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Slide 2 04/18/20141 New Mexico Mortgage Finance Authority Working with First-time Homebuyers and the MFA Programs Slide 3 04/18/20142 Instructor TERI BACA HOMEOWNERSHIP REPRESENTATIVE Slide 4 04/18/20143 Introduction Benefits of First Time Homebuyers to Realtors Benefits of MFA Programs for the First Time Homebuyer Slide 5 04/18/20144 Importance of the First-Time Homebuyer A nationwide survey shows that approximately 38% of total home sales were made to first time homebuyers * *2013 NAR Survey Slide 6 04/18/20145 Importance of the First-Time Homebuyer Knowledge of MFA programs helps to sell affordable homes Trade-up buyers Tell the world referrals Pay Property taxes; stable community Slide 7 04/18/20146 National Association of Realtors Profile of First Time Homebuyers - 2013 Median age of FTHB = 31 Median down payment = 5% Median Income - $67,400 Avg. Home Price - $170,000 Slide 8 National Association of Realtors Historically, first-time buyers are instrumental in housing recoveries because they help existing homeowners sell and make a trade. Lawrence Yun, NAR Chief Economist 04/18/20147 Slide 9 National Association of Realtors Typical First Time Homebuyer Sources of Down Payment 78% used savings * 27% used gift funds from relative or friend 7% borrowed from relative or friend 9% sold stocks or bonds 8% used 401k fund * 54% of those who saved their down payment said student loan debt delayed their savings 04/18/20148 Slide 10 MFA Borrower Stats 63% = single households Average household = 2 persons 51% minority Average borrower age = 34 44% Female/ 56% Male Average FICO score = 686 04/18/20149 Slide 11 10 Types of Tenants Tenants by Choice Tenants by Circumstance Slide 12 04/18/201411 Profile of Tenants by Choice Choose not to own a home Do not want to be tied down (military) Maintenance (home and yard) Unstable employment Slide 13 04/18/201412 Profile of Tenant by Circumstance Possess a strong desire to be homeowners Have little to no money saved Have moderate to high debt Believe home ownership is a good investment Most would like to buy ASAP Do not have a clue of what the process is and where to start Slide 14 04/18/201413 Homeownership Stats in New Mexico Statewide homeownership rate: 68.9% 2012 USCB Number of households: 763,844 Median household income: $44,886 MFA average income: $33,450 MFA 2013 MFA average sales price: $127,135 MFA average loan amount: $123,818 Slide 15 04/18/201414 How the MFA works Created by Legislature in 1975 Promote safe, sanitary, decent and affordable housing Receive volume cap from state Funded by mortgage revenue bonds MFA utilizes lenders across the state IRS tax code Slide 16 04/18/201415 First-Time Homebuyer Program Criteria First-time homebuyer Income limits Acquisition limits Single family residence Owner-occupied Slide 17 04/18/201416 First-Time Homebuyer All occupants must be first-time homebuyers 3 year rule Single Family detached, Condos, Town Homes, and permanently attached Manufactured Housing Leasehold land Slide 18 04/18/201417 Changes Waiver of FTHB requirement for Veterans (even if not utilizing VA loan) Minimum credit score of 620 required except for a manual underwrite with the HFA Preferred conventional product which has a minimum credit score of 660 (Lenders may have their own overlays) Slide 19 04/18/201418 Single Family Residence Single family dwelling One kitchen, no rental units Tax code restriction on business use cannot be more than 15% Slide 20 04/18/201419 Owner-Occupied Borrowers must occupy the property Non-occupying co- signers allowed* *Note: Lenders must follow special rules for Down Pmt & Debt/Income Ratios Slide 21 04/18/201420 Mortgage$aver First time buyers only Interest Rates Government- ** HFA Preferred Conventional- ** May be coupled with MFA DPA loan Can be used with FHA, VA, CONV and RHS loan products Borrowers pay 1+1 ** Due to frequency of rate changes, see MFA Website for current rates Slide 22 04/18/201421 Mortgage$aver Zero First-time buyer only Interest Rates