procedural manual - ahfa · commitment fee: a percentage amount of the related mortgage loan, to be...

PROCEDURAL MANUALALABAMA HOUSING FINANCE AUTHORITY

Revised 01/17 •

CONTENTS

INTRODUCTION

SECTION I—DEFINITIONS .......................................................................................................................................................... 4

SECTION II—MORTGAGOR ELIGIBILITY EVALUATION ................................................................................................................ 6

A. IncomeRestrictions ..................................................................................................................................................... 6B. Occupancy ................................................................................................................................................................... 6C. ResidenceUsedasVacation,Seasonal,Rental,RecreationalorSecondHome .......................................................... 6D. LegalSeparation .......................................................................................................................................................... 6E. HomebuyerEducation ................................................................................................................................................. 6F. Credit Score Requirement ............................................................................................................................................ 7G. TotalDebt-to-IncomeRatio .......................................................................................................................................... 7H. AcceptableMIProviders .............................................................................................................................................. 7I. AUS Findings ................................................................................................................................................................ 7J. Tax Liens ....................................................................................................................................................................... 7K. FederalTaxReturnTranscripts ..................................................................................................................................... 7L. PreviousForeclosure .................................................................................................................................................... 8

SECTION III—LOAN ELIGIBILITY EVALUATION ............................................................................................................................ 8

A. PermittedEncumbrances ............................................................................................................................................ 8B. Types of Loans ............................................................................................................................................................. 8C. Amount of Mortgage Loan .......................................................................................................................................... 8D. New Mortgage Requirements ..................................................................................................................................... 8

SECTION IV—PROPERTY ELIGIBILITY EVALUATION .................................................................................................................... 8

A. EligibleLoanArea ........................................................................................................................................................ 8B. QualifyingResidences ................................................................................................................................................. 8C. Foreclosures ................................................................................................................................................................. 9D. AHFA Requirements for Repair Escrows ....................................................................................................................... 9

SECTION V—RESERVATION SECTION ......................................................................................................................................... 9

A. ReservationProcedures .............................................................................................................................................. 9B. Rate Commitment Form .............................................................................................................................................. 9C. ReservationDocumentDelivery ................................................................................................................................ 10D. ReservationExpirationDate ...................................................................................................................................... 10E. LockPolicy .................................................................................................................................................................. 10F. CancellationofReservation ....................................................................................................................................... 11G. TransferofReservation ............................................................................................................................................. 12

SECTION VI—LOAN PROCESSING AND UNDERWRITING PROCEDURES .................................................................................. 12

A. RequestforConditionalCommitmentPackage ........................................................................................................ 12B. RequestforConditionalCommitment ...................................................................................................................... 12

SECTION VII—INCOMEGUIDELINESFORSALARIEDANDSELF-EMPLOYEDMORTGAGORS ..................................................... 13

A. SalariedMortgagors .................................................................................................................................................. 13B. Self-EmployedMortgagors ........................................................................................................................................ 16C. Non-BorrowingSpouses,Partners,AllOtherOccupants18YearsorOlder ............................................................... 17D. CurrentlySeparatedorSeparatingSpouses ............................................................................................................... 17E. Co-Signer/Non-OccupantGuarantors ........................................................................................................................ 17

SECTION VIII—ISSUANCE OF THE CONDITIONAL COMMITMENT ............................................................................................ 18

Revised 01/17 •

SECTION IX—CLOSED LOAN PROCEDURES .............................................................................................................................. 18

A. ConditionalCommitment .......................................................................................................................................... 18B. VerificationsofIncome.............................................................................................................................................. 19C. SettlementStatementFees ....................................................................................................................................... 19

SECTION X—LOAN PURCHASES AND TRANSFER OF SERVICING RIGHTS ................................................................................. 19

A. ReviewoftheMortgageLoan ................................................................................................................................... 19B. PenaltiesWithheldfromFunding .............................................................................................................................. 19C. FundingoftheMortgageLoan .................................................................................................................................. 20D. FinalDocumentation ................................................................................................................................................. 20E. TransferofLoanServicingRightsandBenefits .......................................................................................................... 20

SECTION XI—MODIFICATIONS ................................................................................................................................................ 21

SECTION XII—ASSUMPTIONS .................................................................................................................................................. 21

SECTION XIII—DOWN PAYMENT ASSISTANCE ......................................................................................................................... 21

A. Reservations .............................................................................................................................................................. 21B. Eligibility .................................................................................................................................................................... 21C. Types of Loans ........................................................................................................................................................... 21D. CalculationofAssistanceAmount ............................................................................................................................. 22E. RequiredDocumentation .......................................................................................................................................... 22F. Term and Repayment ................................................................................................................................................ 22G. Commitment Periods ................................................................................................................................................ 22H. Issuance of Funds ...................................................................................................................................................... 22I. FeesinOrigination .................................................................................................................................................... 22J. PurchaseandServicing ............................................................................................................................................. 22K. Assumptions .............................................................................................................................................................. 22

SECTION XIV—DELEGATED EXAMINER OPTION ...................................................................................................................... 22

REQUIRED FORMS ................................................................................................................................................................... 24

Revised 01/17 •

INTRODUCTIONTheAlabamaHousingFinanceAuthority(theAuthority),isapubliccorporationandaninstrumentalityoftheState.ItwasorganizedpursuanttoTitle24,Chapter1AoftheCodeofAlabama,asrevised.TheAuthority,anon-profitorganization,wasestablishedasthehousingentityforthestatein1980andcurrentlyadministersseveralhousingprogramssuchastheFirstStepMortgageRevenueBondProgram,theMortgageCreditCertificateProgram,theStepUpProgram,theDownPaymentAssistanceProgram,theHabitatforHumanityLoanPurchaseProgram,theLow-IncomeHousingTaxCredit“LIHTC”andtheHOMEProgram,aswellasseveralspecialtyhousingprogramswithinthestateofAlabama.

Thelenderdeterminesifthemortgagor,loan,andpropertyarewithinguidelinesasstatedinSectionsII,III,andIVoftheStepUpProceduralManualbaseduponinformationobtained.ThelendermustexplaintheProgramanditsrequirementstothebuyer.

ThelenderreservesfundsandsendstotheAuthoritythereservationpackageasstatedinSectionVoftheStepUpProceduralManual.

ThelenderprocessesandunderwritestheloanasstatedinSectionsVIandVIIoftheStepUpProceduralManual.ThelendersendstotheAuthoritytheRequestforConditionalCommitmentpackagebeforeclosingasstatedinSectionVIoftheStepUpProceduralManual.UponapprovaloftheloanthelenderwillreceivefromtheAuthorityaconditionalcommitment.Thelendermaythenclosetheloanwiththeconditionslistedontheconditionalcommitment.ThelendermusthavetheloanapprovedbytheAuthorityandclosetheloanbeforethereservationoffundsexpires.

AftertheloanclosingthelendersendstotheAuthoritytheclosedloanpackageasstatedinSectionVIIIoftheStepUpProceduralManual.Uponreceiptandapprovaloftheclosedloanpackage,theAuthoritywillfundthemortgageloanasstatedinSectionIXoftheStepUpProceduralManual.

ThepurposeofthismanualistoprovidepertinentinformationandtoenhanceanycurrentguidelinesestablishedbyAuthorityfortheStepUpProgram.ApplicableProgramGuidelinesandtheOriginationandSaleAgreementsupersedethismanual.Pleaseutilizetheappropriate,applicabledocuments.TheAuthorityreservestherighttoupdateorrevisetheStepUpProceduralManualatanytime.

SECTION I—DEFINITIONS

Agreement: TheOriginationandSaleAgreementbetweentheOriginatorsandtheAuthority,andallamendmentsorsupplementswhereappropriate,theInvitation,theNoticeofAcceptance,andallformsorreportsprescribedbytheAuthority.

Appraised Value: Anappraisers’opinionofvaluebasedonregulationsandguidelinesestablishedbythemortgageindustry.

Authority: AlabamaHousingFinanceAuthority,apubliccorporationandinstrumentalityoftheStateorganizedpursuanttotheAct,oranysuccessortoitsduties.

Co-Signer: Apersonwhowilloccupythepropertybeingpurchasedandwhowillbesecondarilyliableforthemortgageloan.

Commitment Fee: Apercentageamountoftherelatedmortgageloan,tobepaidtotheAuthoritythroughaLenderatthetimeofReservationofFunds.

Conventional Mortgage:AMortgageLoanotherthananFHA-InsuredMortgageLoanoraMortgageLoanwithaVAGuarantyoraRuralDevelopmentGuaranty.

Eligible Mortgagor: ApersonintendingtopurchaseaprincipalresidencetobefinancedwithaStepUploan,whocanmeetallqualificationsasestablished.

Eligible Loan Area: TheentiregeographicalareaoftheStateofAlabama.

Revised 01/17 •

Equal Credit Opportunity Act (ECOA): Afederallawthatprohibitslendersfromdenyingmortgagesonthebasisoftheborrower’srace,color,religion,nationalorigin,age,sex,maritalstatus,orreceiptofincomefrompublicassistanceprograms.

Family Income: ThemeaninggiventosuchterminSectionIIofthisManual.

Fannie Mae: TheFederalNationalMortgageAssociation,oranysuccessorthereto.

Fee Simple: Thegreatestpossibleinterestapersoncanhaveinrealestate,includingtherighttodisposeofthepropertyorpassitontoone’sheirs.

FHA: TheFederalHousingAdministrationoftheDepartmentofHousingandUrbanDevelopmentoftheUnitedStatesofAmerica,oranysuccessorthereto.

Ginnie Mae: TheGovernmentNationalMortgageAssociation,aentirely-ownedcorporateinstrumentalityoftheUnitedStatesofAmericawithintheDepartmentofHousingandUrbanDevelopment,whosepowersareprescribedgenerallybyTitleIIIoftheNationalHousingActof1932,asamended.

Ground Rent: Theearningsofimprovedpropertyallocatedtothegrounditselfafterallowanceismadeforearningsoftheimprovements.Also,paymentfortheuseoflandinaccordancewiththetermsofagroundlease.

Guarantor: Apromisebyonepartytopaydebtorperformanobligationcontractedbyanotherintheeventthattheoriginalobligorfailstoperformascontracted.

Interest Held In Trust: Propertyheldintrustuntilfulfillmentofcertainconditionsaremet.

Joint Tenancy:Jointownershipbytwoormoreperson,givingeachtenantequalinterestandrightsintheproperty,includingtherightofsurvivorship.

Lease: Awrittendocumentcontainingtheconditionsunderwhichthepossessionanduseofrealand/orpersonalpropertyaregivenbytheownertoanotherforastatedperiodandforadatedconsideration.

Life Estate: Afreeholdestategivingabeneficiaryallpropertyrights,excepttherighttosell.Theestateisterminateduponthedeathofthebeneficiary.

Mortgage: TheinstrumentsecuringamortgageloanwhichcreatesalienonaResidencesubjectonlytoPermittedEncumbrances.

Mortgage Documents: ThedocumentsspecifiedfordeliverytotheAuthority.

Mortgage Loan: AnyloanevidencedbyaMortgageNotewhichissecuredbytherelatedMortgageforfinancingthepurchaseofaResidence.

Mortgage Note: Thepromissorynoteevidencingtheobligationtorepayamortgageloan,payabletotheorderofalender,executedbyamortgagortoevidenceobligationtorepaythemortgageloan.

Mortgagor: Thepurchaserofasingle-familyresidencewhoborrowsfundstoobtainaResidence.

New Construction: Single-Familyresidenceslessthanoneyearoldandneveroccupied.

Originators: LendinginstitutionsthatexecuteanAgreementwiththeAuthoritytoparticipateintheProgram.

Permitted Encumbrances: ThetitleencumbrancesonaResidencepermittedundertheProgramGuidelines.

Primary Wage Earner: Theoccupying,note-signingborrowerwhoreceivesthemostmonthlyincome.

Principal Residence: HousingwhichtheEligibleMortgagorintendstooccupyasaprimaryresidenceandwhichisnottobeusedinatradeorbusiness,orasaninvestmentproperty.

Profit and Loss: Astatementbyabusinessreflectingafinancialgainorlossforagivenperiod.

Revised 01/17 •

Program Guidelines: GuidelinesestablishedbytheAuthoritytoadministertheStepUpProgramandanyrevisions,amendmentsandmodificationsthereof.

Program Participation Fee: AfeetobesetbytheAuthorityforeachseries.

Rate Commitment: Aninterestrateguaranteedtotheborrowerforeither15daysor30daysfromtheloanreservationdate.

RD (Rural Development): AU.S.agencyformerlyknownasFarmersHomeAdministration.

RD Guaranty: AguarantyofamortgageloanbyRDundertheprovisionsofSubchapterIII,Chapter8A,Title42,U.S.CodeAnnotated.

Remainder Interest: Thepropertyremainderofanestateaftertheterminationofapriorestate;canhaveeitheravestedorcontingentinterest.

Reservation Expiration Date: Aperiodof30daysor15daysfromthereservationdate.

Reservation of Funds: ReservedfundsequaltothemortgageloanamountforanEligibleMortgagor.

Residence: Asingle-familyowner-occupieddwellingunitlocatedwithintheEligibleLoanArea,includingdetachedandattachedunits,condominiums,plannedunitdevelopmentsandmanufacturedhomeswhichhaveaminimumof400squarefeetoflivingspaceandaminimumwidthof102inchesandwhichisofakindcustomarilyusedatafixedlocation,andmeetingapplicablelenderrequirements.

Servicer: AlabamaHousingFinanceAuthority.

State: TheStateofAlabama.

Survivorship: Thelegalrightofthesurvivororpersonshavingjointinterestinpropertytotaketheinterestofthepersonwhoisdeceased.

Take-Out Loan: Anymortgageloanmadeforthepurposeofpayingaconstructionperiodloan,bridgeloanorsimilartemporaryinitialfinancingwhichqualifiesassuchpursuanttoSectionII,oftheStepUpProceduralManual.

Transfer Date: AdatetobedesignatedinaccordancewiththeOriginationPeriodasdefinedintheProgramGuidelinesofanyseries.TheTransferDateisestablishedbytheAuthority.

SECTION II—MORTGAGOR ELIGIBILITY EVALUATION

A. IncomeRestrictions.TheAuthorityhasadoptedasingleincomerestrictionfortheprogram.Theannualfamilyincomeofthemortgagormaynotexceed200%ofthestatewidemedianincome—or$97,300asofOctober21,2005.Annualfamilyincomewillbecalculatedtoincludetheincomeofanyoneover18yearsofagewhowillresideinthehome.TheAuthoritymayrevisetheincomeeligibilitycriteriainthefuture.

B. Occupancy. MortgagormustoccupytheresidenceastheirPrincipalResidencewithin60daysaftertheclosingandthereafter,astheirprincipalandpermanentresidence.

C. ResidenceUsedasVacation,Seasonal,Rental,RecreationalorSecondHome.TheMortgagorcannotpurchasetheresidenceforuseasarental,recreational,seasonal,vacationorsecondresidence.

