been taken and addressed prior to closing. Sellers often pay for this service.

If structural damage resulted from the infestation, provide proof that the damage was satisfactorily repaired prior to closing. Sellers often pay for the repairs.


Property Standards

Private Water Supply Appraiser must note the type of private water supply; “on-

site” alone is not sufficient.


Property Standards

Private Sewage Disposal Appraiser must note the type of system; “on-site” alone is not

sufficient. If appraiser recommends or requires a septic certification OR if

there is indication in the appraisal or sales agreement of an existing or potential problem, a clear septic dye test must be included in the Purchase Submission.

Rural properties forced to utilize “wildcat disposal systems” because there is no alternative, may be acceptable under certain conditions (See Appendix W).

When you encounter a non-traditional form of sewage disposal, contact the Agency for possible acceptability of it.


Property Standards

Privately Owned and Maintained Streets For a property on a community or privately owned and

maintained street, provide proof that an adequate, legally enforceable private road maintenance agreement was recorded. A copy of it, with recordation notation, must be included in the Purchase Submission.

Provide proof of ingress, egress and regress. NOT required if the street is maintained by an HOA.

Dirt basements Acceptable if appraiser notes they are common and typical for

the area. The amenities (furnace, etc.) should be on concrete slabs.


Homeowner’s Insurance

Term- at least one (1) year Fire and Extended Coverage Required

Protection against loss or damage from fire and other hazards covered by standard extended coverage endorsement

In an amount equal to the LESSER of the loan amount OR the maximum insurable value of the improvements (subtract the land value from the final reconciliation of value on appraisal)

Maximum deductible is $3,000 or 1% of the face amt of policy Mortgagee Clause - Endorsed in favor of PHFA and/or its

successors or assigns, as their interest may appear; address is on Form 53 (closing instructions)

Copy of HO6 (contents) coverage for condos Taxes and Insurance are ALWAYS escrowed


Flood Insurance Required for properties where any portion of the

improvements are in a flood zone The maximum deductible permitted by PHFA is $5,000

unless the mortgage insurer/guarantor (such as FHA) requires a lower amount, but the borrower must still qualify at the lowest deductible permitted.

If needed for a condo, obtain proof of Condo Association’s insurance.

All PHFA loans require a “Life of Loan Certification” issued by a Flood Insurance company Insured as “Pennsylvania Housing Finance Agency, its Successors

and Assigns” OR include a “Notice of Servicing Transfer” with the purchase package


Flood Insurance

Mortgage qualification purposes, the standard policy rate should be utilized in calculating the debt to income ratios.

The standard rate will also be the amount escrowed and included in the monthly PITI payment.

PHFA uses Corelogic when conflicts arise Clay Rose, Product Account Executive 800.447.1772 ext. 3132 OR 512.977.3132, [email protected] Brenda Gould, Product Account Executive 800.447.1772 ext. 3128 OR 512.977.312,

[email protected]


Elevation Information

In the 'Elevation Information' section of an application, the lowest floor, base floor, and base flood elevation must be listed and must match the elevation certificate

If the ‘Elevation Difference’ is less than zero and the full risk (i.e., non-subsidized) NFIP premium at the lowest possible deductible is not provided, then the premium used to underwrite the file will be the lesser of 10 percent of the loan amount or $12,000 If you’d like to underwrite with the actual full risk rates, which may be

significantly lower, ask insurance agents to provide completed applications


Flood Insurance

Elevation Certs are not acceptable documentation to waive the flood insurance purchase requirement

No one can waive the flood insurance requirement if the structure is shown to be located in the Special Flood Hazard Area on the FEMA Flood Insurance Rate Map except FEMA via Letter of map Amendment, etc.

Flood insurance for properties in a participating Community must be written through the National Flood Insurance Program (NFIP)

NFIP Publications can be ordered online at www.fema.gov/business/nfip/libfacts.shtm

Review Chapter 12 for additional details


Taxes and Assessments

Special Assessments Any special assessments, tax assessments OR any then

due taxes or past due taxes must be paid by closing This includes unpaid lienable water/sewer rents and

unpaid Condo/PUD Association fees




Programs for Homeowners


Homeowner Products


HFA PreferredTM

FHA/VA Streamline Refinance

Refinancing: Conventional Refinancing: Government


Allowable Fees: For Refinances

Actual amount (or your standard fees) for items including, but limited to: Credit report (not needed for FHA/VA Streamline) Appraisal fee (not needed for FHA/VA Streamline) Filing and recording fees DU/LP (not needed for FHA/VA Streamline) Tax certification fees can only be charged on conventional loans if

it’s a pass thru fee to a third party. $750 Administrative fee to cover overhead such as underwriting,

processing and doc prep- for conventional financing $350 Administrative fee for FHA/VA Streamline Refinance

program



Refinancing: Conventional


HFA Preferred Risk SharingTM/HFA PreferredTM Loan Programs

Refinance Option



For purchase and limited cash-out refinance Rate & term refis only Available for all loan types

