Welcome MFA’s Partners Program Anita Racicot and Cynthia Marquez, MFA

Welcome

MFA’s Partners ProgramAnita Racicot and Cynthia Marquez, MFA

Ted Swisher, Santa Fe Habitat

28/11/2014

MFA Contacts for Partners Program

• Cynthia Marquez, Compliance Specialist Compliance

Package #1 (At Application)Package #2 (Prior to Closing)

• Lisa Romero, Lending Specialist Closed Loan

Package #3 (Closed Loan)Package #4 (Final Documents)

• Anita Racicot, Homeownership Specialist

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Partners Background

• Established in 1992 to serve as a secondary market for Non-profit housing development organizations, tribal organizations and public housing agencies

• Borrowers must be very low-income at the time of qualifying (HFH takes first application) 50% AMI for most areas of the state 60% AMI for high cost areas

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Compliance GuidelinesVerification of Employment Income

• High Cost Areas determined and approved by MFA’s Board of Directors are:

Santa Fe County Los Alamos CountyCatron County Mora CountyColfax County Quay CountyDeBaca County Taos CountyGuadalupe County Torrance CountyHarding County Union CountyHidalgo County

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Partners Program Guidelines

• Eligible Borrowers/Homeowners

Must be first time homebuyers

Must occupy the home within 30 days of closing

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• Use of Other Sources of Financing

Participants must maximize the use of other sources of soft money financing where such funding/financing is both available and appropriate

The use of such funds must conform to the applicable governing rules and regulations

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• Loan Closing

Participants may only close a Partners loan upon receipt of a copy of the MFA Compliance Approval showing the income calculation and acquisition cost.

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• Loan Purchase Requirements

MFA will purchase loans at a discount of 83.32% of the net principal balance

Loans must not be seasoned (i.e. should be newly closed loans)

MFA will be in first lien position Borrowers must be current on their payments, if any are

due to the Affiliate (if first payment was due prior to MFA purchasing the loan)

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• Loan Servicing

MFA will service all loans sold to MFA

Individual Habitat Affiliates have a contract with MFA to service the Habitat subordinate financing

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• Payments

– It is the Affiliate’s responsibility to inform the borrower that the loan will be sold to MFA and provide the borrower with clear instruction as to the first payment to MFA and the correct payment mailing address.

• Payment Address is: MFA, P.O. Box 25525, Albuquerque, NM 87125

• Also provide borrower with the MFA loan number in order to ensure timely and accurate application of payments

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• Escrow

– Upon closing the loan, the Affiliate should ensure all taxes are paid and current and the 1st years insurance in paid. (MFA will need proof that taxes and insurance are paid when the closed loan package is delivered)

• A minimum of 2 months escrow payment should be collected at closing

• MFA will be deducting the escrow funds from the wire when the loan is purchased

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• Payment Reserve Account

– This account is a “payment reserve” funded by the Affiliate. This is a “guarantee” in the case the loan becomes delinquent

• Affiliate must remit six (6) months of the total payment (principal, interest, taxes and insurance) for the first six loans purchased by MFA and three (3) months of total payment for each loan thereafter.

– These funds are deducted from the wire at the time MFA purchases the loan from the Affiliate

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– The provisions of the directive allow for the application of the “payment reserve” in the event the loan becomes delinquent (30 days +)

– MFA can draw on the account to apply to the payment(s) due on the loan to cure the default which is done after the initial collection attempts have been unsuccessful

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– If the borrower is able to reinstate, the “payment reserve” will be replenished and the borrower will make payments as agreed under the provisions of the Mortgage Note

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• Delinquencies

– On or about the 17th of each month, MFA will provide the State Program Administrator and the Affiliates with a monthly delinquency report which will provide detail of delinquent accounts

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• Delinquencies

– MFA will perform the initial contact with the borrower(s) on delinquent accounts

– After MFA’s initial contact, the Affiliate is responsible for contacting the borrower in an attempt to cure the default

– Otherwise the Affiliate is responsible to repurchase the loan.

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First Time Home Buyer Program Requirements

• Definition of First -Time Home Buyer

Borrowers are purchasing first home

Borrowers have not owned a home as their primary residence for a full three (3) years.