Government- ** HFA Preferred Conventional- ** Borrower pays zero points 30 yr., fixed rate mortgage Can be coupled with DPA loan ** Due to frequency of rate changes, see MFA Website for current rates Slide 23 04/18/201422 Mortgage$aver Plus First-time buyer only Interest Rates Government- ** HFA Preferred Conventional- ** 3.5% assistance for down payment & closing costs. (Cannot have MFA 2 nd DPA) Borrower pays no points Priced slightly higher than Mortgage$aver & Mortgage$aver Zero Grant; never repaid Applied as credit on HUD I ** Due to frequency of rate changes, see MFA Website for current rates Slide 24 04/18/201423 Income Limits Albuquerque MSA (Bernalillo, Sandoval, Valencia & Torrance Counties) 1 or 2 person household: $ 62,900 3 + person household: $ 72,335 Slide 25 04/18/201424 Income Limits Santa Fe MSA & Los Alamos County 1 or 2 person household: $62,000 3 + person household: $71,300 Slide 26 04/18/201425 Income Limits Farmington MSA 1 or 2 person household: $55,300 3 + person household: $63,595 Slide 27 04/18/201426 Income Limits All Areas of the State (excluding Albuquerque, Farmington MSA and Santa Fe MSA) 1 or 2 person household: $ 54,200 3 + person household: $ 62,330 Slide 28 04/18/201427 Acquisition Cost Limits Los Alamos County New or Existing:$342,585 Slide 29 04/18/201428 Acquisition Cost Limits Santa Fe County New or Existing:$384,750 Slide 30 04/18/201429 Acquisition Cost Limits San Juan County New or Existing:$253,125 Slide 31 04/18/201430 Acquisition Cost Limits All other areas of the state (excluding Los Alamos, Santa Fe & San Juan Counties New or Existing:$243,945 Slide 32 TARGETED AREAS Maps are located on the MFA Website: www.housingnm.org/targeted-area-census-tracts Bernalillo Cibola Curry Doa Ana Luna McKinley Otero Sandoval Santa Fe Sierra Socorro 04/18/201431 Slide 33 04/18/201432 Mortgage Booster DPA Loan 1 st time buyer only Can include prepaids; max loan amount $8,000 30 year repayment; no prepayment penalty. Rate is 6.00% Lender must follow CLTV rules for applicable loan product Slide 34 04/18/201433 Payment$aver DPA Loan 0% rate - non-amortizing loan due on sale, transfer or refinance 8% of sales price, max of $8,000 DPA & closing costs ( excluding pre- paids) Program not available in City Limits of Albuquerque Slide 35 04/18/201434 Payment$aver Acquisition Cost Limits (Varies by county) Los Alamos County New or Existing:$380,650 **Please note that the Acquisition Cost Limits are higher than the Mortgage$aver Program, However, the Mortgage$aver Limits must be used ** Slide 36 04/18/201435 Payment$aver Acquisition Cost Limits (Varies by county) Santa Fe County New or Existing:$427,500 **Please note that the Acquisition Cost Limits are higher than the Mortgage$aver Program, However, the Mortgage$aver Limits must be used ** Slide 37 04/18/201436 Payment$aver Acquisition Cost Limits (Varies by county) San Juan County New or Existing:$281,250 **Please note that the Acquisition Cost Limits are higher than the Mortgage$aver Program, However, the Mortgage$aver Limits must be used ** Slide 38 04/18/201437 Payment$aver Acquisition Cost Limits (Varies by county) All other areas of the state (excluding Los Alamos, Santa Fe & San Juan Counties) New or Existing:$271,050 **Please note that the Acquisition Cost Limits are higher than the Mortgage$aver Program, However, the Mortgage$aver Limits must be used ** Slide 39 04/18/201438 Smart Choice Program What is the Smart Choice Homeownership Program? The basic premise of the Smart Choice Homeownership Program is that instead of using the Section 8 subsidy to help a family with rent, the subsidy is provided to help a first-time homeowner meet monthly mortgage expenses Slide 40 04/18/201439 s mart Choice Program (Contd) Must be approved by appropriate county agency or public housing authority Must be a first-time homebuyer Payment$aver income and acquisition cost limits apply MFA will provide a $15,000 subsidy for down payment & closing cost assistance for those who qualify Slide 41 04/18/201440 Mandatory Homebuyer Counseling Required