FLORIDA HOUSING
FINANCE CORPORATION
MORTGAGE CREDIT CERTIFICATE
(MCC)
PROGRAM
LENDER TRAINING
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WHAT IS A MORTGAGE
CREDIT CERTIFICATE
A MCC creates a non-refundable federal income tax credit and is issued to first time homebuyers in conjunction with their mortgage.
A MCC allows a qualified homebuyer to write off a portion of the annual mortgage interest as a special tax credit, not to exceed $2,000, during each year that they occupy the home as their principal residence.
The portion or amount of the tax credit is equal to the mortgage credit rate of 50% (Florida Housing’s rate) multiplied by the annual mortgage interest paid.
This credit reduces the federal income taxes of the buyer and has the potential of saving the MCC holder thousands of dollars over the life of their mortgage loan.
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“TAX CREDIT" VS. “TAX DEDUCTION”
A “tax credit” entitles taxpayers to subtract the
amount of the credit from their total federal income
tax liability, receiving a dollar for dollar savings.
A “tax deduction” is subtracted from the adjusted
gross income before federal income taxes are
computed. Therefore, with a deduction, only a
percentage of the amount deducted is realized in
savings.
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2012 MORTGAGE CREDIT
CERTIFICATE PROGRAM
The program administration and
compliance will be handled by Florida
Housing staff- not by eHousing or US Bank
A MCC is an enhancement to YOUR first
mortgage, not Florida Housing’s as in the
Bond Program
All loans are retained and serviced or sold off
by the originating lender
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2012 MORTGAGE CREDIT
CERTIFICATE PROGRAM
Program Period Expiration – December 31, 2014 or until funds have been fully utilized. However, Florida Housing has resources available in case additional MCC allocation is needed.
MCC Credit Rate = 50% (.50 x amount of annual mortgage interest paid = Tax Credit Amount).
Credit is capped at a maximum of $2,000 annually.
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BORROWER
QUALIFICATION
Homebuyer may not have owned a home as their primary residence in the last three years (First Time Homebuyer-some exceptions apply).
Homebuyer’s household income and the purchase price must not exceed the maximum limits set by the Program.
Homebuyer must complete homebuyer education through a HUD approved counseling agency. Online education is acceptable if provided by a HUD approved counseling agency.
Homebuyer must occupy the home as their principal residence within 60 days of closing.
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BORROWER
QUALIFICATION
Homebuyer must apply for the MCC through a participating lender.
Homebuyer applies for the MCC at the same time he or she makes a formal application for a mortgage loan.
Funds will be available on a first-come first-served basis.
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HOW A HOMEBUYER USES
THE MCC
The borrower claims the tax credit with their annual tax return using IRS Form 8396
The credit may be claimed for the life of the loan as long as the home is their principal residence
The borrowers may, if they choose, adjust their W-4s to reflect the anticipated credit
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HOW A LENDER USES THE
MCC
Following Agency and/or Investor guidelines, the anticipated credit may be used to help qualify the borrower for a loan. If the tax credit is $2,000, the monthly adjustment is an additional $166.67 per month in qualifying income or is used to lower the housing expense depending upon loan type.
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MCC WORKFLOW
Step 1: Loan Officer qualifies borrower(s) for the MCC Program based on FTHB, income & purchase limit
requirements.
Step 2: Loan Officer collects 3 years' tax returns from
borrower/co-borrower or spouse, completes Income Calculation Worksheet, Tax
Credit Worksheet, & provides borrower(s) with Notice to
Buyer.
Step 3: Loan Officer reserves loan & prints Reservation Form for submission to Underwriting.
Step 4: Underwriter certifies loan upon review of 3 years' tax
returns, applicable income documentation, Income Calculation Worksheet
completed by LO, and sales contract.
Step 5: Closing generates applicable MCC Program
documentation; Borrower/Co-Borrower Closing Affidavit,
Seller Affidavit & confirms loan information is correct in online reservation system. Closer then submits closing documents to
closing agency/attorney.
Step 6: Post Closing submits closed loan file & all applicable MCC Program documents to FL Housing for issuance of MCC to
borrowers.
Step 7: FL Housing reviews loan files for eligibility & issues
actual mortgage credit certificate upon approval to borrower & forwards copy of
MCC to lender for record retention & reporting as
required by the IRS.
Step 8: FL Housing contacts lender if there are file
deficiencies & works with lenders to clear exceptions . Ineligible loans may result in
non-issuance of MCC to borrowers.
Step 9: Lender reports MCC recipients to the IRS annually
as required by the Internal Revenue Service.