D. LegalSeparation.Legalseparationagreementsarenotacceptabledocumentationinthedeterminationofahousehold’seligibility.LendersmusttreatseparatedoccupantsasmarriedandtheseparatedspousemustmeetallStepUpguidelinesasestablishedinSectionsII,III,&IVofthismanual.

E. HomebuyerEducation.AlleligiblemortgagorsmustcompleteanAHFA-approvedhomeownershipeducationcoursepriortoloanclosing.TheOriginatormustsubmitthecertificateofcompletionwiththeclosedloanfile.CertificatesofcompletionmustbedatedwithinoneyearofloanreservationtoAHFA.Acceptableformsofcounselingincludeface-

Revised 01/17 •

to-face,variousonlinecourses,andtheKeystoHomeownershipbookpublishedbytheNationalFoundationforCreditCounseling.

F. CreditScoreRequirement.UnderFHAStepUpandConventionalStepUp,theprimarywage-earning,occupyingborrowermusthaveamiddlecreditscoreofatleast620tobeeligiblefortheprogram.Inthecasetheprimarywage-earnerhasonlytwoscores,thelowerofthetwoscoresmustbeused.Inthecasetheprimarywage-earnerhasonlyonescoreordoesnothaveacreditscore,theborrowerwouldnotbeeligiblefortheprogram.Theprimarywage-earnerisdefinedastheoccupyingborrowerwiththehighestmonthlyincome.

AllotheroccupyingborrowersmustmeetFHAcreditscorerequirementsforFHAStepUp;orFannieMaeandtheapplicableMIcompanycreditscorerequirementsforConventionalStepUp.

G. TotalDebt-to-IncomeRatio.TheTDTIratiomaynotexceed45percentfortheStepUpprogram.Whenusingthe“HFAPreferred”conventionalproduct,thelenderwillalsoneedtoadheretocurrentFannieMaeTDTIrequirements,inadditiontotheapplicableMIcompanyTDTIrequirements.TDTIratioshouldbebasedonthelender’s qualifyingtotalincomeandtotaldebts.ToverifyTDTI,thefollowingdocumentationmustbesubmittedwiththecompliancepackage:

•DUFindingsorFHATotalScorecardFindings(FHA)

•DUFindingsonly(conventional)

AND

•HUDForm92900-LT(FHALoanUnderwritingandTransmittalSummary)forFHAloans

•1008forconventionalloans

Oncetheclosedfileisreceived,AHFA’sFundingandDeliveryDepartmentwillensurethefinalTDTImeetsprogramguidelinesbyreviewingthefinalAutomatedUnderwritingFindingsandfinalFHALoanUnderwritingandTransmittalSummary.Loansnotmeetingprogramrequirementswillnotbepurchased.

H. AcceptableMIProviders.Lendersmayusethefollowingproviders:1)Arch,2)Essent,3)Genworth,4)MGIC,or5)Radian.Thislistissubjecttochange.

I. AUSFindings.AHFAwillnotacceptmanualunderwritingforFHA/conventionalloanapprovals.WeacceptDUorFHATotalScorecardFindingsresultinginApprove/EligibleorAccept/AcceptthatisconsistentwithFHAguidelines,andDUFindingsresultinginApprove/Eligibleconsistentwithconventionalguidelines.DU/FHATotalScorecardsubmissionsforFHAloansresultinginaReferdecisionwillbeineligiblefordeliverytoAHFA.DUsubmissionsresultinginaReferdecisionwillbeineligiblefordeliverytoAHFA.

J. Tax Liens.Unpaid,unsatisfied,and/orunreleasedfederalorstatetaxliensarenotpermittedundertheStepUpProgram.Anyborrowerorspousewhowillholdtitlethathasataxliencannotutilizetheprogram.Wewillnotacceptrepaymentplansonfileswithanestablishedlien.Allliensmustbesatisfiedpriortoapprovalandevidencetosupportthereleaseincludedintheloanfile.

Furthermore,ifaborrowercurrentlyhasarepaymentplaninplacefortaxesowed(notyetataxlien)andshowsahistoryofprevioustaxlienspercreditdocuments,theywillnotbeeligiblefortheStepUpprogramaswell.

Asasidenote,shouldaborrowercurrentlyhavearepaymentplaninplacefortaxesowed(notataxlien)andthatcreditissueisreferencedinourcompliancepackage,forourpurposes,AHFAwillrequireverificationfromtheIRSthattheaccountiscurrent.Iftheaccountisnotcurrent,AHFAwillnotbeabletoapprovetheloanduetotheuncertaintythatataxliencouldbeimposedatanypoint-in-time.

K. FederalTaxReturnTranscripts.Thelendermustbeabletoprovidethemostrecentyear’sIRStaxtranscriptsforeachoccupyingborrowerandnon-borrower(s),18yearsofageandolder.Self-employedborrowersarestillrequiredtoprovidethemostrecenttwoyears’transcriptsandayear-to-dateprofitandlossstatement.AnylatefilersorIRSresponsesof“norecordoftaxreturnbeingfiled”wherereturnswereapplicablewillhavetobesatisfactorilyresolvedbeforetheloanwillbeeligibleforStepUp.ExtensionswillnotbeacceptedbyAHFA.

L. PreviousForeclosure.Anyborrowerwithapreviousforeclosureor“DeedinLieu”,byanyservicer,mustwaitthreeyears

Revised 01/17 •

beforeapplyingforfinancingthroughAHFA’shomeownershipprograms.Inaddition,theymusthaveestablishedtwonewcreditlines(asreportedonthecreditreport)followingtheforeclosuresalewithanacceptablepayhistory,andtheymusthavea660minimumcreditscore(middlescore).Non-traditionalcreditaccountswillnotbeacceptableasnewaccounts.ThelendermustreceiveanApprove/Eligibleunderwritingdecision.Manuallyunderwrittenloanswillnotbeeligiblefortheprogram.

SECTION III—LOAN ELIGIBILITY EVALUATION

A. PermittedEncumbrances.AllMortgageLoansmustbesecuredbyafirstlienonthefeesimpletitleorleaseholdestatetotheResidence.PermittedEncumbrancesarethoseliens,covenants,conditionsandrestrictions,rightsofway,easementsandothermattersofpublicrecordasofthedateoftherecordingoftherelatedMortgage.TheseencumbrancesmustbepermittedunderFHAandGinnieMae,asapplicable.

B. TypesofLoans.Inordertoqualifyundertheprogram,eachmortgageloanmustbeinsuredbyFHA(203(k)loansarenoteligibleforinclusionintheStepUpprogram)orFannieMae.

C. AmountofMortgageLoan.ThemaximumamountofanymortgageloanmaynotexceedtheapplicablerequirementsofFHAandGinnieMaeasoftheclosingdateofthemortgageloan.

D. NewMortgageRequirements.Norefinancingofanyoutstandingindebtednessshallbepermittedexceptwithregardtotake-outloans.Atake-outloanmaybemadetopermitanEligibleMortgagortofinancearesidencewhichqualifiesasanewlyconstructedresidenceundertheProgramGuidelines.

Ifwarrantedbythecircumstances,anEligibleMortgagorshallbeconsideredasbothaMortgagorandasellerwithrespecttotake-outloans.Anewlyconstructedresidenceisconsideredaresidencewhichhasnotpreviouslybeenoccupied,andislessthanoneyearold.

SECTION IV—PROPERTY ELIGIBILITY EVALUATION

A. EligibleLoanArea.TheEligibleLoanAreashallbetheentiregeographicboundariesoftheState.

B. QualifyingResidences.Subjecttocertainlimitationsdescribedbelow,allResidencesfinancedbytheStepUpProgrammustmeetthefollowing:

1. TheResidencesmustbepermanentlyaffixed,andconsidered“RealProperty”;

2. Detachedsingle-familyhouses,consistingofnomorethanonedwellingunit;

3. Attachedsingle-familyhousesortownhouses,unitswhicharemanufacturedhousinginsuredunderSection203(b)oftheNationalHousingActof1934,asamended;and

4. Unitsofa“condominium”orunitswithina“plannedunitdevelopment”assuchtermsaredefinedintheFannieMae guide.

5. ManufacturedhomesusingFHAfinancingmustmeetthefollowingrequirements:

(a) Themanufacturedhomemustbeattachedtotheland.

(b) Themanufacturedhomemustbeclassifiedandtaxedasrealestate.

(c) Inaccordancewiththejurisdictionalrequirements,themanufacturedhometitlehastobesurrendered/cancelled(copyofcancellationmustbeprovidedatthetimeofloanpurchasebyAHFA).

Nomorethan5%oftheReservationsofFundsmaybeused,withoutthewrittenauthorizationoftheAuthority,tooriginatemortgageloanswhichconstitutemanufacturedhousing.Allproductguidelinesconcerningtheeligibilityof

Revised 01/17 •

manufacturedhousingmustbemet.

C. Foreclosures.AllforeclosedpropertiesmusthaveaffirmativetitlecoveragewithnoexceptionforRightofRedemption.

D. AHFARequirementsforRepairEscrows.AHFAmustissuepriorapprovalforanyrepairescrow.ThelendermustfurnishAHFAwithacopyoftheescrowagreementandcopiesofworkbidestimates,alongwiththerequestforapproval.Inordertoqualifyforarepairescrow,thefollowingtermsmustbemetandincludedintheescrowagreement:

1. Repairescrowfundsmustbeheldanddisbursedbyeithertheoriginatinglenderortheclosingagent.

2. Repairescrowfundsmustbeequalto150%oftherepairestimateamount.

3. Repairsmustbecompletedwithin10daysafterclosing.

4. Nostructuralrepairsarepermitted.

5. AcopyofthefinalinspectionmustbeforwardedtoAHFAwithin5daysaftercompletion.

6. Themaximumrepairescrowamountis$10,000.

SECTION V—RESERVATION SECTION

A. ReservationProcedure.Subjecttothefundingrestrictionsandapplicablereservations,applicationsformortgageloanswillbeacceptedinallofthelendingofficesofeachParticipatingOriginatorintheState.Reservationswillbemadeonafirst-come,first-served,fairandequalbasisirrespectiveofrace,color,religion,nationalorigin,age,orsex.

Priortomakingareservationrequest,thelendermusthavetakenamortgageloanapplicationfromapotentialEligibleMortgagor.Themortgagorfurnishesthelenderanearnestmoneysalesagreementorconstructioncontractenteredintobytheseller/builderofaResidenceandtheEligibleMortgagor.LendersareresponsibleformakingapreliminarydeterminationtoseeifthepotentialEligibleMortgagorwillqualifyforthemortgageloan.TheProgramprocessingisdesignedtocomplimentthelender’sregularcreditandunderwritingprocedures.SincetheAuthorityisnotpartofthecreditapprovalprocess,noformalnoticeofrejectionoftheStepUploanisrequiredbytheAuthorityundertheEqualCreditOpportunityAct.TheAuthorityrecognizestheproceduralvariationsamongparticipatinglenders.

Thefollowingstepsareforthereservationandloanprocessingprocess:

1. TheEligibleMortgagorappliesformortgagefinancingfromaparticipatinglender.

2. ThelenderdeterminesiftheloanapplicantiseligiblefortheStepUpProgrambasedonpreliminaryinformationobtainedonannualincome.

3. Allmortgageloansmustbeoriginatedincompliancewith,andmustconformtotheprovisionsofallapplicablerules,regulationsandlimitationsofFHA,GinnieMae,andFannieMaeasappropriate.

EachlenderistoassignusernamesandpasswordstodesignatedemployeesresponsibleformakingrequestsforReservationsofFunds.AllreservationsmustbemadethroughtheAuthority’sonlinereservationsystem,https://lenders.ahfa.com. Telephonedrequestsforreservationswillbeacceptedifthewebsiteisunavailableformorethan24hours.Inthatevent,telephonereservationswillbeacceptedtemporarilyuntilthesiteresumesoperation.The Authority, at its sole discretion, may continue to accept reservation request in the manner specified even though the available funds may be fully reserved. Thesereservationrequestsmaybeeligibleforfundingonafirst-come,first-servedbasisunderanyfutureStepUpprograms.

B. Rate Commitment Form. BeginningonadatedesignatedbytheAuthority,theparticipatinglendersmayrequestReservationsofFundsonlineathttps://lenders.ahfa.com.ThelendercompletestheNewReservationFormwithintheonlinesystemtoreservefundsandsecurethecurrentinterestrate.Uponcompletionoftheform,theonlinesystemwillgenerateacommitmentnumberandexpirationdateofthecommitment.ThelenderthenprintstheReservationofFunds/RateCommitmentFormwithintheonlinesystemfortheborrower(s)’sexecution.ThelenderwillincludethisformandtheReservationAcceptanceinStep1oftheStepUppackage.

Revised 01/17 •

NOTE:Thelenderisresponsibleformakingthereservationinatimelymannerwhiletherateisstillavailable.TheStepUprateissubjecttochangewithmarketactivity.Undernocircumstancesshouldalenderpostponeordelaymakingareservation,duetothepossibilityofanincreaseintherate.AHFAcannothonoralender’sdisclosuretoaborrowerwithoutanactualloanreservationcommitmentissuedfromLenderOnLine.

(ProposedConstruction)ReservationofFundsCommitmentForm.WhiletheAuthorityofferstheAlabamaHomeBuyerInitiativeunderConventionalStepUp,lenderswillhavetheopportunitytoreservefundsonlyfora120-dayperiodonproposedconstruction.Thisoptionwillbeavailableforalimitedtime.ThelenderusesthesameNewReservationFormafterselectingtheproposedconstructionoptionwithintheonlinesystem.Uponcompletionoftheform,theonlinesystemwillgenerateacommitmentnumberandexpirationdateofthefunds.Thelenderthenprintsthe(ProposedConstruction)ReservationofFundsCommitmentFormwithintheonlinesystemfortheborrower(s)’sexecution.ThelenderwillincludethisformandtheReservationAcceptanceinStep1(a)oftheStepUppackage.

Thelenderwillthenberesponsibleforlockingtheinterestratebythecommitmentexpirationdate.ThiswillbeachievedbysubmittingtheRateLockRequestFormtotheAuthoritytolockthecurrentinterestrate.Oncethelenderreceivesconfirmationoftheratelock,theywillprinttheReservationofFunds/RateCommitmentFormtoconfirmtherateandrevisedcommitmentexpirationdate.Theborrower(s)willexecutetheform,anditwillbeincludedinStep1oftheStepUppackage.ThestandardStepUpnon-refundablecommitmentfeewillbedueatthistimewhichis0.50%fora15-dayreservationand0.75%fora30-dayreservation.