for all borrowers Two types of counseling; depends on loan type (HUD vs. MFA) Lenders will coordinate with eHome America or local non-profit partner agency Counseling done prior to delivery of Compliance File to MFA Slide 42 04/18/201441 Mandatory Homebuyer Counseling All MFA Borrowers are required to take pre-purchase homebuyer counseling regardless of program type. Reference Lender Memo 12-03 dated February 22, 2012 and Clarifications Lender Memo 12-04 dated April 12, 2012 Slide 43 04/18/201442 Mandatory Homebuyer Counseling The pre-purchase homebuyer counseling will be either: Face to Face pre-purchase housing counseling provided in either a classroom or one-on-one setting by a HUD approved housing counseling agency Face to Face counseling must be used for the Payment$aver and Helping Hand Programs (the on- line counseling is not acceptable for these two programs) Borrowers preferring to go to a counselor instead of taking the class on-line is also acceptable OR Slide 44 04/18/201443 Mandatory Homebuyer Counseling Pre-purchase homebuyer counseling Through the eHome America on-line Housing counseling program Borrowers may take the course married, unmarried or jointly for one fee of $45 paid at the time of registration. When registering type both names so that the certificate of completion will print correctly. The $45 fee can be reimbursed at closing and included with the closing costs included in the second mortgage loan Slide 45 04/18/201444 Homebuyer Counseling Pre-purchase homebuyer counseling Link to the eHome America site is on the MFA Home Page Be sure borrower has chosen New Mexico as their counseling agency. Slide 46 04/18/201445 Recap of DPA products Mortgage$aver Plus - 3.5% GRANT No 2 nd allowed when borrower uses this program. 3.5% Grant is based on the FINAL loan amount on the HUD 1 Mortgage Booster Provides max loan amount of $8,000; loan repaid over 30 years, 6% rate Slide 47 04/18/201446 HUD Funded DPA Products Payment$aver Up to $8,000 soft second mortgage; (targeted to 70-80% or below AMI) (excludes pre- paids) Helping Hand - $8,000 soft second for ADA disabled (targeted to 80% or below AMI) (includes pre-paids) Smart Choice - $15,000 soft second for Sec. 8 voucher recipients(targeted to 70-80% or below AMI) (excludes pre-paids) All Products are due on sale, transfer or refinance of loan. Slide 48 04/18/201447 HERO Program Eligible Borrower(s): The HERO program is available only to households in which at least one person is a Teacher, Safety Worker, Health Care Worker or an Active Member of the Armed Forces. Definitions are as follows Slide 49 04/18/201448 HERO Program Teacher: One of the borrowers must be an employee of an accredited or state chartered private or public school; a certified teacher or administrator in an education agency; or an employee of a post- secondary level educational institution. Slide 50 04/18/201449 HERO Program Safety Worker: One of the borrowers must be an employee of a law enforcement agency or fire department administered by an agency or subdivision of a state or local government; or a sworn law enforcement officer responsible for crime prevention and detection, law enforcement, or criminal incarceration; or a sworn member of a fire department involved in the fire suppression or prevention, emergency medical response, hazardous materials response, or management or response to terrorism. Slide 51 04/18/201450 HERO Program Health Care Worker: One of the borrowers must be a certified, accredited, or licensed health care worker who is a medical resident or fellow; a nurse, nursing assistant, pharmacist, pharmacy technician, physicians assistant, or medical technician, technologist or therapist. Slide 52 04/18/201451 HERO Program Active Member of Armed Forces: One of the borrowers must be a current member of the United States Armed Forced (Active or Reserve). Slide 53 04/18/201452 HERO Program Eligible Borrower(s): The borrower does not have to be a first-time homebuyer (FTHB) under the HERO Program The borrower may not own any other Real Property