Borrower has not lived with an ex-spouse that owned the property as his/her sole and separate property prior to the marriage for a full three years

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• Owner Occupied

– Borrowers must occupy the property as their primary residence

– Non-occupying co-signer(s) allowed NOT NON-OCCUPYING CO-BORROWER(S)

• Co-signer(s) must sign Note for first, second and any other subordinate mortgages, but won’t take title to property

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• Restriction on business use of property less than or equal to 15% of the home.

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Recapture

• Only applies to Partners First Mortgage loans

• Will only be required if all three of the following events occur

– Borrower sells the home during the first nine years of ownership

– Borrower has a net gain (net profit) on the sale of the home

– Borrower experiences a substantial increase in their income (IRS formula will define)

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Partners ProgramAcquisition Cost Limits

Area Acquisition Cost LimitLos Alamos County $ 372,375Santa Fe County $360,000Taos County $280,125All other Areas of the State $265,158

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Partners Program Income Limits

• See Notice of Availability of Funds (NOFA) for county and family size

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MFA Guidelines

• Reasons for Sole and Separate

– One Spouse of a married couple is not able to enter into a contract (i.e. not of legal age), the spouse that is able to enter into a contract will be allowed to purchase the home as their Sole and Separate property.

• Proof that spouse is not of legal age must be provided

** All household income needs to be counted toward income eligibility **

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MFA Guidelines


– One spouse of a married couple has insufficient credit history (no credit score), which does not allow for the married couple to qualify for the mortgage jointly, the spouse with the credit score will be allowed to purchase the home as their Sole and Separate property.

• Proof of no credit history must be provided


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MFA Guidelines


– One spouse of a married couple does have a Social Security number and the other spouse does not have a Social Security number or has an Individual Tax Identification Number (ITIN), the spouse with the Social Security number will be allowed to purchase the home as their Sole and Separate property.

• Proof of no Social Security number or proof of ITIN must be provided


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MFA Guidelines


– One spouse of a married couple has a poor credit history (a credit score of less than 620), which does not allow for the married couple to qualify for the mortgage jointly, the spouse with the credit score above 620 will be allowed to purchase the home as their Sole and Separate property, with the following restrictions;

**All household income needs to be counted toward income eligibility **

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MFA Guidelines


A maximum debt-to-income (“DTI”) of 45% for the purchasing spouse, regardless of the automated underwriting system (“AUS”) approval criteria.

Both spouses need to provide proof that they both qualify for any and all First Time Homebuyer Requirements that might apply, including total household Income and prior homeownership.

Proof of poor credit history must be provided

**All household income needs to be counted toward income eligibility **

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MFA Guidelines

• Minimum borrower cash contribution

– MFA requires a minimum borrower cash contribution of $500.00 (typically shows as borrower down payment/earnest money)

– Funds must be from the borrower and cannot be derived from any type of gift, grant, pro-rated taxes or down payment

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Compliance Guidelines

• Must have pay stub within 30 days of

– Taking initial pre-qualifying application (Package #1)

– Submitting the pre-close package to MFA and Compliance Approval (Package #2)

• The date that should be within 30 days is the paid through date on the pay stub; not the date the check was issued.

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• Must have VOE within 90 days of:

– Taking initial pre-qualifying application (Package #1)

– Submitting the pre-close package to MFA (Package #2)

• Please use the FNMA VOE form

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Monthly gross income includes, but is not limited to:Monthly gross pay(wages, salary, tips, etc.)

Interest and dividends

Overtime SSIPart-time Disability IncomeBonuses Child SupportBusiness Income AlimonyVA Compensation Rental IncomeOther Income

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• Basic Income Calculation ExamplePaystub Dated September 15, 2014Paid Through Date September 10, 2014ALL YTD Income $18,000.00Number of Months YTD 8.33Monthly Income Calculation $18,000.00 divided by 8.33

months = $2,160.86 per monthAnnual Salary Calculation $2,160.86 multiplied by 12 =

$25,930.37 per year

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• Income is calculated by using the sum of ALL Household members

– **NEW ** Income Disclosure Letter

• Calculating income will be reviewed in further detail at the next session

– T28 MFA Income Qualifications

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• **NEW ** Credit Report is required (Package #1)

– Credit Report is required

– If Borrower does not have three years credit history then 3 years Tax Returns are required (Original signatures no longer required; MFA will accept copies)

– If Borrower(s) did not file tax returns, then must provide transcript from IRS

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• Verification of Rent is required (Package #1)

– **NEW ** 1 year rental history

If borrower has a mortgage on their credit report, then must provide a FULL three years rental history

– Please use the FNMA VOR form

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• Real Estate Purchase Agreement

– Full address of the property, full names of all sellers and buyers, total purchase price of property must be included. All names persons must sign; include the name and title whenever required

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• Real Estate Purchase Agreement (cont.)