C. ReservationDocumentDelivery.UponcompletionoftheLoanReservationFormandreservationprocedure,eachlendermustfurnishtheAuthoritywiththeReservationPackageasstatedontheStepUpTransmittalChecklist(Step1),Appendix1.TheAuthoritymustreceivethesedocumentswithin72hours(threeworkingdays)ofreceiptofacommitmentnumber.FailuretodelivertherequesteddocumentationtotheAuthoritywithinthetimespecifiedmayresultincancellationoftheReservationofFundsandRateCommitment.Documentationshouldbemailedto7460HalcyonPointeDrive,Suite200,Montgomery,AL36117.

D. ReservationExpirationDate.Therewillbetwoavailable“lockin”commitments:

1. A30-dayreservationexpirationrequiringanon-refundablecommitmentfeeof0.75%ofthetotalloanamountforFHAandconventionalloans.

2. A15-dayreservationexpirationrequiringanon-refundablecommitmentfeeof0.50%ofthetotalloanamountforFHAandconventionalloans.

E. LockPolicy.ThepurposeofthispolicyistoenhancetheAuthority’sStepUpprogrambyofferingspecificrulesandguidelinesinareasthatwerepreviouslyhandledonacase-by-casebasis.

1. Extensions

(a) Fifteen-dayextensionsareavailableon15-dayor30-dayreservations.

(b) Thecostperextensionis0.25percent.

(c) Extensions must be requested on or before the reservation expiration date.

(d) Amaximumoftwoextensionsareavailableona15-dayreservation,oneona30-dayreservation.

(e) Theextensionfeemustbereceivedwithin72hoursoftheextensionrequestorthereservationwillexpireandtheextensionopportunitywillbelost.

2. Re-locks

(a) Re-locksareavailableatworst-casepricingforexpiredreservationsorreservationsthathavebeenextendedthemaximumamountoftimeallowed.

(b) Re-lockedloansmustpayanadditionalcommitmentfee.

(c) Reservationsthatarenotexpiredmaynotre-lock.

Revised 01/17 •

(d) Areservationto the borrowermustbeexpiredfor60daystogetcurrentmarket(betterrate).

(e) Reservationsthatarecancelledduetononpaymentofthecommitmentfeemayre-lockatworst-casepricing.

(f) Borrowersthatchangelendersmustre-lockduetosystemlimitations,butwillretaintheoriginalreservation.

(g) Borrowersthatchangeproperty,providedthattheloanamountiswithin10percentoftheoriginalloanamount,willretaintheoriginalreservation.

3. Expiredreservations

(a) Loansnotclosedonorbeforethereservationexpirationdatewillbechargeda0.25percentpenalty.

(b) Thepenaltywillbenettedfromtheloanfundingproceeds.

4. LateDelivery

(a) Loansthatarenotdeliveredinfundableformatwithin10daysofthecommitmentexpirationwillnotbepaidper-dieminterestfromthe10thdayuntilthefundingdate.

(b) Loansthatarenotdeliveredinfundableformatwithin10daysofthecommitmentexpirationwillbesubjecttoworst-casepricing.

(c) Loansthatarenotdeliveredinfundableformatwithin15daysofthecommitmentexpirationwillbesubjecttoanadditional0.25percentlatedeliverypenaltyforeach15dayspastthecommitmentexpiration.

(d) Loansthatarenotdeliveredinfundableformatwithin15daysofthecommitmentexpirationwillbesubjecttoafundingadjustmentequaltothegreaterofworst-casepricingoralatedeliverypenalty,asdetermined by AHFA.

(e) Latedeliverypenaltieswillbenettedfromtheloanfundingproceeds.

(f) Loansthatarenotdeliveredinfundableformatwithin30daysofthecommitmentexpirationwillnotbepurchasedandwillbereturnedtotheoriginatinglender.

5. Definitions

(a) Worst-casepricing:Thehigherofeithertheoriginallockrateorthecurrentmarketrateatthetimeoftherequestoratthetimeofthefunding,ifnorequestismade.Alternatively,iftheratecannotbechanged,thelowerofeithertheoriginallockpriceorcurrentmarketpriceatthetimeoftherequestoratthetimeofthefunding,ifnorequestismade.

(b) Days:Allreferencestodaysshallbecalendardays.

F. CancellationofReservation.Ifitisdeterminedthattheproposedmortgagordoesnotqualifyfortheprogram,thereservationwillbecanceled.IftheAuthoritydeterminesthatamortgageloanapplicationwastakenbyalenderafterthedatethelendersubmitteditsrequestforReservationofFunds,thereservationwillbecanceled.Thecommitmentfeeisnon-refundable.

WrittennotificationmustbesenttotheAuthoritywithin24hoursofreservationifitisdeterminedthatthemortgagorsdonotmeetStepUpProgramguidelines.Otherwise,thecommitmentfeewillhavetoberemittedtoAHFAregardless.

LenderswhorepeatedlymakeStepUpreservations,butfailtofollowthroughwiththeloanprocessanddonotremitthecommitmentfee,willbebilled.Furthercontinuedabusemayresultinexpulsionfromtheprogram.

G. TransferofReservation.TheAuthoritywillallowatransferofanyReservationofFundsfromoneEligibleMortgagortoanother,withAuthorityapproval.AnewRateCommitmentFormisrequired.TheAuthorityalsomayallowaloan

Revised 01/17 •

transferfromoneapprovedlendertoanother.TheCommitmentFeewillbetransferreduponapprovalbytheAuthority.ReservationsofFundsmaybetransferredonetimeonly.

TheReservationofFundsandRateCommitmentcommittedtoanEligibleMortgagormaybetransferredfromonepropertytoanotherwiththepriorapprovaloftheAuthority.Loan amount changes may affect your commitment. Notify the Authority of any changes immediately.

SECTION VI—LOAN PROCESSING & UNDERWRITING PROCEDURES

A. RequestforConditionalCommitmentPackage.TheOriginatorperformsthecustomaryverificationsforloanunderwritingasrequiredbytheOriginationandSaleAgreement.TheOriginatorcompletestheremainderofthemortgageapplicationprocessandsendstotheAuthoritytheRequestforConditionalCommitmentPackageasstatedontheTransmittalChecklist(Step2).Uponreceiptoftherequireddocumentation,thepackageisplacedinafirst-comefirstservedorderandprocessedwithin72hours(threebusinessdays)beginningthenextbusinessday.

Delegated Examiners only: TheOriginatorcompletestheremainderofthemortgageapplicationprocessandsendstotheDelegatedExaminertheRequestforConditionalCommitmentPackageasstatedontheDelegatedExaminers’TransmittalChecklist(Step2).Uponreceiptoftherequireddocumentation,theDelegatedExaminerwillreviewthepackageandmakeacompliancedetermination.TheDelegatedExaminerwille-mailadecisiontocompliance@ahfa.com usingtheDelegatedConditionalCommitmentform.

B. RequestforConditionalCommitment.TheRequestforConditionalCommitmentpackageandthereservationpackagewillbecomparedatthetimetheRequestforConditionalCommitmentpackageisreceived.

Delegated Examiners only: TheRequestforDelegatedConditionalCommitmentpackageandacopyofthereservationpackagewillbecomparedatthetimetheRequestforDelegatedConditionalCommitmentpackageisreceivedbytheDelegatedExaminer.

Thefollowingcriteriawillhelpensureaccuracyandconsistencyinfileswhenreviewed:

1. Commitment Fee. Thenon-refundablecommitmentfeeistobecheckedtoensuretheamountreservediscovered.Thecommitmentfeeshouldbepaidwithin72hoursofloanreservationandshouldagreewiththeamountshownontheRateCommitmentForm.Iftheamountsdonotagree,arequestinwritingforadecreaseorincreaseisneeded.(Amountsthatincreasewillrequireadditionalfundstocoverthecommitmentfee,andaresubjecttotheavailabilityoffunds.)SeeSectionX,Modifications,formoreinformation.

2. RequestforConditionalCommitment.TheTransmittalChecklistmustbecompletedthoroughly.TheAuthoritywillchecktheincomereflectedontheIncomeCalculationWorksheettoensurecompliancewithapplicablelimits.InformationprovidedontheworksheetshouldagreewiththeRateCommitmentForm,handwrittenapplicationandthesalescontract(name,propertystatus,etc.).

2. Delegated Conditional Commitment (Delegated Examiners only). TheDelegatedExaminers’TransmittalChecklistmustbecompletedthoroughly.TheDelegatedExaminerwillchecktheincometoensurecompliancewithapplicablelimits.InformationprovidedshouldagreewiththeRateCommitmentForm,handwrittenapplicationandthesalescontract(name,propertystatus,etc.).

3. Handwritten/InitialApplication.Thehandwritten/initialapplicationshouldbecompleted,signed,anddatedbythemortgagorsandlender.AllinformationshouldagreewithallapplicableareasoftheRateCommitmentFormandsalescontractasfollows:

(a) Namesofthemortgagors.

(b) Propertyinformationsection.

(c) Numberofdependents.

(d) Maritalstatus.

Revised 01/17 •

(e) Residencyhistory.

(f) Employment(incomepurposes).

(g) Otherincomesection(toensureallincomehasbeenincluded).

(h) Scheduleofrealestateownedsection(toestablishwhethertheborrowershaverentalproperty,ownsalotorpresentlyownsahome.Additionalincomemaybereceivedfromthesesources).

(i) Assetssectiontoensureallfundswhicharenotapartofclosingareincludedintheannualfamilyincome,i.e.,interestanddividendsearnings.

(j) Declarationsectionreflectsthemortgagorsintenttooccupythepropertyastheirprimaryprincipalresidence.

4. FullyExecutedSalesContract.AnychangesoraddendumstothesalescontractmustbereviewedbytheAuthoritypriortoclosing.

Changesinthesalespricewillrequireanamendedsalescontract.Allchangesaretobeinitialedbyallpartiesinvolved.

Allareasofthesalescontractaretobecompletedandproperlyexecutedbythemortgagorandsellerwhereapplicable.ThefollowingareasshouldbeconsistentwithallapplicableareasoftheRateCommitmentFormandhandwrittenapplication.

(a) Namesofthemortgagors.

(b) SalesPrice.

(c) Propertyaddress.

(d) LoanType:FHAorConventional.

(e) Realestateagency’snameandaddress.

(f) Numberofdaysforthesellertosurrenderpossessionis60daysorlessafterloanclosing.

(g) Signaturesofthesellersandbuyerswithdates.

SECTION VII—INCOME GUIDELINES FOR SALARIED & SELF-EMPLOYED MORTGAGORS

A. SalariedMortgagors

1. GrossMonthlyIncome.Grossmonthlyincomeincludes:grossmonthlypay,anyadditionalincomefromovertime,part-timeemployment,bonuses,dividends,interest,royalties,pensions,VeteransAdministration(VA)compensation,netrentalincome,etc.;andotherincome(suchasalimony,childsupport,publicassistance,sickpay,socialsecuritybenefits,unemploymentcompensation,incomereceivedfromtrusts,andincomereceivedfrombusinessactivitiesandinvestments,etc.)Overtimepayandbonusesaretobeprojectedinanamountconsistentwiththeearningshistoryofeachhouseholdmember.

Theincometobetakenintoaccountindeterminingthegrossmonthlyincomeistheincomeofanypersonwhoisexpectedtoliveintheresidencebeingfinanced.Theincomeofapersonwhoisunder18yearsofageandafull-timestudent(excludingthemortgagors)willnotbeincludedinthegrossmonthlyincome.

Personsover18yearsofagewhoarenotemployedanddonotintendtoseekemploymentwithinthenext12monthswillberequiredtosignastatementtosuch,seeAppendix5,EmploymentStatement.

2. VerificationsofEmployment.Whencheckingverificationsofemployment,allareasoftheverificationshould

Revised 01/17 •

becompletedandexecutedbytheemployer.Makesureallincomehasbeenderived(i.e.,raises,bonuses,commissions,carallowance,etc.).Verifythatpaystubsandverificationsareconsistentwithoneanother.Iftheydiffer,anexplanationmustbeprovided.Previousyearearnings(overtime,etc.)shouldbeconsistentwithcurrentyearearnings.Ifnot,itmaybenecessarytouseonlyyear-to-datefiguresdependingupontheincreasesthemortgagorhasreceived(overtime,raise,etc.).VerificationsofEmploymentmustbeupdatediftheyaremorethanfourmonthsoldatthetimeofclosing.

Whenreviewingverifications,watchforcertaintypesofemployment,i.e.,ministers,nurses,etc.,whichhaveunusualincome.Forexample,aminister’sincomeusuallyconsistsofabaseincome,utilitiesallowance,housingallowance,insuranceallowanceandcarallowance.Anurse’sincomeusuallyconsistsofabaseincome,overtime,andshiftdifferentialsfornightandweekendpay,whichinmostcasesdiffer.Beverycautiouswhencalculatingincomeforthesetypesofemploymenttoensureallincomehasbeenincludedinthecalculations.

Ifaletterisusedinlieuoftheoriginalverificationform,itmustcontainallitemscoveredintheoriginalverification.

3. Paystubs.Paystubscoveringthemostrecent30-dayperiodarerequiredonallloansandincomemustbeconsistentwiththeVerificationofEmploymentorW-2form.Paystubsmustbedatedwithin30daysofsubmission.

4. IncomeHistory.Iftheprospectivemortgagorhasadditionalearnedincomeandhasahistoryofsuchearnings,thentheincomeistobeincludedinthegrossmonthlyincome.Iftheincomeisearnedonlywithinthecurrentyearwithnopriorhistory,andwillnotcontinueafterclosingthenastatementfromtheemployerstatingtheearnedincome,(i.e.,overtime,etc.)willnotcontinueisrequired.

5. AlternativeDocumentation.AHFAallowsdocumentationfortheverificationofemploymentwiththefollowingrequirements:

(a) Paystubscoveringthemostrecent30-dayperiodwhichreflectthemortgagor’sname,SocialSecuritynumber,hourlyrateofpay,numberofhoursworkedperpayperiod,andyear-to-dateearnings.

(b) Copyofthepasttwo-years’W-2formsor1099whichincludesthemortgagor’sname,SocialSecuritynumber,companyname,andtotalcompensation,orastandardVerificationofEmployment(VOE)completedandsignedbytheemployer.

(c) Telephonecertification.

6. Averaging Income. Incomeisaveragedforovertime,commissions,andanyotherincome(exceptbaseearnings)overaperiodofnolessthan15months,butnomorethan27months.However,ifincomeoverbaseearningsisnotconsistentwithpastyears’earnings,ortheincomehistoryislessthan15months,theAuthoritywilldeterminetheperiodforincomecalculations.

7. OvertimeEarnings.Incomeearnedfromovertimewillbeincludediftheborrowerhasahistoryofsuchincomeortheincomewasearnedduringthecurrentyear.Theverificationofemploymentformfromtheemployermustexplainhowmuchovertimeisexpectedifany,andatwhatrateofpay.

8. Bonus. Thegrossamountofrecurringbonusesistobeincludedintheincomecalculationsif:

(a) Thebonusispartofacollectivebargainingagreementandmustbepaid;or

(b) Thebonusisincludedinthecomputationofincomebytheemployer;or

(c) Thereisahistoryofbonuses.