Slide 54 04/18/201453 HERO Program Eligible Program Type: FHA ONLY Must be owner-occupied single family residence Slide 55 04/18/201454 HERO Program Interest Rate- ** 3.00% assistance for down payment & closing costs. (Cannot have MFA 2 nd DPA) Borrower pays no points Pricing subject to change based on market conditions, could change mid day Grant; never repaid Applied as credit on HUD I ** Due to frequency of rate changes, see MFA Website for current rates Slide 56 04/18/201455 HERO Program Tax Code Criteria: No Tax Code Criteria required for the HERO Program No Recapture requirement Tax Exempt Financing/VA Rider not required Seller and Purchaser Affidavits are not required Slide 57 04/18/201456 HERO Program Minimum borrower cash contribution MFA requires a minimum borrower cash contribution of $1,000.00 for the HERO Program. Funds must be from the borrower and cannot be derived from any type of gift, grant, pro-rated taxes or down payment. Slide 58 04/18/201457 HERO Program Minimum borrower cash contribution MFA requires the lender to provide proof of borrowers funds If the borrower contributes more than $1,000 to the transaction (i.e. Earnest Money, POC Appraisal Fee) the borrower can get those funds back at closing Slide 59 04/18/201458 HERO Program Homebuyer Counseling Required for first-time Homebuyers (FTHB) only Slide 60 04/18/201459 Income Limits Albuquerque MSA (Bernalillo, Sandoval, Valencia & Torrance Counties) $ 75,480 Slide 61 04/18/201460 Income Limits Santa Fe MSA and Los Alamos County $ 74,400 Slide 62 04/18/201461 Income Limits All other areas of the state $ 65,040 Slide 63 04/18/201462 Acquisition Cost Limits Los Alamos and Santa Fe County New or Existing:$342,585 Slide 64 04/18/201463 Acquisition Cost Limits All other areas of the state (excluding Los Alamos and Santa Fe Counties New or Existing:$243,945 Slide 65 04/18/201464 What is a Credit Score? A highly specialized score based on the information supplied within a single credit repository - Experian, TransUnion, or Equifax Relative degree of risk a potential borrower represents 230 different attributes Scores weigh and balance information more quickly and precisely than an underwriter. Slide 66 04/18/201465 Credit Score Ranges Credit Bureau Scores range from approximately 375 to 900 points, the higher the score the lower the risk of defaults. Score range of: ODDS (good to bad) below 6008 to 1 620-65926 to 1 660-67938 to 1 680-69955 to 1 700-719123 to 1 above 8001292 to 1 Slide 67 04/18/201466 Scoring Models Beacon at Equifax (formerly CBI) (1-800-685-1111orwww.equifax.com) Emperica at Trans Union (1-800-888-4213orwww.tuc.com) FICO at Experian (formerly TRW) (1-888-EXPERIANor www.experian.com) Slide 68 04/18/201467 How Credit Data Are Analyzed A primary indicator of risk is the severity, frequency & recency of any delinquencies. Past payment history Outstanding debt utilization History of credit establishment Inquiries-pursuit of new credit Type of credit Slide 69 04/18/201468 Sources of Non-Traditional Credit Rental Verification Utilities (gas, electric, water) Cell phone Auto Insurance Rent-to-own Slide 70 04/18/201469 Steps to the MFA Mortgage$aver Program Reservation Fees Compliance Closing Slide 71 04/18/201470 Reservation Reservations made by lender on MFA website Signed purchase agreement required MBS Mortgage Purchase Agreement issued by MFA Slide 72 04/18/201471 Reservation Loans must be purchased by Master Servicer no later than 60 days from the date of reservation Slide 73 04/18/201472 Fees No reservation fee Zero points on Mortgage Saver Plus, Mortgage Saver Zero and HERO! 1+1 on Mortgage Saver Normal and customary closing costs $100 Mortgage Booster loan origination fee Slide 74 04/18/201473 Fees Lender can request either a 15 day or a 30 day extension for the purchase of the loan. 15 day extension (0.1875% of the loan amount) 30 day extension (0.3750% of the loan amount) Only ONE extension is allowed The extension fee may be charged to the borrower Slide 75 04/18/201474 Compliance MFA must review and approve file prior to closing Lenders Underwriter reviews for tax code compliance 72-hour turn around (3 business days after receipt of file) Slide 76 04/18/201475 Documentation 3 years federal tax returns are not required if borrower has at least a 3 year history with the credit bureau! 