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ELIGIBLE LOAN TYPES
Underwriting Options:
FHA
VA
USDA/RHS
Fannie Mae Conventional
Freddie Mac Conventional
Eligible Loan Terms:
All loan types must be 30 year fixed rate purchase money mortgage
– NO ARMs or Interest Only Loans
All loans must be originated in accordance with agency guidelines
Prevailing market rates—set by lending institution
Cannot be used with bond financing
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ELIGIBLE PROPERTY TYPES
ELIGIBLE PROPERTY TYPE – New or Existing Single Family Units Town homes Condos Manufactured Homes – Must meet FHA Standards
PROPERTIES NOT ALLOWED – Rental Homes Co-ops Investment Properties Recreational, Vacation, or Second Homes
Must be borrower’s primary residence. Homebuyers must not use more than 15% of the residence in a trade or business, including child care.
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TARGETED AREA
*Definition of “Targeted Area” – Census tract in which seventy percent (70%) or more of the families have an income which is eighty percent (80%) or less of the statewide median family income.
Properties within a Targeted Area-
First Time Homebuyer Requirement is waived – No tax returns required
Higher Income Limits – Up to 120 and 140% of AMI
Higher Purchase Price Limit
Refer to the 2012 MCC Program Guide for a list of the Qualified Census Tracts.
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IRS CODE REQUIREMENTS
FIRST TIME HOMEBUYER REQUIREMENT
Homebuyers using the program cannot have had a present ownership interest in any principal residence during the last three years. This will be determined by the following:
Past three years signed tax returns (2009, 2010 and 2011 tax returns are currently required). Review for mortgage interest deduction or any type of homeowner tax credit which may indicate homeownership.
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IRS CODE REQUIREMENTS
Signed tax returns are required from all borrowers who will be on title as well as non-borrowing spouses.
IRS transcripts will be accepted in lieu of the 1040 EZ, 1040 A, or 1040
If a borrower was not required to file federal tax returns in a particular year(s), an IRS printout stating “No Record Found” must be provided or other confirmation issued by the IRS confirming borrower was not required to file a return for that year.
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INCOME REQUIREMENTS
Definition of “Household Income” means all sources of revenue or income of the mortgagor (or mortgagors) and any other person 18 years of age or older, who is expected to permanently reside in the home being financed.
All forms of income including but not limited to: overtime, bonus, Social Security Income, child support, alimony, seasonal/part-time jobs, self-employment, interest and dividend income, and rental income.
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INCOME REQUIREMENTS
Income is annualized over a 12-month period (see Program Guide).
Spouses income must be verified and included, regardless if they are on the loan, mortgage, deed/title, or are legally separated (not recognized in Florida).
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IRS CODE REQUIREMENTS
RECAPTURE TAX Recapture Tax is a federal tax that some homeowners that utilize these programs may be required to pay from the net profit they receive from the sale of their homes. The homeowner pays recapture tax with their federal income tax for the year in which they sell their home. The maximum tax is the lesser of 6.25% of the original loan amount or 50% of the gain on the sale of the home. For Recapture Tax to apply, they must meet all of the following conditions:
Sell the home within nine years of purchase; Make a net profit on the home, after adjusting the value of the home
for any improvements or repairs the homebuyers have made, and after deducting all costs of sale, including sales commission, and;
The homebuyers household income must have increased at least 5% each year, above the applicable AMI used to qualify borrower.
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IRS CODE REQUIREMENTS
Fear of paying Recapture Tax should not stop a homebuyer from utilizing the programs because of the above. Also, if the homebuyer refinances their home at a later date to obtain a better interest rate, or to use the equity they have in their home, Recapture Tax is not triggered.
There is no way to predict the exact recapture tax liability, if any, since it is based upon the situation when the home is sold. At any time it will depend on the homebuyer’s income, family size, and the amount of the net profit the homebuyer realizes from the sale of their home.
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PROGRAM FEES AND
EXPENSES
MCC Issuance Fee: $500.00
Any party can pay the fee in the mortgage loan transaction, and it must be disclosed per RESPA guidelines. Florida Housing must be paid by a lender check or by a check from the title company or closing attorney with the closing package. Upon receipt of the fee and the required documentation, FHFC will issue an MCC to the borrower with a copy sent to the Lender
Program Participation Fee: $750.00 This one time lender fee is paid by the Lender and
submitted with the MCC Participation Agreement to FHFC.
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WIN-WIN
LENDER BENEFITS
• The lender offers the homebuyer the benefit of an annual tax credit.
• The lender can use its standard fixed rate mortgage products in
conjunction with the credit.
• The lender can charge normal and customary fees.
• The lender maintains its servicing rights to the loan.
• MCC product may increase the number of loans produced by the
lender.
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HOMEBUYER BENEFITS
• The MCC allows the homebuyer the benefit of a dollar-for-dollar reduction
of their tax bill in the event income taxes are owed.
• Any remaining mortgage interest can be used to reduce the amount of
taxable income.
• The MCC can be used to gross up income or qualifying ratios for borrower.
HOW TO ACCESS FLORIDA
HOUSING’S RESERVATION SYSTEM
After completion of online training you
will need to request system access via
email to:
Please allow 48-72 hours for us to
respond to your email as we anticipate
a large number of initial requests.