Ifthereisahistoryofbonusesbuttheapplicantdoesnotknowifabonusisplanned,nordoestheemployerdivulgeitsplansforabonusortheprojectedamount,anaverageofpastyears’bonuseswillbecalculatedasincome.AbonushistoryforStepUppurposesistobeconsideredforoneyearormore.

Thebonusisnottobeincludedintheannualfamilyincomeifthereisnohistoryofabonusandthebonusistotallydiscretionarybytheemployerandwagesoftheapplicantarethebasicsourceofincome.Thefilemustbedocumentedwithastatementfromtheemployer.

Revised 01/17 •

9. RentalPropertiesorContractIncome.Rentalincomeandcontractincomeisdeterminedbysubtractingthemonthlymortgagepaymentfromthegrossrentalincome.Depreciationshouldbeaddedbacktonetrentalincomewhereapplicable.Contractincome(incomederivedfromthemortgagorsellingpropertywithownerfinancing)istobeusedincalculatingannualfamilyincome.

Theuseofstandardunderwritingcriteriatodocumentthisincomeisacceptable(i.e.copiesofleases&mortgageverifications).

10. ChildSupport/Alimony.Childsupportandalimonymustbeincludedintheannualfamilyincomeandacopyofthefinaldivorcedecreeisrequired.Ifthemortgagorshavenotreceivedchildsupportoralimonyforthepast24monthsandtotheirknowledge,noneisforthcoming,astatementfromthemortgagorsisrequired,seeChildSupport Statement.

11. EducationGrants.Theportionoftheincomefromgrantsthatisusedforlivingexpensesistobeaddedtotheannualfamilyincomeifthisincomewillcontinueforthenext12months.

12. EmployeeBenefitsProgram.Somecompaniesofferanemployeebenefitsprogramdesignedtoletemployeescreatetheirowninsurancepackage.Themonthlyamountisusuallyshownseparatelyonthepaystub,yetincludedinyear-to-dateearnings.Thepaystubusuallyshowsthemonthlyamountactuallyspentonthisplan.Aletterfromtheemployerisneededtoverifytheactualcostofthisplanyear-to-date,inordertodeterminediftheemployeesreceivedfundsovertheactualcost.Inthiscasetheadditionalunusedportionwouldbeincludedintheannualfamilyincome.

Ifthemortgagorreceivesmonthlyincomefortheemployeebenefitprogramandelectsnottopurchasebenefitsofferedbytheprogram,thenthefullamountwillbeaddedtotheannualfamilyincome.

13. PermanentSeasonal,Seasonal&TemporaryIncome.Includeallpermanentseasonal,seasonalandtemporaryearningswhencalculatingannualfamilyincome.

14. SocialSecurity/VABenefits.SocialSecurityincomeshouldbeverifiedwithanAwardsletterobtainedfromtheSocialSecurityoffice.VAbenefitsshouldbeverifiedwithabenefitsletterfromtheVeteransAffairsOffice.

15. LumpSumPayments.Lumpsumpayments,includingbutnotlimitedto,inheritance,reenlistmentbonuses,anddisbursementsfrominsurancepoliciesdonothavetobeincludedintheannualfamilyincome.However,interestincomeoninvestmentsmustbeincludedandcalculatedatthecurrentpassbookratesovera12-monthperiod.Iftheincomeisreceivedinanyotherformotherthanlumpsum(i.e.monthlyorannual),thenitmustbetreatedaspermanentincomeandaddedtotheannualfamilyincome.

16. CapitalGains/Loss.Bothtaxableandnon-taxableportionsofcapitalgainsaretobeincludedasincomeifahistoryofthisincomeexists.Ifthetwo-yearaverageresultsfromthetaxreturnsisagain,thenitmustbeaddedtoannualfamilyincome(lossescannotbeusedtoreduceannualfamilyincome).

17. PensionandStockWithdrawals.Withdrawalsofprincipalfundsfrompensionorstocksourcesisnotconsideredincome.However,annuityorinterestpaymentsunderapensionorstockinvestmentprogramareconsideredincome.Verificationofbenefitswillberequired,i.e.,federaltaxreturns,statementofbenefits,etc.

18. Interest,DividendandRoyaltyIncome.Interest,dividendandroyaltyearningsareconsideredincome.Currentinterestanddividendearningsarecalculatedatcurrentpassbookratesovera12-monthperiod.Incomecalculationsforroyaltiesarecalculatedbynetearningsandinterest.EarningsfromIRAsand401Ksarenotincluded.Documentationwillberequiredtoverifythesessourcesofincome,i.e.,federaltaxreturns,statementofbenefitsandcontractagreementsforroyaltiesincome.

19. ExclusionfromGrossMonthlyIncome.Grossmonthlyincomeshallnotincludecasual,sporadicorirregulargifts;amountsthatarespecificallyfororinreimbursementofmedicalexpenses;inheritances;insurancepayments(includingpaymentsunderhealthandaccidentinsuranceandworkmen’scompensation,otherthanpaymentsinlieuofearnings);settlementforpersonalorpropertylosses;amountsofeducationscholarshipspaiddirectlytothestudentortheeducationalinstitutionandamountspaidbythegovernmenttoaveteranforuseinmeetingthecostsoftuition,fees,booksandequipment,butineithercaseonlytotheextentusedforsuchpurpose;specialpaytoactivemilitarypersonnelexposedtohostilefire;andfosterchildcarepayments.

Revised 01/17 •

B. Self-EmployedMortgagors

1. AnnualFamilyIncome.Theproceduretocalculateannualfamilyincomeforself-employedmortgagorsrequiresthefollowing:

(a) Depreciationanddepletionistobeaddedbacktotheadjustedgrossincome(AGI)onallself-employedmortgagors.

(b) Twoyears’currentsignedindividualfederalincometaxreturnswithallapplicableschedules.

(c) Year-to-dateProfit&Loss.Ifasoleproprietorship,P&Lcancomedirectlyfromsoleproprietorhimself/herself.Ifapartnership,S-corp.,orcorporation,P&Lmustbeprovidedbyanaccountant.

(d) U.S.PartnershipReturnsandU.S.CorporatefederalincometaxreturnswithallschedulesandW-2form(whereapplicable),withindividualfederalincometaxreturns(form1040)

Incomemustbeaveragedoveraperiodofnolessthan15months,butnomorethan27months.Self-EmployedmortgagorsmayneedtwoyearsoffederalincometaxreturnswithacurrentProfitandLoss.AfterApril15eachyear,themost“currentyear”federalincometaxreturnsarerequired.

2. SoleProprietorship.SoleProprietorshipisabusinessownedbyoneperson.IRSform1040—ScheduleCorScheduleC-EZisrequired.SoleProprietorshipincomeisdetailedonForm1040(ScheduleC)ofU.S.incometaxreturns.Thisformwilllistallincome,depreciation,anddepletionwhichisaddedbacktotheAGI.

3. GeneralPartnership.AGeneralPartnershipisabusinessownedbytwoormorepartners.Eachpartnerispersonallyliableforalldebtsofthebusiness.Eachpartnerisresponsibleforallotherpartners.Thefollowingdocumentsarerequired:

(a) IRSform1065—ScheduleK-1&ScheduleE,PartII.

(b) U.S.PartnershipReturnswithallapplicableschedules.

GeneralPartnershipsrequireincometobecalculatedonform1065ofU.S.PartnershipReturns,todeterminetheshareofnetincomedistributabletoeachpartner.ThisisreportedonScheduleK-1ofform1065andontheindividual’sScheduleE,PartII;thisamountisincludedintheAGIonform1040.Note:Thetotaldepreciationanddepletionwillbedeterminedbythenumberofthepartners,andshouldbedividedtodeterminewhatpercentageortotaldollaramounttobeaddedbackforeachpartner.

4. LimitedPartnerships.LimitedPartnershipsareusuallyformedforinvestingmoney.Limitedpartnersoftentakealossontheirinvestment,whichreducestheirtaxableincome.Liabilityislimitedtotheamountinvested.Thefollowingdocumentsarerequired:

(a) IRSform1065—ScheduleK-1&ScheduleE,PartII.

(b) U.S.PartnershipReturnswithallapplicableschedules.

LimitedPartnershipsrequireincometobetakenfromScheduleK-1(form1065),andtheindividual’sScheduleE,PartII;thisamountisincludedintheAGIonform1040.

5. S-Corp.Usuallyasmallstart-upbusinessrequiringthefollowingdocumentation:

(a) IRSforms1120/1120S—ScheduleK-1,ScheduleE,II.

(b) VerificationofW-2earnings.

SCorporation’sincomeisdetailedonform1120S(USfederalincometaxreturnforanSCorporation).ScheduleK-1willlistborrower’spercentageofownershipandordinaryincome,depreciationanddepletionfromtheSCorporation(thisinformationistransferredtoScheduleE,SectionIIoftheindividualtaxreturns).Thisincomemustbeproportionatelyaddedbackasdeterminedbythepercentageofownershiptotheordinaryincomesincedepreciationanddepletionareactuallynon-cashexpenses.Theprimarysourceofincomeforanownercomes

Revised 01/17 •

fromW-2wages,whichmustbeincludedinearningsinadditiontocorporateearnings.

6. Corporation.ACorporationrequiresastatecharterandisaseparatelegalentityfromitsowners(stockholders).Thecorporation’sprofits(retainedearnings)areputbackintothebusinessoraredistributedtostockholdersintheformofdividends.Stockholdersarenotresponsibleforthedebtsofthecorporation.Thefollowingdocumentationisrequiredtodetermineeligibility:

(a) U.S.CorporationIncomeTaxReturns,form1120&ScheduleL,(ifapplicable).

(b) W-2form.

CorporationsrequireincometobetakenfromtheIRSform1120,andScheduleLwillshowthecurrentyearcorporatebalancesheet.IncometotheofficersandstockholdersisreportedbyW-2formsandreflectedontheirindividualform1040.

Dividendearningsarereportedon1099formsandreflectedontheirindividualreturns.

C. Non-BorrowingSpouses,Partners,AllOtherOccupants18YearsorOlder

AHFAprogramsrequiretheincometobedocumentedforthetotalhousehold.Totalhouseholdincomeisdefinedastheindividuals18yearsofageorolderwhointendtooccupythepropertywithinthenext12calendarmonths,eveniftheyarenotapartytotheloan.

DocumentationrequiredforsubmissioninStep2:

1. SignedNon-BorrowerStatement

2. Eitherfullincomeverificationoraltdocincomeverificationasrequiredforallsalariedorself-employedborrowers,orasignedEmployment/IncomeStatement,iftheoccupantdoesnothaveANYsourceofincome.

3. DocumentationofSocialSecuritybenefits,pensions,annuities,ifapplicable

4. Most recent year’s IRS tax return transcripts

D. CurrentlySeparatedorSeparatingSpouses

Allseparatedspouses’incomedocumentationmustalsobesubmittedtoAHFAcomplianceinStep2.Thisisregardlessofwhethertheseparatedspouseisapartytotheloan,orevenintendstooccupytheproperty.TheStateofAlabama,forAHFApurposes,doesnotrecognize“separated.”Thepartiesareconsideredeithermarriedordivorced.

DocumentationrequiredforsubmissioninStep2:

1. SignedNon-BorrowerStatement

2. Fullincomedocumentationoraltdocdocumentation

3. SeparationAgreement,includinganyPropertySettlementAgreement

4. Most recent year’s IRS tax return transcripts

E. Co-Signer/Non-OccupantGuarantors

Co-Signer/Non-OccupantsandGuarantorsareallowed,providedthatthefollowingconditionsaremet:

1. TheCo-Signer/Non-OccupantorGuarantorisactinginsuchacapacitysolelyforthepurposesofprovidingadditionalsecurityforthemortgageloan,andwillnottaketitletothepropertyorbeapurchaseronthesalescontract.

Revised 01/17 •

2. Theprimaryoccupyingborrower(s)mustbeabletomeetaminimumof40percentofthePITIbyverifiableanddocumentedincome,ORmusthavedocumentedincomerepresentingfull-timeemploymentatnolessthan30hoursperweek.

3. TheCo-Signer/Non-OccupantorGuarantorwillnotoccupytheresidenceashisprimary/permanentresidence.

4. TheCo-Signer/Non-OccupantorGuarantorisarelativeofthemortgagor.

5. TheCo-Signer/Non-OccupantorGuarantorispermittedbyapplicableFHAandGinnieMaeguidelines.

6. TheCo-Signer/Non-OccupantorGuarantorwillberequiredtosignastatementcertifyingtotheaboveconditions(seeAppendix6,Co-Signer/Non-OccupantStatement).Taxreturnsandincomeverificationsarenotapplicable.TheseCo-Signer/Non-OccupantsorGuarantorswillbetreatedasnon-occupantCo-Signersforqualifyingpurposes.

Pleasenote:ForallpartiessigningtheEmployment/IncomeStatement,AHFAwithholdstherighttorequiredocumentationfromtheIRSsupportingthesignedstatement.

SECTION VIII—ISSUANCE OF THE CONDITIONAL COMMITMENT

Pleasenote:LendersareresponsibleformonitoringthestatusoftheirloansonLenderOnline,whichincludescheckingforthepostingofconditionalcommitmentsasshownbelow.

Delegated Examiners only: TheDelegatedExaminermustreviewthecompliancepackagepriortoissuingtheDelegatedConditionalCommitment.Oncethepackagehasbeenreviewedandapproved,theDelegatedExaminerisrequiredtoissuetheDelegatedConditionalCommitmentande-mailtheformtotheAuthorityatcompliance@ahfa.comorfaxtheformto(334)244-9213.FailuretocomplywiththisprocessmayresultinremovaloftheOriginator’sDelegatedauthority.

Revised 01/17 •

OriginatingbranchesmayviewloanconditionsonLenderOnline.

SECTION IX—CLOSED LOAN PROCEDURES

A. ConditionalCommitment.UponissuanceoftheConditionalCommitmentaspostedontheLoanStatusscreen,thelendermayclosetheloaninaccordancetotheconditionsstatedontheConditionalCommitment.TheloanistoclosebeforethereservationexpirationdatestatedontheConditionalCommitment.Themortgagor,address,interestrate,loanamount,andtermofloanmustagreewithallclosingdocuments.ChangesoftheseitemsaretobeapprovedbytheAuthoritybeforeclosing.Failuretodosocouldresultinrejectionoftheloan.

Delegated Examiners only: UponissuanceoftheDelegatedConditionalCommitmentaspostedontheLoanStatusscreen,thelendermayclosetheloaninaccordancetotheconditionsstatedontheDelegatedConditionalCommitment.TheloanistoclosebeforethereservationexpirationdatestatedontheDelegatedConditionalCommitment.Themortgagor,address,interestrate,loanamount,andtermofloanmustagreewithallclosingdocuments.ChangesoftheseitemsaretobeapprovedbytheAuthoritybeforeclosing.Failuretodosocouldresultinrejectionoftheloan.