1 year rental history Verification of Employment Affidavits and closing documents Slide 77 04/18/201476 Rental History 1 year of rental history Verification of Rent Credit report Letter from relative Cancelled checks Slide 78 04/18/201477 Verification of Empl & Income Monthly gross income includes, but is not limited to: Monthly gross pay (wages, salary, tips, etc.) Overtime Part-time Bonuses Business income Interest and dividends SSI Disability income Child support- Alimony(if documented) VA compensation Rental income Other income Slide 79 04/18/201478 Closing Package Mortgage$aver and HERO Programs Must be purchased by the Master Servicer no later than 60 days from reservation date Second Mortgage (DPA) Programs MFA Funds loan to Title Company at the time of closing and Lender ships file to MFA for QC review Slide 80 04/18/201479 Closing Documents Affidavits Seller and Buyer MFA will ensure compliance with income and acquisition limits. Must be notarized ** Not required for HERO Slide 81 04/18/201480 Closing Documents (Contd) Tax Exempt Financing Rider VA Rider to Standard Mortgage Notice of Potential Recapture ** Not required for HERO Slide 82 04/18/201481 Other MFA Programs Multi Family 542 (c) Build It HOME/Rental PRIMERO Multifamily/Rental LIHTC 501 (c) (3) Other Assistance Partners HOME WAP ESG HOPWA Continuum of Care/HUD Housing Counseling Program Slide 83 04/18/201482 Land Title Trust Fund Another resource for affordable housing is now available to Realtors and homebuyers statewide Slide 84 04/18/201483 Land Title Trust Fund Summary Legislature and title industry established the fund as renewable financial resource for affordable housing Funded by interest earned on certain title company escrow funds Can be used for loans or grants to eligible organizations Demonstrates statewide industry support of affordable housing initiatives Slide 85 04/18/201484 Support the Land Title Trust Fund Utilizing title companies that are participating in the fund Encouraging title companies to participate in this important housing initiative Slide 86 04/18/201485 The Fair Housing Act Fair housing opens doors with your help Slide 87 04/18/201486 Federal Protected Classes Race Color Religion Sex Disability Family Status (children under the age of 18) National Origin Slide 88 04/18/201487 Additional Protected Classes NEW MEXICO Ancestry Sexual Orientation Gender Identity Spousal Affiliation Slide 89 04/18/201488 What is discriminatory housing practice? Refusing to show a property Refusing to sell, rent, or to deal with a person Telling a person housing is not available when it is Advertising housing as being available to only certain people Denying a loan or offering different loan terms Harassing, coercing, intimidating, or interfering with the exercise of a persons fair housing rights Slide 90 04/18/201489 For more information contact: HUD 1-800-669-9777 US Department of Justice 1-202-514-4713 Your state or local civil/human rights organization Your attorney New Mexico Mortgage Finance Authority Supports Fair Housing Slide 91 04/18/201490 Recapture Tax IRS imposed tax Only applicable if 3 things happen: Sell home in 1st 9 years AND Realize a net gain on the sale AND Income exceeds threshold income * * Borrowers should seek advice from a qualified tax preparer Slide 92 04/18/201491 Any Questions??? Slide 93 04/18/201492 MFA Information Contact Us... www.housingnm.org All of MFAs forms available via web page Program Fact Sheets Newsletter Housing Services Directory Annual Report Homeownership Department at 505-843-6881 or 1-800-444-6880 Slide 94 04/18/201493 Thank you from the MFA Thank you from all of us at the MFA You have just completed 4 credit hours towards your continuing education Your credits will be uploaded to NM R.E.C.