Fully amortized MyCommunityMortgage…BUT No loan level pricing adjustment 30 year, fixed-rate term

Same guidelines as mentioned in the homebuyer section but…



Limited Cash Out refinances (rate & term refi) Cash back limited to lesser of 2% of the balance of

the new loan or $2000 Must be obtaining maximum financing-determined

by DU findings 95% vs. 97% Cash back must be used towards closing costs if

the Advantage Assistance Loan is requested



Acceptable Uses: Pay off the unpaid principal balance of the existing

first mortgage Pay off only subordinate mortgages used to purchase

property



Refinancing: FHA/VA


FHA/VA Streamline Refinance Loan


FHA Streamline Refinance

Only for existing FHA homeowners New loan can only include:

The outstanding principal balance (from payoff stmt) Odd day’s interest Minus the applicable refund of the UFMIP Plus the new UFMIP up to a maximum amount of

97.75% of the original appraised value One month of annual MI for the current payment due

on the existing loan may also be included


VA Interest Rate Reduction Refinancing Loan (IRRRL)

New VA loan can include the outstanding principal balance plus the VA funding fee and eligible closing costs.

Lenders must follow VA’s streamline refinance guidelines in effect at the time of loan application per VA Pamphlet 26-7, Revised -- Chapter 6, Section 1 and sections of chapters 5, 7 and 8 as they pertain to the VA IRRRL’s requirements.


FHA/VA Streamline Refinance

Any and all subordinate loans must be re-subordinated or paid off by the borrower; they cannot be paid off with the new loan.

A lien search is required on all loans Title commitments are acceptable

PHFA seconds will only be re-subordinated if the new refinanced loan is coming through PHFA

Copy of the deed


FHA Guidelines

Lenders must follow the FHA’s guidelines in effect at the time of loan application for the Streamline Refinance per the HUD Handbook 4155.1, Chapter 3, Section C and Chapter 6, Section C.

Reference Mortgagee Letter 12-4 for information on premiums, as they differ depending on when the original loan was endorsed.


FHA Guidelines

Mortgagee Letter 12-4 Streamline Refinance transactions for existing FHA loans

ENDORSED ON OR BEFORE MAY 31, 2009, the UFMIP will decrease from 1% to 0.01% of the base loan amount.

The Annual MIP for refinanced FHA loans ENDORSED ON OR BEFORE MAY 31, 2009 will be 55bps regardless of the base loan amount.

Please review the entire Mortgagee Letter which also discusses premium increases that went into effect on

or after April 9, 2012.


For FHA/VA Streamline Refinance Loan Program

Additional PHFA Requirements


PHFA Requirements

30 year fixed rate only Owner occupied One or two units, principal residences only

Both the existing and new loan must meet this requirement

Non credit qualifying option is acceptable without an appraisal but a verbal VOE is required on all refis

Maximum mortgage limit is $417,000 Real estate taxes and insurance must be escrowed

regardless of the LTV


PHFA Requirements

For loans currently serviced by PHFA: The amount needed to pay off the borrower’s existing PHFA

loan will be reduced by the balance in the borrower's existing escrow account. The payoff statement used must come directly from PHFA staff

The calculation of the new loan amount would still be done normally per the applicable program guidelines.

The lender will perform the standard escrow analysis to ensure sufficient funds are collected to pay for any taxes and insurance due within the next 12 months, and will also provide the initial escrow account disclosure statement.


PHFA Requirements

Non-occupying co-borrowers cannot be added to the new loan Permitted only when they were on the original FHA

loan Co-borrowers on the original loan can be removed

from the new loan with additional documentation These must be underwritten according to FHA's credit

qualifying guidelines, although an appraisal is not needed.


Lender Instructions and Procedures

PHFA will review the HUD1 to verify that the premium was accurately applied

The allowable lender administration fee is $350 (not $750) Less paperwork for these loans No additional fees may be charged except for the

reasonable and customary third party fees and closing costs

Lock the loan with PHFA via Pipeline Plus – see chapter 2 of the Sellers Guide for details



Underwriting Requirements and Documentation If a co-borrower is being removed, the loan must be

underwritten and documented using FHA’s Credit Qualifying Streamline Refinance guidelines without an appraisal.

The following items will be required: Credit report Income verification A full loan application (1003) with all sections completed

PHFA’s overlays would apply



PHFA delegated underwriting system is not permitted

The underwriting/compliance package must be submitted to PHFA using Form 51R prior to closing

PHFA specific documents are not required: Mortgagor’s/Seller’s Affidavit (Form3) Recapture Tax Notice (Form 4)


Appendix E

BlitzDocs Instructions


Accessing Blitzdocs

Utilize Appendix E – BlitzDocs Instructions Can be found at www.phfa.org/lenders/forms.aspx#