B. VerificationsofCreditDocuments.Allverificationsshouldbelessthanthreemonths(90days)oldatthetimeofclosingorcurrentinformationwillberequired.Creditdocumentsmorethan90daysolduponsubmissionoftheclosedloanpackagecouldresultinrejectionoftheloan.

C. SettlementStatementFees.Inconnectionwitheachmortgageloan,alendermaychargeandcollectfromanEligibleMortgagororselleratclosing,reasonableandcustomarycharges.Alllendersmustchargea1%originationfee.Otherchargesmaynotexceedtheusualandreasonable“settlementandfinancingcost”thatarecustomaryasfollows:

1. “SettlementCosts”includetitleandtransfercosts,titleinsurance,surveyfeesandothersimilarcosts;and

2. “Financingcosts”includecreditreportfees,legalfees,appraisalexpenses,pointswhicharepaidbytheborrowers,orothercostsoffinancingtheResidence.

SECTION X—LOAN PURCHASES AND TRANSFER OF SERVICING RIGHTS

A. ReviewoftheMortgageLoan.TheclosedmortgageloanpackageistobereceivedbyAlabamaHousingFinanceAuthority(AHFA),within10daysofloanclosing.

1. LendersmustchecktheclosedloanpackagetoconfirmallitemslistedontheFundingChecklistareincludedinthepackageLoanswillnotbefundedifanyoftheitemsonthechecklistaremissingorincorrect.

2. AllloanspurchasedbyAHFAwillrequiremandatoryregistrationwithMERS.Noassignmentswillbeacceptedforfirstorsecondmortgages.LendersmusttransferallapplicablerightsinMERStoAHFAimmediatelyafterpurchase.

Uponcompletionoftheclosedloanfilecompliancereview,themortgageloan(s)willbefundedifthefileiscompleteandisincompliancewithallrequirements.Closedloanpackageswillnotbefundeduntilallrequiredfundabledocumentationhasbeenreceivedandallcomplianceissuescleared.

B. PenaltiesWithheldFromFunding.Lendershave10daysfromclosingtodeliverthecompleteclosedloanpackagetoAHFA.Aloanisconsideredtobeinafundableconditionwhenacompleteclosedloanpackageisdeliveredwithouterrorsormissingdocuments.Also,loanswithdelinquentpaymentswillnotbepurchased.Lenderswillhave40daysfromthedateofclosingtocleartheloanexceptionwithnopenalty.Iftheloanisnotcleareduntil41daysfromthedateofclosing,thelenderwillbechargedalatedeliveryfeeof50basispoints(0.50%)oftheprincipalpurchased.Ifthefileisnotclearedbythe71stdayfromthedateofclosing,originalNoteswillbereturnedtothelenderandtheloan(s)willnotbepurchased.Thissectiondoesnotoverrideanyapplicablelockexpirationperiod.ExtensionfeesmayberequiredbyAHFAiftheloanisnotfundedbytheapplicableexpirationdate.Theamountsofallfeesandpenaltiesaresubjecttochange.PleaserefertothecurrentscheduleofpenaltiesandfeeslocatedintheBulletinBoardSectionoftheLenderOnlineportalathttps://lenders.ahfa.com/Bin/Display.exe/ShowSectionforthemostcurrentinformation.

Revised 01/17 •

C. FundingoftheMortgageLoan.AHFAwillissueanACHorwireonsingleandmultiplefundingseachWednesdayandFridayforeachlender.Abreakdownofthemultiplelender’sfundingswillbeincludedwiththeACHorwire.AnydiscrepanciesshouldbedirectedtotheFundingandDeliveryDepartment.OnlyonesetofACH/wiringinstructionswillbeacceptedfromeachlender.Lendersareallowedonechangetothewiringinstructionspercalendaryear.SubsequentchangestoACH/wiringinstructionswillresultina$500feepertransaction.

LendersareresponsibleforservicingtheloanuntilpurchasedbyAHFAtoincludethepaymentofallrequiredescrowdisbursementsforeachloanduringtheperiodfromclosingtopurchase.

Ingeneral,fundableclosedmortgageloanpackagesreceivedbythecloseofthebusinessdayonMondayofeachweekwillbefundedonFridayandthosereceivedbythecloseofbusinessonThursdaywillbefundedonWednesdayofthenextweekonceapprovedbyAHFA.

Thefundingamountforbothfirstandsecondmortgageswillconsistof:

1. Scheduledunpaidprincipalbalance

2. ServicingReleasePremiumpertheProgramGuidelines(firstmortgagesonly)

3. Interestfromtheclosingdatethroughthepurchasedateorinterestfromthelastpaidinstallmentdatetopurchasedateattheloan’sperdiemrate

Amountstobedeductedfromfundingofbothfirstandsecondmortgageswillconsistof:

1. PenaltiesorfeesassessedinSectionX,BorC

2. Floodnotificationtransferfeeof$10(notrequiredforfloodcertificationfromCoreLogic).

3. Prepaidinterest(Loanspurchasedbythe10thofthemonthpriortothefirstpaymentduedateonly).

4. Prepaidescrow(unlessafterfirstpayment)orcurrentamortizedescrowbalanceontheloanlessanddisbursements

5. Taxservicefeeof$65

6. LoanLevelPriceAdjustments(FannieMaeStandardloansonly).

7. Wirefeeof$20(pertransaction(ifapplicable)

D. FinalDocumentation.ThelenderistosubmitthefinalmortgageloandocumentationconsistingofthefollowingoriginaldocumentstoAHFAwithin120daysofclosing:

• Recorded First Mortgage

• TitlePolicy

• MortgageInsurancedocumentation(FHAMortgageInsuranceCertificate,PMICertificateofCoverage,LoanGuarantyCertificate)

• RecordedSecondMortgage(ifapplicable)

E. TransferofLoanServicingRightsandBenefits.TheoriginatinglenderretainstheloanservicingrightsandbenefitsuntilAHFApurchasestheloan.Theoriginatinglenderwillperformallservicingdutiesuntilthattime.ServicingandbenefitsrightstransfertoAHFAatthetimeofloanpurchase.Lenderwillbesentareminderalongwiththepurchasepaymentadvicetosendouttheirgoodbyelettertotheborrower.AHFAwillsendtheborroweraNoticeofSale,AssignmentorTransferandtwotemporarypaymentcouponsatthetimeofloanpurchase.(ThefirstpaymentduetoAHFAwillbedeterminedbaseduponwhentheNoticeofSale,AssignmentorTransferissent.)Iftheloanispurchased(purchasedate)onorbeforethe10thofthemonth,thefirstpaymentduetoAHFAwillbethenextscheduledmonthlypaymentduedate.Afterthe10th,theeffectivedatewillrolltothefollowingscheduledmonthlypaymentduedate.ThelendermusttransfertheloantoAHFAthroughtheMERSsystemimmediatelyafterpurchase.

Revised 01/17 •

Examples:

• Aloanthatclosedon06/02/16isreceivedinouroffice06/8/16andisbeingfundedon06/10/16.Thisloanwillbepurchasedattheoriginalnoteamountwithnolatedeliverypenalty.

• Aloanthatclosedon06/24/16isnotreceivedinourofficeuntil7/28/16andisreadytobefundedon08/11/16.Theinitialpaymentonthisloanisdueon08/01/16.Sincethisloanisbeingpurchasedafterthe10thofthemonth,theloanwillbepurchasedeffectivewiththepaymentscheduledfor10/01/16.Thelenderwouldbechargedalatedeliveryfeeof50basispoints(0.50%)oftheprincipalpurchased.

SECTION XI—MODIFICATIONS

Itisthelender’sresponsibilitytonotifytheAuthorityofanymodifications.Expirationdates,penaltiesandextensionsareaddressedinSectionVI.

1. MortgageDecrease.MortgageamountdecreaseswillrequireapprovalbytheAuthority.

2. MortgageIncrease.MortgageamountincreaseswillrequireapprovalbytheAuthorityandwillbesubjecttotheavailabilityoffunds.

3. PropertyAddress.PropertyaddresschangesrequireapprovaloftheAuthority.

4. Marriage.Ifthemortgagormarriespriortoloanclosing,thespouse’sincomewillbeincludedinthetotalannualfamilyincome.ThelendermustobtainthisinformationpriortoclosingandsubmitthesedocumentstotheAuthority.Theannualfamilyincomemaynotexceedtheincomelimitation.ThespousewillalsohavetomeetallStepUprequirementsasestablishedinSectionII,IIIandIVofthismanual.

SECTION XII—ASSUMPTIONS

AssumptionloansrequirethesamequalifyingprocessasthecurrentStepUpProgramGuidelines(refertoSectionII,IIIandIVoftheStepUpmanual).IncomeguidelinesarethemostcurrentincomeguidelinesprovidedbytheAuthority.Investorguidelinesmustbefollowed.

The down payment assistance second mortgage is not assumable.

SECTION XIII—DOWN PAYMENT ASSISTANCE

Thepurposeofthisprogramistoprovidedownpaymentandentrycostassistancetohomebuyerswithlowtomoderateincomesandminimalliquidassets.DownpaymentassistanceisusedinconjunctionwiththeStepUpProgramonlyasasecondmortgage.Onlyborrowerswhoseprimarywageearnerhasamiddlecreditscoreofatleast620willbeeligibleforDown Payment Assistance.

A. Reservations.Ifneeded,reservationsforDownPaymentAssistancewillbemadethroughtheAuthority’sreservationwebsite,https://lenders.ahfa.com,andistiedtothefirstmortgagereservation.

B. Eligibility.AllhomebuyersmustmeetthequalificationsstatedontheDownPaymentAssistanceApplication,Appendix11.ThemaximumincomeisstatedontheDownPaymentAssistanceApplicationandiscalculatedasstatedinSectionIIofthisStepUpProceduralManual.

C. TypesofLoans.ThisprogramwillbeavailableinconjunctionwithhomesfinancedundertheFHA203(b)mortgageproductortheHFAPreferredconventionalloanprogram.ThisprogramcannotbeusedinconjunctionwithanyotherdownpaymentassistanceprogramorgrantprogramwithoutpriorapprovalfromtheAuthority.AllFHAguidelinesmustalsobemet.

Revised 01/17 •

D. CalculationofAssistanceAmount.Themaximumdownpaymentassistanceavailabletoahomebuyeristhelesserof$7,500or3%ofthesalesprice.

E. RequiredDocumentation.Thelendermustprovide:

1. Theexecuted,completedDownPaymentAssistanceApplication;

2. Acopyoftheprimarywageearner’screditreport(occupyingborrower);

3. AcopyoftheHUD92900-LTworksheetoftheFannieMae1008,reflectingtheDPAassecondaryfinancing;and

TheAuthoritywillissuealegallybindingobligationletterforthesecondmortgageDPAonallFHAfirstmortgageloansusingtheAuthority’sDPAprogram.Thelendermustbeinpossessionofthelegallybindingobligationletterbeforetheyclosetheloans.

TheDownPaymentAssistanceNoteandMortgagearetobeexecutedatclosing.Thelenderwillovernighttheoriginalexecutedsecondnote,endorsedtotheAuthority,alongwiththefirstmortgagenote.

If the lender’s first mortgage loan is using FHA financing with the DPA second, the lender must transfer the loans in MERS to the Authority PRIOR to submitting for MIC. The lender should include a copy of the legally binding obligation letter and executed second note and mortgage in the case binder file.

F. Term and Repayment. Asecondmortgagewillberecordedagainstthepropertybeingpurchased.Thetermofthesecondmortgagewillrunfor10years.Thesecondmortgagewillbearinterestatthefirstmortgagenoterate.Thesecondmortgagewillamortizein120equalmonthlypaymentsofprincipalandinterest.Repaymentwillberequireduponsaleoftheproperty,refinanceofthefirstmortgage,and/orpayoffofthefirstmortgage,aswellastheassumptionofthefirstmortgage.

G. CommitmentPeriods.TheCommitmentperiodsofthisprogramwillrunconcurrentwiththeStepUpProgramasdefinedintheProgramGuidelines.

H. IssuanceofFunds.TheAuthoritywillpurchasetheDownPaymentAssistancesecondmortgagewiththepurchaseoftheStepUpfirstmortgageforconventionalloans.

I. FeesinOrigination.Alendermaynotchargeanyadditionalfeesinconjunctionwiththisprogram.Therecordingcostsofthesecondmortgageloanaretobebornebytheborrowerorseller.

J. PurchaseandServicing.Lenderswillsellthesecondmortgageloanswhichitoriginates,accordingtoconventionalguidelines,totheAuthority.ThepricetobepaidbytheAuthoritywillbetheamountequalto100%oftheprincipalamountofthesecondmortgage,plusperdieminterestinaccordancewithSectionIX,LoanDelivery.

K. Assumptions.TheDownPaymentAssistancesecondmortgageloanisnotassumable.

SECTION XIV—DELEGATED EXAMINER OPTION

DelegatedExaminershavetheopportunitytoacceleratetheStepUploanapprovalprocessbyperformingthecompliancereviewfunctionsinhouse.AHFAwouldonlyreviewloanfilesatthetimeofpurchase. Toqualify:

A. LendersarerequiredtobeanApprovedParticipatingLenderforaminimumofone(1)year.

B. AHFAcanatitsowndiscretionrescindtheprivilegeofDelegatedExaminersforanyreason(latedeliveryofclosedfiles,QCissues,oranyotherissuesregardinglenderperformance).

C. LendersmustbeingoodstandingwithAHFA’sFundingandDeliveryDepartmentandAHFA’sQualityControlDepartment

D. LendersmustbeapprovedfortheprogramasanOriginatorI,OriginatorII,oranOriginatorwhohascreditunderwritersonstaff.

Revised 01/17 •

E. Lendersarerequiredtosubmitaminimumoftenqualityfileswithina12-monthperiod:

F. EachpersonnominatedbythelenderasaDelegatedExaminerisrequiredtometthetenqualityfileminimum.

G. Testfileswithmajorcomplianceconditionswillnotbeconsideredinthetenqualityfilecount.(Majorconditionsincludebutarenotlimitedtoincomeissues,contractissues…)

H. IncomecalculationsontestfilesmaynotexceedtheincomecalculationsofAHFAexaminersbymorethan$500.

I. Alltestfilesmustclosewithinreservationexpirationdates.

TheAuthorityreservestherighttomakerevisionsasitdeemsnecessarytoprovideforasuccessfulprogram.