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HOW TO ACCESS FLORIDA
HOUSING’S RESERVATION SYSTEM
Please send us the following information:
First name: Last name:
Lending institution:
Position: (LO, Underwriter, Closer, etc.)
Date trained:
Address: City: State: Zip:
Phone number: Extension:
Email: This must be the same email address you
use when you create your system password!!!
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HOW TO ACCESS FHFC
RESERVATION SYSTEM
Once you receive confirmation from Florida
Housing that you can proceed, you will
access the system and create your password:
• Log in to: www.floridahousing.org/MCC
• Select “Lender Portal”
• Click: Don't have an account? Click here to register
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REGISTER
Please complete the following information to
register a new account:
Full Name: ____________________
Email Address: Must be the same as your
original email request to FL Housing
Telephone Number: _______________
Create a Password: _______________
Confirm Password: ________________
CLICK: Submit Registration Information
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SUCCESS !!!
New user account successfully created:
Login with email address and newly
created password
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LENDER PORTAL
You are now logged into the Florida
Housing Lender Portal where you can:
Create a new reservation or update an
existing one
Access reference documents including the
Lender Guide
Check status of existing reservation
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LENDER PORTAL
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CREATING A RESERVATION
Once you click “Create a new reservation” the
originator will complete the reservation form by
either typing in the information or by using the
dropdowns provided. When finished click “Save
Changes” (if not saved, you will need to start
reservation again when you return to this site).
If you are missing information or have entered an
incorrect format, the system will prompt you to
make the necessary correction before allowing you
to submit to your underwriter.
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CREATING A RESERVATION
Once corrections are made, click “save changes”
once again, go to the Queue status screen and
click “submit to underwriter once again.
Be sure to print out a “Notice to Buyers” for your
borrowers to sign (found in the “Reservation
Forms” section of the Queue Status pagr.
Once the underwriter has received the file, they are
the only ones who can make changes to the
reservation unless they return it to the originator to
make the changes. If correct the queue will show
“Complete” in the status column.
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WEBSITE NAVIGATION
QUEUE
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SAMPLE RESERVATION
PAGE
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UNDERWRITER
CERTIFICATION
Once the underwriter receives the notice in their underwriter
queue, the underwriter reviews the reservation information and
supporting documentation and certifies that the borrower meets
the requirements to receive a MCC. The certification form will
mostly auto-populate from the reservation page.
We ask underwriters to manually check off that they have
reviewed the most current 3 yrs. of tax returns for all parties
taking title to the home and for spouses (whether a party to the
loan or not). You will be reviewing the returns looking
specifically for any mortgage interest deductions which would
indicate homeownership. This would generally disqualify the
borrower from receiving a MCC.
Once completed, the underwriter clicks; “submit to closing”.
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SAMPLE UNDERWRITER
CERTIFICATION
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CLOSER
When the closer receives notification in
their queue, the closer will print out the
following docs to be included in the
closing package:
1) Seller Affidavit
2) Borrower/Lender Closing Affidavit
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SELLER AFFIDAVIT
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BORROWER CLOSING
AFFIDAVIT
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Post Closing-Shipping
Once closing package is returned to
lender, post closer/shipper should print a
MCC Compliance File Checklist found on
our reservation page under reference
documents.
The Compliance file should be assembled
in a legal size file folder with the
documents being Acco-Bound as outlined
on the checklist. 38
Post Closing-Shipping
The Compliance file should be sent overnight
or second day (with tracking) to Florida
Housing at:
Florida Housing Finance Corporation
Attn: MCC Compliance Group
227 North Bronough ST, Ste. 5000
Tallahassee, FL 32301 39
Post Closing-Shipping
The Compliance file will be reviewed by
Florida Housing staff upon receipt. If any
deficiencies are found the exceptions will be
transmitted back to the lender via the MCC
Reservation queue—all parties will be
notified. Once the exception(s) are cleared
Florida Housing will issue the MCC and
send to borrower with a copy sent to the
lender for their file.
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MCC Program Contacts
Charles “Chip” White Program Administrator
850-488-4197 x 1203
Sandy Gaver Program Manager
850-488-4197 x 1143
Natalyne Zanders Program Senior Analyst
850-488-4197 x 1118
Lynn Brady Program Analyst
850-488-4197 x 1198
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THE END
This presentation is for reference
purposes only. You should refer to
the Lender Guide for Program
eligibility requirements. See next
two slides for instructions for
lender portal access.
42
HOW TO ACCESS FLORIDA
HOUSING’S RESERVATION SYSTEM
After completion of online training you
will need to request system access via
email to:
Please allow 48-72 hours for us to
respond to your email as we anticipate
a large number of initial requests.
43
HOW TO ACCESS FLORIDA
HOUSING’S RESERVATION SYSTEM
Please send us the following information:
First name: Last name:
Lending institution:
Position: (LO, Underwriter, Closer, etc.)
Date trained:
Address: City: State: Zip:
Phone number: Extension:
Email: This must be the same email you use
when you create your system password!!!
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