Log into the PHFA Pipeline Plus system To access BlitzDocs each person must have a PHFA Pipeline Plus

account Continue to use the PHFA Pipeline Plus system to check loan

status and view reports/notifications PHFA will make sure existing Pipeline Plus account users have a

corresponding BlitzDocs account when requested Account Administrators would add the BlitzDocs menu option

to those users submitting any portion of a file to PHFA


Accessing BlitzDocs

When creating new Pipeline Plus accounts for an employee that needs access to BlitzDocs, the administrator must email [email protected] PHFA will contact BlitzDocs to obtain login info

Select BlitzDocs from your menu and click the link to launch BlitzDocs in a new window

When a compliance package is submitted via BlitzDocs the purchase package must also be submitted via BlitzDocs


Accessing Blitzdocs

“Submission Contact” Determines who will receive the submission confirmation email

from BlitzDocs and can be different for each submission File size limited to 50MB

If larger submit two separate uploads PHFA Employees files cannot be sent via BlitzDocs

Paper files must be sent directly to PHFA marked “Personal and Confidential”

Compliance packages sent to Tammy Miller Purchase packages sent to Karen Zapotosky


Submitting New Compliance Package

Only create a folder when ready to submit a complete compliance package Do not create multiple folders for the same borrower

When completing the Folder Attributes, you must use PHFA Loan Number Listed on the reservation confirmation In PHFA Pipeline Plus system



Submission Contact entered should be the person who will receive email notifications for the loan

For the PHFA Delegated Loan section Only select “PHFA-Delegated” if you are an approved

PHFA Delegated lender AND the file you are submitting has been entered into PHFA’s Delegated Underwriting System

For all other lenders, select “PHFA Non-Delegated”




Compliance package must be in the stacking order of Form 51/51R

Upload Compliance Package: Documents>>Upload; Document Type: **To Be Indexed**

Crucial final step! Select: File Submission >> Submit New Compliance Package to PHFA.

Upload the original version of the Appraisal if at all possible If completed separately, you can select Appraisal as the

Document Type Must be an adobe version not XML



Please do not click File Submission more than once You can verify if your field was properly submitted by

checking the notes section within the loan folder There will be a note with the description of

“Submitted New Compliance Package to PHFA” if it was successful

Please avoid submitting duplicates of any document


Submitting Conditions: Approval, Suspense

& Denials Review Compliance notifications posted to PHFA

Pipeline Plus

Search in BlitzDocs for folders in status of Approved, Suspended and/or Denied/Cancelled

Make sure you have the necessary documentation please wait to upload the information before submitting conditions Only complete submissions will be reviewed.


Submitting Compliance Conditions: If Suspended

Obtain suspense notification from PHFA Pipeline Plus system Review and collect ALL outstanding items

All conditions are to be submitted at one time All mail is to be submitted through BlitzDocs

DO NOT send documents via email to compliance officer or to [email protected]



Upload Suspense Conditions: Documents>>Upload; Document Type: Compliance Suspense Conditions

Crucial final step! Select: File Submission >> Submit Compliance Suspense Conditions to PHFA.



Please do not click File Submission more than once You can verify if your field was properly submitted

by checking the notes section within the loan folder There will be a note with the description of

“Submitted Suspense Conditions to PHFA” if it was successful



Submitting Compliance Conditions: If Denied

Review Compliance Denial notification via Pipeline Plus system

If denial can be disputed, collect and upload any supporting documentation: Documents>>Upload; Document Type: Change Request Conditions

Crucial final step! Select: File Submission >> Submit Change Request to PHFA.

If the denial cannot be disputed: No action is required


Submitting Compliance Conditions: If Denied

Please do not click File Submission more than once You can verify if your field was properly submitted

by checking the notes section within the loan folder There will be a note with the description of

“Submitted Change Request to PHFA” if it was successful



Submitting Compliance Conditions: If Approved

Review Compliance Approval Notification and collect all outstanding items

These documents must be submitted when the purchase submission package is uploaded

There’s no file submission action for approval conditions

Documents will not be reviewed until the completed purchase package has been uploaded and submitted


Change Requests

The “Submit Change Request” should not be used to upload approval or suspended compliance conditions

This option is used for major changes to the loan that need to be made and reviewed before closing


Notifying PHFA of Cancelled/Denied Loans

If a loan previously submitted via BlitzDocs will be cancelled or denied by your organization, you must cancel it on the Pipeline Plus System Be sure to include the reason for cancellation.



Contact Information

Business Development Unit Coleen Baumert [email protected] 717.780.1871 Michael Brightbill [email protected] 717.780.1801 Justin Coleman [email protected] 717.780.3993

Compliance Unit Tammy Miller [email protected] 717.780.3884 Denise Wolfgang [email protected] 717.780.3923 Betsy Stilo [email protected] 717.780.4321


Contact Information

Purchasing/Final Docs Unit Karen Zapotosky [email protected] 717.780.3973 General purchasing questions: [email protected] General final docs questions: [email protected]

Secondary Marketing Unit Jordan Laird [email protected] 717.780.3843 Leah Finley [email protected] 717.780.1872

Homeownership Hotline 1.800.822.1174

THANK YOU FOR YOUR TIME AND ATTENTION

www.phfa.org


3/10/15