Revised 01/17 •

REQUIRED FORMS

1. TransmittalChecklist(Step1) ............................................................................................................................................252. TransmittalChecklist(Step1A,AHBIProposedConstructionOnly) ..................................................................................263. TransmittalChecklist(Step2) ............................................................................................................................................274. RequestforFundingChecklist ...........................................................................................................................................285. Rate Commitment Form ....................................................................................................................................................316. ReservationofFundsCommitmentForm(AHBIProposedConstructionOnly) ................................................................327. RateLockRequestForm(AHBIProposedConstructionOnly) ...........................................................................................338. IncomeCalculationWorksheet .........................................................................................................................................349. Co-Signer/Non-OccupantStatement ................................................................................................................................3610. ChildSupportStatement ...................................................................................................................................................3711. Employment/IncomeStatement .......................................................................................................................................3812. Full-TimeStudentStatement ............................................................................................................................................3913. Income Tax Statement .......................................................................................................................................................4014. Occupancy Statement .......................................................................................................................................................4115. Non-BorrowerStatement ..................................................................................................................................................4216. DownPaymentAssistanceApplication .............................................................................................................................4317. TransferofAllocationForm ...............................................................................................................................................4418. FirstPaymentNotification .................................................................................................................................................4519. NoticeofAssignment,SaleorTransferofServicingRights ...............................................................................................4620. EarlyDefaultNotification ..................................................................................................................................................4721. QualityControlCertificationandAuthorization ................................................................................................................4822. Interest Rate Buydown Addendum to Mortgage ..............................................................................................................4923. DelegatedExaminerNominationForm .............................................................................................................................5124. Test Case Submission Form ...............................................................................................................................................5225. DelegatedExaminerTestFileCompletionCertification ....................................................................................................5326. DelegatedExaminers’TransmittalChecklist(Step1) ........................................................................................................5427. DelegatedExaminers’TransmittalChecklist(Step2) ........................................................................................................5528. DelegatedConditionalCommitment .................................................................................................................................56

STEP UP TRANSMITTAL CHECKLIST

Lender: AHFACommitment#:Processor’s Name ____________________________________________________________________EmailAddress:_______________________________________________________________________Phone#____________________________________Fax#_________________________________Mortgagor(s):

STEP 1 — Reservation Package (Submit to AHFA within 72 hours of reservation)

ReservationAcceptancePrintout Copy of Rate Commitment Form signed by borrower

CopyofRateCalculationSinglePremiumQuote(appliestoAHBIloansonly)

30-DayReservationNonrefundableCommitmentFee(certifiedfunds,lender’scheck,orcashier’scheck)[0.75%ofthetotalloanamountforFHA&conventionalloans]

OR

15-DayReservationNonrefundableCommitmentFee(certifiedfunds,lender’scheck,orcashier’scheck)[0.5%ofthetotalloanamountforFHA&conventionalloans]

Revised 02/15

STEP UP TRANSMITTAL CHECKLISTFor Proposed Construction Only (Alabama Home Buyer Initiative)


STEP 1A — Reservation Package (Submit to AHFA within 72 hours of reservation)

ReservationAcceptancePrintout ReservationofFundsCommitmentForm

CopyofRateCalculationSinglePremiumQuote

Executed 1003

ExecutedSalesContract

Revised 03/14

STEP UP TRANSMITTAL CHECKLIST


STEP 2 — Request for Step Up Conditional Commitment (Submit to AHFA)

Step Up TransmittalChecklist

Copyoftheexecutedloanapplication Copyoftheexecutedsalescontract StepUpIncomeCalculationWorksheet

CopyofwrittenVerificationofEmploymentANDonecurrentpaystub(bothdatedwithin30daysofsubmission)

CopyofVerbalVerificationofEmployment,ifusingALT DOC

Copyofpaystubscoveringcurrent30daysANDW-2forcurrenttwoyears,ifusingALT DOC

Allotherapplicableincomedocuments(e.g.,SSIawardsletter,finaldivorcedecree,childsupportdocs,etc.)

Non-BorrowerStatement,ifapplicable

Copyofmostrecentyear’sIRStaxtranscript(includinganyoccupants18yearsoldandolder)

CopyofDPAPApplication(ifapplicable)

CopyofFHALoanUnderwritingandTransmittalSummary(92900-LTforFHA;1008forconventional)

AutomatedUnderwritingFindings(DU/FHATotalScorecardforFHA;DUonlyforconventional)

CopyofRateCalculationSinglePremiumQuote,ifquotehaschangedsinceStep1submission(AHBIonly)

Copyofcreditreportforalloccupyingborrowers CopyofHomebuyers’EducationCertificate

Copyofdriver’slicenseforalloccupants18yearsofageandolder(Note:AHFAwillbereviewingforsignatureconsistencythroughoutthefile.)

Revised 08/16

Revised 07/16

REQUEST FOR FUNDING CHECKLIST

AHFACommitment#:_________________________

LendingInstitution:______________________________________________________________

ShippingContactPerson:______________________________________________________________

PhoneNumber:_______________________________

EmailAddress:________________________________

Reminders:** PROVIDE THE COMPLETE PROCESSING, ORIGINATION AND CLOSING PACKAGE **

1003, Notes and Deeds of Trust must include Loan Originator’s NMLS ID Number.Package to be uploaded within 10 days of closing to AHFA‘s Online Reservation System

DOCUMENTS FOR LOAN PURCHASE REVIEW:□ RequestforFundingChecklist□ PaymentHistory(ifapplicable)

□ OnecopyoftheNoteandAddendumtoNoteendorsedtoServiSolutions,adepartmentofAlabamaHousingFinanceAuthority,withoutrecourse(Allongesarenotacceptable)

□ CopyofDeedofTrust/Mortgagewithallapplicableriders□ OnecopyofDownPaymentAssistanceNoteendorsedtoAHFAwithoutrecourse(ifapplicable)□ CopyofDeedofTrust/MortgageforDownPaymentAssistanceloan□ CopyofPowerofAttorney(ifapplicable)□ Copy of MIN Summary from MERS□ Copyoffinal,stampedClosingDisclosurewithaddendums□ Copyoffinal,stampedClosingDisclosurewithaddendumsforDownPaymentAssistanceloan

□ TitleBinder/TitlePolicy(ifapplicable)

□ CopyofSurveyorsignedSurveyWaiverwithLetterofIntenttoobtainashort-formtitlepolicy

□ Appraisalwithcolorphotos—includeallexhibits.Mustbecompletelylegiblewithandincludeacopyoftheappraiser’slicense

□ VerificationloanranthroughFannieMaeEarlyCheck(conventionalloansonly)--effective01/01/17

□ CopyofFannieMaeAppraisalFindingsDetail/SSRReportwithCollateralUnderwriterRiskScoreshowing(conventionalloansonly)

□ CopyofCollateralUnderwritingAnalysisforappraisedproperty□ CondoProjectApproval,FannieMaeForm1076or1077(condoprojectsonly)□ FinalInspectionandevidenceofclearanceofallappraisalconditions(ifrequiredbyappraisal)□ ConditionalCommitmentofAppraisalvalue(HUDForm92800-5Bcopy),signedbyunderwriter□ Allrequirednewconstructiondocuments,ifapplicable□ TermiteLetter(ifapplicable)□ PMICertificate(conventionalloansonly)□ PMIDisclosure(conventionalloansonly)

□ HazardInsurancePolicyw/policynumberandpaidreceiptfor1styear’spremium(Mortgagee:ServiSolutions,itsSuccessorsand/orAssignsATIMA)

□ FloodInsuranceorWindPolicy(ifapplicable)□ LifeofLoanFloodCertification

Revised 07/16

□ PropertyTaxCertification/Assessment□ CopyoffinalGoodFaithEstimatesandTILfor1stand2ndmortgages□ QualityControlAuthorizationandCertification;signedbyborrowersatclosing□ CopyofNoticeofSale,AssignmentorTransferofServicingRights(RESPAGood-byeLetter,lendercopy)□ PaymentBreakdown/ServiSolutionsTemporaryCoupons□ EscrowClosingInstructions□ InitialEscrowAccountStatement□ 4506-TsinitialandfinalexecutedbyallBorrowers□ TransmittalSummary(1008)orHUD92900-LT,signedbyunderwriter□ InitialandFinalSignedLoanApplication1003,for1stand2ndmortgage(ifapplicable),executedbyallparties□ AutomatedUnderwriterFindingsindicating“approved/eligible”

□ Letterofexplanationsignedbyloanofficer,forAUsubmissionsinexcessof15orREDFLAGGEDbyAUstatingexcessivesubmissions

□ CreditReportusedforAUresultsandcopiesofcreditexplanationletters(asrequestedbyAUfindings)□ Copyofalldocumentsforthepurposeofverifyingcreditrelatedtoborrowers□ FinalauthorizationtoverifySSAsignedbytheborrower,ifapplicable

□ AllassetdocumentationasrequiredbyDU(includingVOD,cancelledearnestmoneycheck,fundssource,2monthsbankstatementsetc.)

□ Giftletterwithevidenceoftransferandreceiptoffunds-entirepapertrail(ifapplicable)□ AllincomedocumentationasrequiredbyDU(VOE,paystubs,W-2’s,taxreturns,etc.)□ LoanEstimatefor1stmortgage□ LoanEstimatefor2ndmortgage□ CopyofLeasehold(ifapplicable)□ CopyofUniformCommunityLandTrustGroundLeaseRider(ifapplicable)□ CopyofMemorandumofLease(Opalonly)□ PurchaseAgreement/SalesContractandalladdendums

□ W-9forallborrowers□ LDP/GSAfindingsforallpartiesinvolvedforallloanprograms

□ Copyofallinitialandfinalregulatorydisclosuredocumentation,signedbyallparties,includingbutnotlimitedto(FHA,VA,USDA,FannieMae,RESPA,TIL,FCRA,ECOA,TRIDetc.)

□ PatriotActdisclosurealongwiththeborrower’sidentification(photoid,greencardandvisa)□ AppraiserCertificationprintedoutfromthewebsiteASC.Gov□ TaxTranscriptsandW-2’sforallBorrowers,asrequiredbyAutomatedUnderwritingFindings□ CopyofHomebuyerEducationCertificate□ EarlyDefaultNotification□ WrittenListofSettlementServiceProviders

FHA ITEMS:□ Firm Commitment□ ImportantNoticetoHomebuyersHUD#92900B□ ImportantNoticetoHomeowner—AssumptionofHUD/FHAInsuredMortgages□ FHA Case Number Assignment□ MIPStatementorTransmittalForm□ CopyofFHABorrowerAwardletter□ CopyofFHALenderCommitmentletter□ DPAObligationletterfor2ndmortgage,ifapplicable□ FHAConnectionInsuranceApplication□ MIPstatementorMIPcheckandtransmittalForm(EvidenceofUFMIPhasbeenpaidtimely)

Revised 07/16

USDA ITEMS:□ IncomeEligibilityCalculationWorksheet□ FormRD3555-16-AgreementforParticipationinSingleHousingGuaranteed/InsuredLoanPrograms□ FormRD3555-11-GuaranteedRuralHousingLenderRecordChange□ FormRD3555-21-RequestforSingleFamilyHousingLoanGuarantee□ FormRD3555-18-ConditionalCommitment

VA ITEMS:□ CertificateofEligibility□ VA-1880-RequestforDeterminationofEligibility(mustbecompleted)andalegiblecopyoftheDD214□ VA26-1805-AppraisalCertificateofReasonableValue□ VA26-8937-VerificationofVABenefits(mustbecompletedandsigned)□ VAFundingFeeTransmittal&copyofcheck□ VA26-8998-AcknowledgementReceiptofVAFundingFee□ VA26-6393-LoanAnalysis□ VA26-0286-VALoanSummary□ VA26-1820-ReportandCertification□ EvidenceofcompliancewithMCRVorNOV(finalinspection,termitecertificationand/orwarrantydocumentation)□ VA26-0592-CounselingChecklistforMilitaryHomebuyers□ VA26-1802a-InitialandFinalHUD/VAAddendumtoURLA,executedbyallparties□ VA26-1866-LenderCertificateofCommitment(signedbyVA)

BOND & MCC ITEMS:UsetheabovechecklistforAHFAMRBandaddthefollowing:

□ RecaptureSettlementDisclosure□ Mortgagee’sCertification□ Seller’sAffidavit□ ClosingReaffirmation□ BuydownAgreement(Ifapplicable)

RESERVATION OF FUNDS/RATE COMMITMENT FORMINSTRUCTIONSTOORIGINATOR:WhenpreparingforReservationofFundsandratecommitment,theinformationonthisformwillberequiredinordertoissueacommitmentnumber.Wemustreceivethereservationpackagewithin72hours(3workingdays)ofthereservationcommitment.FailuretodeliverthedocumentationwithinthetimeperiodspecifiedmayresultincancellationoftheReservationofFundsandratecommitment.

Commitment#: CommitmentExpires: ApplicationExpires:

1st MortgageProgram:LoanType: LenderLoan#:LoanAmt: Term: InterestRate:

2nd Mortgage (notapplicableforMCC)Program:_____________________________ LoanType:Term: Amount: InterestRate:

BorrowerSS#:FirstName: MI: LastName:DOB:_________________ Age: Ethnicity:MaritalStatus: SingleParent: Sex:

Co-BorrowerSS#:FirstName: MI: LastName:MaritalStatus: SingleParent: Sex:

PropertyPurchaseAmt: AcquisitionCost:New/Exist/Rehab:YearBuilt: No.ofUnits: HousingType:

Property AddressAddress:City: Zip: County: CensusTract:TargetedArea(n/aforSU)? BlockGroup: CommunityCode: Project: Builder:

Annual IncomeBorrowerWages: Other: FromAssets:Co-BorrowerWages: Other: FromAssets:Non-Applicant: Total:

HouseholdHouseholdSize: PriorHomeowner(lastthreeyears?):_________________________________________

Interest Rate Commitment (notapplicableforMCC)Ihaveappliedfora____15-dayora____30-dayreservationfora30-yearfirstmortgageloanatacurrentrateof ___________%,a1%originationandanon-refundablecommitmentfeeof_________%($____________).Iunderstandthatoncethereservationisconfirmedbythelender’sreservationcommitmentImustremitthenon-refundable fee within72hoursoftheconfirmationandthatmyloanmustcloseanddisburseonorbeforetheapplicationexpirationdateof ___________________.

__________________________________________________ ________________________________Borrower Date__________________________________________________ ________________________________ Co-Borrower Date

Revised 10/12

RESERVATION OF FUNDS COMMITMENT FORMFor Proposed Construction Only (Alabama Home Buyer Initiative)

Commitment#: CommitmentExpires: ApplicationExpires:

1st Mortgage

LoanAmount: LenderLoan#:

2ndMortgage(DPA)

LoanAmount:

Borrower

FirstName: MI: LastName:

Co-Borrower

FirstName: MI: LastName:

SubjectProperty

PurchaseAmt.: AcquisitionCost:

Address:

City: Zip:

County:

Builder:

Iunderstandmylenderhasreservedfundsforthe1stand2ndmortgageamountundertheAlabamaHomeBuyerInitiative(AHBI)forproposedconstructionlocatedattheabove-referencedpropertyaddress.Thesefundshavebeenreservedfora120-dayperiod.Inaddition,$_____________________hasbeenreservedforthePMIpremiumpayablethroughtheAHBI.Furthermore,Iunderstandthelendermustlocktheinterestratebythetheabove-referencedcommitmentexpirationdate.FailuretolocktheinterestratewillresultinthelossofthemortgagefundsandPMIpremiumfunds.