– Chattel should not be included in the contract. Chattel is described as personal property such as refrigerator, washer and dryer. The stove usually comes with an existing home.

– If new construction and the appliances come with the home they should not be listed in the purchase agreement.

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• Appraisal

– Full address of the property must be on all appropriate pages

– Sales price must be in all appropriate spaces and pages

– The appraisal must not be more than four (4) months old when the file is submitted for compliance and from the date of closing.

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• Loan Application

– Pre-qualification (first application)

• Application will be the HFH Application taken when the borrower(s) initially are pre-qualified to participate in the HFH program

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– Preliminary Application (second application)

• Application will be taken on the FNMA form 1003 at the time it is determined that the borrower has obtained a property from HFH

• Required to be signed and dated by ALL parties

• There must be a separate 1003 for ALL loans involved in a transaction

• MUST comply with RESPA

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– Final Application (third application)

• Application will be typed on the FNMA form 1003

• Required to be signed and dated by ALL parties at closing

• There must be a separate 1003 for ALL loans involved in a transaction

• Must comply with RESPA

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• Partners Funding Worksheet

– Preliminary to be completed at the time of submitting the Compliance Package (Package #2) (This is an estimate of the loans included in this transaction and estimated purchase amount of Partners loan)

– Final to be completed at the time of submitting the Delivery Package (Package #3) (This is the actual loan amounts and purchase amount of Partners loan)

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• Good Faith Estimate (GFE) and Truth In Lending Statement (TIL)

– Must be generated and signed at the time of the Preliminary Application (second application) and Final Application (third application)

– Must comply with RESPA and re-disclose if required

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• Fees must be reflected on the initial GFE and TIL as well as any additional disclosures that are required

• Fees must also appear on the final HUD-1, in accordance with the applicable regulations

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• HUD-1 Settlement Statement

Buyer, seller and closing agent must fully execute the HUD-1

There must be a separate HUD-1 for each loan regarding this transaction.

All appropriate proceeds must be transferred properly from the subordinate financing HUD-1(s) to the first mortgage HUD-1

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Lien Positions

• Loans must be in the appropriate lien positions:

– Partners is in First Lien position

– If any subordinate financing is from other MFA Funds must be in appropriate lien positions before any other funding source

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Loan Packages

• Packages must be delivered according to the appropriate checklists in the order of the checklist and complete

• Affiliates to deliver all packages to the Habitat Program Administrator for review– Program Administrator will deliver all packages to MFA

after review

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Loan Packages

• Package #1

– Preliminary – pre-qualification package

• Information from the time the borrower was approved for a Habitat loan

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Loan Packages

• Package #2

– Compliance – pre-close package

• Sent to MFA prior to closing the loan. Loan CANNOT close until Affiliate received Compliance Approval with the income calculation and acquisition cost to be placed on the Affidavit of Purchaser

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Loan Packages

• Package #3

– Closed Loan Package

• Package is sent to MFA after the loan has closed and is reviewed for purchase

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Loan Packages

• Package #3

– First Time Homebuyer Documents

• Affidavit of Purchaser• Affidavit of Seller• Notice of Potential Recapture• Tax Exempt Financing Rider (attached to the first

[Partners] mortgage)

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Loan Packages

• Package #3

– Be sure to include the pre-close TIL along with the final TIL

• Loan must comply according to RESPA rules

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First Mortgage [Partners] Purchase

• Loan will be funded at 83.32% of out-standing (net) principal balance

Deduct two (2) months Escrows (Escrows to be collected at the time of closing on the HUD 1)

Deduct three (3) or six (6) months of Payment Reserves.

Determined by how many loans the Affiliate has sold to MFA

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Loan Packages

• Package #4

– Final Documents are due within 90 days of the date of purchase

• Please send the original Mortgage plus one (1) copy

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Questions?

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Thank you for your participation in MFA’s programs