Uponlockingtheinterestrate,mylenderwillpresenttheReservationofFunds/RateCommitmentFormformyexecutionwhichwillconfirmtheinterestrateandtherevisedcommitmentexpirationdate.ANON-REFUNDABLEcommitmentfeewillbedueatthattime.

Oncethelenderhaslockedtheinterestrate,IunderstandacompliancepackagewillthenbesubmittedtoAHFAforreviewtodetermineiftheloanmeetsprogramguidelines.

_______________________________________________________ ____________________________Borrower Date

_______________________________________________________ ____________________________Co-Borrower Date

_______________________________________________________ ____________________________Builder’sSignature Date

Revised 04/14

RATE LOCK REQUEST FORMFor Proposed Construction Only (Alabama Home Buyer Initiative)

AHFACommitment#:Mortgagor(s):

PropertyAddress:

Theparticipatinglenderandborrower(s)arerequestingthatAHFAlockinthecurrentinterestrateof________________%fortheabove-referencedcommitmentnumber.Wearerequestingthefollowinglockperiod:

15-dayReservation(anon-refundablecommitmentfeeof.50%willbeduewithin72hoursofratelock)30-dayReservation(anon-refundablecommitmentfeeof.75%willbeduewithin72hoursofratelock)

ItisunderstoodtheborrowerwillreceivethecurrentrateatthetimetherequestisreceivedbyAHFA.

The lender must send this form by 4:00 p.m. on the business date requested below.

_____________________________________________ ____________AuthorizedParticipatingLenderRepresentative Date

_____________________________________________ Borrower

_____________________________________________Co-borrower

Revised 03/14

Revised 07/16

INCOME CALCULATION WORKSHEET(PRIORTOLOANCLOSING)

AHFACOMMITMENT#:

MORTGAGOR(S)NAME:

NUMBERINFAMILY:

MAXIMUMINCOMELIMIT:_________________________ Reflecttheannualincomebasedonthecurrentincomeofthemortgagor(s).Iftheverificationdocumentsaremorethanthreemonths(90days)oldatthetimeofclosing,updatetheverificationdocuments.Note:Thesedocumentsmustcomplywiththeapplicableprogramguidelines.

MORTGAGOR’SINCOME: (ANNUALIZED)Wages,salary,andtips FULL-TIME PART-TIMEHourly/weekly/monthlyrate $______________________ $______________________No.ofhours/weeks/months X______________________ X______________________BaseSalary $______________________ $______________________

Overtimepayrate $______________________ $______________________AverageNo.ofhours/months X______________________ X______________________MonthlyOvertimePay(*) $______________________* $______________________*

AverageBonusfor2years(*) $______________________* $______________________*Ifconsistenttolastyear

CO-MORTGAGOR’SINCOME:Wages,salary,andtips FULL-TIME PART-TIMEHourly/weekly/monthlyrate $______________________ $______________________No.ofhours/weeks/months X______________________ X______________________BaseSalary $______________________ $______________________

Overtimepayrate $______________________ $______________________AverageNo.ofhours/months X______________________ X______________________MonthlyOvertimePay(*) $______________________* $______________________*

AverageBonusfor2years(*) $______________________* $______________________*ifconsistenttolastyearInterestand/orDividendIncome(averaged) $______________________**NetRentalIncome $______________________**

Royalties,partnerships,estates,and/ortrusts $______________________**

Pensions,VA,and/or $______________________**UnemploymentCompensation

Revised 07/16

SocialSecurityBenefits $______________________**

Alimonyand/orChildSupport $______________________**

BusinessIncome $______________________**

OtherIncome(Listtypeandprovideverification)____________________________________ $______________________**____________________________________ $______________________**

TotalGrossMonthlyIncome $______________________Addallthelinesdesignatedby* $______________________Addallthelinesdesignatedby** $______________________

X 12Total Annual Income $______________________

Doestheannualincomeexceedthemaximumincomelimitshownonpage1? □ Yes □ No

NOTE:INCOMEMUSTBEDERIVEDFROMALLSOURCES,TAXABLEANDNON-TAXABLE.IFINCOMEWILLNOTCONTINUE,EVIDENCE MUST BE PROVIDED.

__________________________________________________ ________________________________SignatureofOriginatingLender Date

CO-SIGNER/NON-OCCUPANT STATEMENT


PropertyAddress:

IamactinginacapacityonlytoprovideadditionalsecurityforthisMortgageLoan.Ihavenointentionofoccupying,becomingapermanentresident,or,atthistime,usingtheabove-referencedpropertyforinvestmentpurposes.

Non-Occupant Co-Signer: Non-Occupant Co-Signer:

_________________________________________ _________________________________________Name Name

_________________________________________ _________________________________________Address Address

_________________________________________ _________________________________________City,StateZIP City,StateZIP

_________________________________________ _________________________________________Phone Phone

_________________________________________ _________________________________________SSN SSN

_________________________________________ _________________________________________RelationshiptoBorrower RelationshiptoBorrower

_________________________________________ ______________________________________Signature Signature

_________________________________________ ______________________________________Date Date

Mortgagorunderstandsthatitisafederaloffensepunishablebyamaximumof$10,000fine,twoyearsimprisonment,orboth,toknowinglymakeafalsestatementinthisaffidavit(title18,UnitedStateCode,section10140).Mortgagorhasreadinformationcarefullytobesureinformationcontainedhereinistrueandcompletebeforesigning.MortgagorunderstandsthattheinformationgivenbymortgagorinthisaffidavitissubjecttoverificationbytheAlabamaHousingFinanceAuthority.

Revised 10/12

CHILD SUPPORT STATEMENT


PropertyAddress:

IherebycertifythatIhavenotreceivedchildsupportinthelast24monthsand,tomyknowledge,noneisforthcomingforthebelow-listeddependent(s):

_________________________________________ __________ Iwasnevermarriedtothemother/fatherofthischild.Child’sName(pleaseprint) Age





_________________________________________ ______________________________________Mortgagor Co-Mortgagor/Non-Borrower

_________________________________________ ______________________________________Date Date

Mortgagorunderstandsthatitisafederaloffensepunishablebyamaximumof$10,000fine,twoyearsimprisonment,orboth,toknowinglymakeafalsestatementinthisaffidavit(title18,UnitedStatesCode,section10140).Mortgagorhasreadinformationcarefullytobesureinformationcontainedhereinistrueandcompletebeforesigning.MortgagorunderstandsthattheinformationgivebymortgagorinthisaffidavitissubjecttoverificationbytheAlabamaHousingFinanceAuthority.

Revised 02/15

EMPLOYMENT / INCOME STATEMENT


PropertyAddress:

I,__________________________________,ampresentlyunemployedanddonotreceiveincome of any type*. I do not intendtopursueemployment,fullorpart-time,oranticipatereceivinganyothertypeofincomeforthenexttwelvemonths.

____________________________________________________________________________________UnemployedBorrower/Non-Borrower

____________________________________________________________________________________Date

*ExamplesofIncome:W-2,1099,SSI,pension/annuity,childsupport,alimony,seasonalemploymentincome,rentalincome,etc.

_________________________________________ ______________________________________Mortgagor Co-Mortgagor

_________________________________________ ______________________________________Date Date

Mortgagorunderstandsthatitisafederaloffensepunishablebyamaximumof$10,000fine,twoyearsimprisonment,orboth,toknowinglymakeafalsestatementinthisaffidavit(title18,UnitedStatesCode,section10140).Mortgagorhasreadinformationcarefullytobesureinformationcontainedhereinistrueandcompletebeforesigning.MortgagorunderstandsthattheinformationgivebymortgagorinthisaffidavitissubjecttoverificationbytheAlabamaHousingFinanceAuthority.

Revised 10/12

FULL-TIME STUDENT STATEMENT

AHFACommitment#:

Mortgagor(s):

PropertyAddress:

I,____________________________________,ampresentlyafull-timestudentandintendtobeafull-timestudentforthenext12months.Myanticipatedgraduationdateis_________________________.Idonotworkpart-timeorreceiveanytype of income.

______________________________________ __________________________________________Student RelationshiptoMortgagor/Non-Occupant

______________________________________ Date


Revised 10/12

INCOME TAX STATEMENT

AHFACommitment#:

Mortgagor(s):

PropertyAddress:

IherebycertifythatIwasnotrequiredbylawtofileafederalincometaxreturnforthefollowingyear(s)

________________________________.

_______________________________________ _________________________________________Mortgagor Co-Mortgagor/Non-Borrower

_______________________________________ _________________________________________Date Date


Revised 10/12

OCCUPANCY STATEMENT

AHFACommitment#:

Mortgagor(s):

PropertyAddress:

Iwilloccupytheabovereferencedpropertyasmyprincipalandpermanentplaceofresidenceandwillnotrentorleasetheproperty.

_______________________________________ __________________________________________Mortgager Co-Mortgagor

_______________________________________ __________________________________________Date Date


Revised 10/12

NON-BORROWER STATEMENT

Non-BorrowerName:__________________________________________________________________

IherebygivethelenderoriginatinganAlabamaHousingFinanceAuthorityloanproductauthorizationtoverifymyincomeandassetsandprovidethatverifiedinformationtoAlabamaHousingFinanceAuthorityforthepurposesofaccessingthecompliancequalificationofthepurchaseofthepropertylocatedat:

PropertyAddress:

Mortgagor(s):

Iamnotobligatedonthenote,butwillbeoccupyingtheproperty;or

Iamcurrentlyseparatedfromthepurchaserandwillnotbeoccupyingtheproperty.

Ifnotmarriedtoorseparatedfromtheborrower,areyoucurrentlymarriedtoorseparatedfromsomeelse?Yes No

ALLQUESTIONSMUSTBEANSWEREDBYNON-BORROWER:

1. Name,addressandphonenumberofemployer:______________________________________________________

_____________________________________________________________________________________________

2. Lengthoftimeemployed:_____________________

3. Self-employed? Yes No

4. Doyoucurrentlyownanyrealestate?Yes No

Ifyes,isittobesold,rented,oroccupiedasyourresidence?________________________________________________

5. Doyoucurrentlyreceiveanytypeofgovernmentassistanceorretirement/pensionfunds?

Yes No From:__________________________________________________________________________

6. Doyoureceivechildsupportoralimony? Yes No

Agesofchildren:______________________________ Amountpermonth:________________

Mortgagorunderstandsthatit isafederaloffensepunishablebyamaximumof$10,000fine,twoyearsimprisonment,orboth,toknowinglymakeafalsestatementinthisaffidavit(title18,UnitedStatesCode,section10140).Mortgagorhasreadinformationcarefullytobesureinformationcontainedhereinistrueandcompletebeforesigning.MortgagorunderstandsthattheinformationgivebymortgagorinthisaffidavitissubjecttoverificationbytheAlabamaHousingFinanceAuthority.

________________________________________________________ _______________________________ SignatureofNon-Borrower Date

Revised 02/15

DOWN PAYMENT ASSISTANCE APPLICATION

PleasebeadvisedthatI(we),theundersignedMortgagor(s),wanttoapplyforDownPaymentAssistancefromtheAlabamaHousingFinanceAuthority(AHFA).Theconditionsoftheassistanceareasfollows:

MAXIMUM LOAN ASSISTANCE:• FHA:thelesserof$7,500or3%ofthesalesprice.• RuralDevelopment:thelesserof$7,500or3%ofthesalesprice.• ConventionalLoans:thelesserof$7,500or3%ofthesalesprice.

Maximumannualfamilyincomecannotexceedcurrentprogramincomelimits.Theprimarywageearningborrowermusthaveamiddlecreditscoreofatleast620.

Thesecondmortgagewillbearinterestatthesamerateasthefirstmortgagenote.Thesecondmortgagewillamortizein120equalmonthlypaymentsofprincipalandinterest.Thesecondmortgagewillnotbeassumable.Completerepaymentofthesecondmortgagewillberequireduponsaleoftheproperty,refinance,assumption,and/orpayoffofthefirstmortgageloan.

PropertyAddress:

PurchasePrice$:

□ FHA (AttachFHALoanUnderwritingandTransmittalSummary)

DownPaymentAssistance(nottoexceedthelesserof$7,500or3%) $____________________

□ RURAL DEVELOPMENT

ClosingCostsPaidbyBorrower $____________________PrepaidExpenses $____________________DownPaymentAssistance(nottoexceedthelesserof$7,500or3%) $____________________

□ CONVENTIONAL “HFA PREFERRED” MORTGAGE

DownPayment $____________________DownPaymentAssistance(nottoexceedthelesserof$7,500or3%) $____________________

_____________________________________________ ________________________________Mortgagor Date

_____________________________________________ ________________________________Co-Mortgagor Date

Revised 08/16

TRANSFER OF ALLOCATION FORM

To: AlabamaHousingFinanceAuthority Attn:Single-FamilyAdministrator P.O. Box 242967 Montgomery,AL36124-2967

From: ______________________________

______________________________

______________________________

______________________________

Date: _______________________________

CommitmentNumber:

Rate:

NameofParticipant-Transferor:_________________________________________________________

NameofParticipant-Transferee:_________________________________________________________

AmountofTransfer:$_________________________________________________________________

Terms,conditions,andreasonforthetransfer:

__________________________________________ ______________________________________Signature of Transferor Signature of Transferee

Approved:

__________________________________________ ______________________________________Single-FamilyAdministratorfor DateAlabamaHousingFinanceAuthority

Revised 08/11

FIRST PAYMENT NOTIFICATION

Inordertoensureproperpayment,pleaseencloseoneoftheseTemporaryCouponswithyourpaymentintheeventyouhavenotreceivedyourcouponbookbytheduedateofyourfirstpayment.Pleasemailyourpaymentto:

ServiSolutionsP.O. Box 242928

Montgomery,AL36124-2928

Temporary Coupon #2

LoanNumber: Borrower:

PropertyAddress:

Breakdownoftotalmonthlymortgagepaymentmustbeprovidedbytheclosingattorney/agentatclosing.

Principal&Interest $SecondMortgage(ifapplicable) $1/12HazardInsurance $1/12MortgageInsurance $1/12CountyPropertyTax $1/12FloodInsurance $Total Payment: $

SecondPaymentDate:

Ifyouwishtoreceiveanamortizationscheduleorhaveanyquestionsaboutyourloan,pleasecontactourcustomerservicedepartmentat1-866-339-2432.

Temporary Coupon #1

LoanNumber: Borrower:

PropertyAddress:

Breakdownoftotalmonthlymortgagepaymentmustbeprovidedbytheclosingattorney/agentatclosing.

Principal&Interest $SecondMortgage(ifapplicable) $1/12HazardInsurance $1/12MortgageInsurance $1/12CountyPropertyTax $1/12FloodInsurance $Total Payment: $

FirstPaymentDate:

Ifyouwishtoreceiveanamortizationscheduleorhaveanyquestionsaboutyourloan,pleasecontactourcustomerservicedepartmentat1-866-339-2432.

Revised 07/14

NOTICE OF ASSIGNMENT, SALE OR TRANSFER OF SERVICING RIGHTS

Youareherebynotified*thattheservicingofyourmortgageloan,thatis,therighttocollectpaymentsfromyou,isbeingassigned,soldortransferredfrom__________________________________________________________________toServiSolutions®,effective_________________________(firstpaymentdate).

Theassignment,saleortransferoftheservicingofthemortgageloandoesnotaffectanytermorconditionofthemortgageinstruments,otherthantermsdirectlyrelatedtotheservicingofyourloan.

Exceptinlimitedcircumstances,thelawrequiresthatyourpresentservicersendyouthisnoticeatleast15daysbeforethiseffectivedateoftransfer,oratclosing.Yournewservicermustalsosendyouthisnoticenolaterthan15daysafterthiseffectivedateoratclosing.Inthiscase,allnecessaryinformationiscombinedinthisonenotice.

Yourpresentserviceris________________________________________________________________.Ifyouhavequestionsrelatingtothetransferofservicingfromyourpresentservicer,callCustomerServiceat___________________between8:00a.m.and5:00p.m.MondaythroughFriday.

YournewservicerwillbeServiSolutions®.Thebusinessaddressofyournewserviceris:7460HalcyonPointeDrive,Suite200,Montgomery,AL36117.Thetoll-freephonenumberofyournewserviceris1-866-339-2432.Ifyouhaveanyquestionsrelatingtothetransferofservicingtoyournewservicer,callCustomerServiceat1-866-339-2432between8:00a.m.and5:00p.m.MondaythroughFriday.

Thedatethatyourcurrentservicerwillstopacceptingpaymentsfromyouistoday(loansettlement).Thedatethatyournewservicerwillstartacceptingpaymentsfromyouistoday(loansettlement).Pleasenote:Sincenoscheduledmortgagepaymentsareduepriortoloansettlement,noneofyourmortgagepaymentsshouldbesenttothepresentservicer.Allmortgagepaymentsshouldbesentdirectlyto ServiSolutions®.

ImportantNoteaboutInsurance:Thetransferofservicingwillaffectthecontinuedavailabilityofmortgagelifeordisabilityinsuranceoranyothertypeofoptionalinsuranceaswedonotofferoptionalinsuranceproducts.However,ifyouwishtocontinuetoretainoptionalinsurance,wesuggestthatyoucontactyourcurrentoptionalproductserviceprovidertomake payment arrangements.

PartialPaymentPolicy:ServiSolutions®maychoosetoacceptpartialpaymentsandapplysuchpaymentstotheconsumer’sloanormayholdpartialpaymentsinaseparateaccountuntiltheconsumerpaystheremainderofthepaymentandthenapplythefullperiodicpaymenttotheconsumer’sloan.ServiSolutions®mayalsochoosetonotacceptanypartialpayments.Iftheloanissold,thenewservicermayhaveadifferentpolicy.

Underfederallaw,duringthe60-dayperiodfollowingtheeffectivedateofthetransferoftheloanservicing,aloanpaymentreceivedbyyouroldserviceronorbeforeitsduedatemaynotbetreatedbythenewloanserviceraslate,andalatefeemaynotbeimposedonyou.

YouwillreceiveanintroductoryletteralongwithamonthlypaymentstatementfromServiSolutions®withinthenextfewweeks.Ifyoudonotreceivethisinformation,pleasecalltheServiSolutions®CustomerServiceDepartment.InordertoassurethecorrectpostingofyourpaymentstoServiSolutions®,pleaseindicatethepropertyaddressonyourcheckor money order.

Receivedandacknowledgedthis__________________Dayof______________________________20____.

____________________________ _____________________________Borrower Borrower

*ThisnotificationisarequirementofSection6oftheRealEstateSettlementProceduresAct(RESPA)(12USC2605).

Revised 10/15

EARLY DEFAULT NOTIFICATIONBorrower Authorization for Counseling

HFACommitment#:

Mortgagor(s):

PropertyAddress:

IfIfailtomakeanymonthlymortgagepaymentasagreed,Iunderstandthattheservicerofmymortgageloanmayrefermetoathird-partycounselingorganizationoramortgageinsurer,whichwilladvisemeaboutfindingwaystomeetmymortgageobligation.Iherebyauthorizetheservicertoreleasecertaininformationrelatedtotheservicer’sownexperiencewithmetosuchthird-partycounselingorganizationormortgageinsurer,andrequestthatthecounselingpartycontactme.

Ifurtherherebyauthorizethethird-partycounselingorganizationormortgageinsurertomakearecommendationaboutappropriateactiontotakewithregardtomymortgageloan,whichmayassisttheservicerindeterminingwhethertorestructuremyloanortoofferotherextraordinaryservicesthatcouldpreservemylong-termhomeownership.

_______________________________________ __________________________________________Mortgagor Co-Mortgagor

_______________________________________ __________________________________________Date Date

Revised 02/14

QUALITY CONTROL CERTIFICATION AND AUTHORIZATION Theundersignedcertifythefollowing:

1.I/We,theundersignedborrower(s),understandthatfollowingloanclosing,my/ourfilemaybeselectedby_____________________________________________________(theLender),itsagentorassignee,foraQUALITYCONTROLREVIEWwhichisintendedtoinsurequalityservicetoallborrowersandtoverifythatthemortgageloanconformstolendingregulations,aswellasinvestorrequirements.

2.I/Weunderstandthatsuchareviewinvolvesareverificationofthecreditandemploymentinformationpreviouslyobtainedandareviewofthepropertyappraisalreport.Anyinformationobtainedinthegrantingoftheloanmaybereverifiedwiththirdpartiessuchascreditreportingagencies,employers,depositoryinstitutions,etc.

3.I/WeherebyagreetocooperatefullywiththeLender,itsagentorassigneetotheextentnecessarytoaccomplishthisobjectiveandunderstandthattheinformationobtainedbytheLender,itsagentorassigneeistobeusedonlyforpurposesofthequalitycontrolreviewreferredtoabove.

4.I/WefullyunderstandthatitisaFederalcrimepunishablebyfineorimprisonment,orbothtoknowinglymakeanyfalsestatementswhenapplyingforthismortgage.(Title18,UnitedStatesCode,Section1014.)

AUTHORIZATION TO RELEASE INFORMATION

ToWhomItMayConcern:

1.Aspartoftheapplicationprocess,TheLender,itsagentorassigneeandthemortgageguaranteeinsurermayverifyinformationcontainedinmy/ourloanapplicationandinotherdocumentsrequiredinconnectionwiththeloan,eitherbeforetheloanisclosedoraspartofitsqualitycontrolprogram.

2.I/WeauthorizeyoutoprovidetoTheLender,itsagentorassignee,toanyinvestortowhomTheLendermaysellmymortgage,andtothemortgageguarantyinsureranyandallinformationanddocumentationthattheyrequest.Suchinformationincludes,butisnotlimitedto,employmenthistoryandincome;bank,moneymarket,andsimilaraccountbalance;credithistory;andcopiesofincometaxreturns.

3.Acopyofthisauthorizationmaybeacceptedasanoriginal.

4.MortgageguarantyInsurer(ifapplicable):_____________________________________________________

__________________________________ ____________ ____________________________Borrower Date SocialSecurityNumber

__________________________________ ____________ ____________________________Co-Borrower Date SocialSecurityNumber

Revised 01/16

Revised 08/11

INTEREST RATE BUYDOWN ADDENDUM TO MORTGAGE

ThisBuydownAgreement(“Agreement”),madeandenteredintothis day of ,20 by and among_______________ _________(“Borrower”),_______________________________________________________________________________________(“Seller”),and ________________ (“Lender”).

RECITALS

A. WhereastheBorrowerhasmadeapplicationtotheLenderforamortgageloan(“Loan”)tobeevidencedbyanote(“Note”)andsecuredbyafirstmortgage(“SecurityInstrument”);and

B. WhereastheLenderhasagreedtomaketheLoantotheBorrowersubjecttothetemporarybuydowninterestratereductionplandescribedinthisAgreement,wherebyfundsareprovidedtotheAlabamaHousingFinanceAuthority(“AHFA”)bytheSellertobeheldanddisbursedinaccordancewiththetermsofthisAgreementandAHFAwillbetheservicerofthesemortgageloans.

NOWTHEREFORE,toinducetheLendertomaketheLoantobeevidencedbytheNoteandSecurityInstrument,thepartiesheretoagreeasfollows:

1. TheSeller,willprovide$ thetotalamountofbuydownfunds(“BuydownFunds”)setforthinthescheduleinparagraph2below(“BuydownSchedule”).

2. TheBuydownSchedulebelowsetsforththefinancialtermsofthebuydowninterestratereductionplan,includingthesourceandapplicationofBuydownFunds.Inadditiontotheamountsshownforprincipalandinterest,theBorrower’stotalmonthlypaymentwillincludeanamountfortaxes,hazardinsuranceand,ifapplicable,otherrequiredescrowdeposits.

Monthly Monthly Effective P&I P&I Monthly Buydown Payment Payment Monthly Annual Payment Interest At Note Made By Buydown BuydownYear Number Rate Rate Borrower Funds Funds

(1) 01-12 ______$______________ - $_______________ = $___________ X12=$____________(2) 13-24 ______ $______________ - $_______________ = $___________ X12=$____________

3. AHFAwilldeposittheBuydownFundsinanon-interestbearingaccountinafinancialinstitutionwhoseaccountsareinsuredbytheFDIC.TheBuydownFundsmaybecommingledwithotherdepositsmadebyoronbehalfofotherpartiesunderotherbuydowninterestratereductionplans.

4. AHFAagreesthatitwillapplytheBuydownFundsasshownintheBuydownScheduleinparagraph2aboveunderthecolumn“MonthlyBuydownFunds”totheamountofprincipalandinterestdueforthescheduledmonthlyNotepaymentuponpaymentbytheBorrowerofthesumshownunderthecolumn“MonthlyP&IPaymentMadeByBorrower”.ThebenefitoftheBuydownFundswillnotbereflectedintheNotenorshalltheNoteorSecurityInstrumentbemodifiedinanywaywhatsoeverbythisAgreement.

5. TheentiremonthlyinstallmentofprincipalandinterestontheNotemustbepaidbytheBorrowerfortheremainderofthetermoftheLoanbeginningwiththefirstmonthlypaymentdueaftertheBuydownFundshavebeenexhausted.However,ifforanyreasontheBuydownFundsarenotavailable,theBorrowershallremainliableforthefullmonthlypaymentsofprincipalandinterestdueundertheNote,unlessotherwiseprovidedbylaw.

6. TheBorroweracknowledgesthatthesolepurposeoftheBuydownFundsisforusebyAHFAtoapplytowardpaymentoftheamountofprincipalandinterestdueforthescheduledmonthlyinstallmentsunderthetermsoftheNoteover

Revised 08/11

andabovethemonthlypaymentbeingmadebytheBorrower,asdescribedintheBuydownScheduleinparagraph2.TheBuydownFundscannotbeusedtopayanypastdueinstallmentpaymentsthataretobepaidunderthetermsoftheNoteandthisAgreementortoreinstatetheLoanorotherwisecureanydefaultoftheBorroweronwhichtheinstitutionofforeclosureproceedingsisbased.

7. IntheeventtheBorrowerprepaystheoutstandingprincipalamountoftheLoaninitsentiretybeforetheBuydownFundshavebeenexhausted,theunusedportionoftheBuydownFundsshallbeappliedtotheoutstandingbalancedueonthemortgage.

8. TheAgreementshallbeconstruedinaccordancewiththelawsoftheStateofAlabama.

INWITNESSWHEREOF,thepartiesheretohaveexecutedthisAgreementofthedatefirstwrittenabove.

_______Borrower

Borrower

_________________________________________________________ Seller

Seller

Lender: _______

By: Lender’sAuthorizedSignatory

NameandTitle

DELEGATED EXAMINER NOMINATION FORM

___________________________________nominatesandauthorizesthefollowingindividualstoserveasapprovedDelegatedExaminersfortheAlabamaHousingFinanceAuthority’sStepUpprogram.

Uponeachnomineepassingeight(8)often(10)qualitytestcasesubmissions,thisdesignationauthorizestheseindividual(s)toissuedelegatedconditionalcommitmentsonbehalfofourorganizationsfortheAlabamaHousingFinanceAuthority’sStepUpprogram.

WeherebywarrantandrepresenttotheAuthoritythatthesenomineeswillactinaccordancewiththeAuthority’sprogramrequirements.

Nominee’s Name Title

E-mail Address

Office Location

___________________ ___________________ ___________________ ___________________

___________________ ___________________ ___________________ ___________________

___________________ ___________________ ___________________ ___________________

___________________ ___________________ ___________________ ___________________

___________________ ___________________ ___________________ ___________________

________________________________________ ______________________________________NameofRequestingAuthority Signature

_____________________________________ ______________________________________Title Date

Revised 02/15

DELEGATED EXAMINER TEST CASE SUBMISSION FORM

Date:_________________________

DelegatedNominee:__________________________________________________________

PhoneNumber:_________________________________

EmailAddress:_________________________________

CommitmentNumber:______________________________________

Borrower:___________________________________________________________________

FOR AHFA USE ONLY:

DateReviewed:_____________________

AHFAExaminer:______________________________________________________________

QualifiedTestCase: YES NO

Revised 08/11

DELEGATED EXAMINER TEST FILE COMPLETION CERTIFICATION

EachDelegatedExaminer(DE)Nomineeisrequiredtosubmitten(10)qualitytestfilesforreviewbyAlabamaHousingFinanceAuthorityandpasseight(8)ofthetensubmissions.Aftereachtestfilesubmission,thenomineewillbeadvisedifthefilecountstowardstheeight-of-tenrequirement.OnceeightoftenfileshavebeenapprovedbyAHFAaspassed,thenomineewillbeauthorizedtoissueStepUpconditionalcommitmentsonbehalfofhis/hercompany.

AHFAherebycertifiesthatthefollowingfilesmeetStepUpprogramguidelinesandcounttowardsthetenqualityfilescompletionoftheDEcertificationrequirements.

Company: ________________________________________________________________

DENominee: ________________________________________________________________

Borrower Commitment NumberDate

ReviewedAHFA

Examiner

1

2

3

4

5

6

7

8

9

10

Revised 02/15

DELEGATED EXAMINERS’ TRANSMITTAL CHECKLIST

Lender:___________________________________ AHFACommitment#:_______________________________Processor’sName:____________________________________________________________________Phone#:___________________________________ FAX#:_________________________________Mortgagor(s):_________________________________________________________________________________________ _________________________________________________________________________________________

STEP 1 - Reservation Package (Submit to AHFA within 72 hours of loan reservation)

□ ReservationAcceptancePrintout□ RateCommitmentFormsignedbyborrower(originalandonecopy)

□ CopyofRateCalculationSinglePremiumQuote(appliestoAHBIloansonly)

□ 30-DayReservationNonrefundableCommitmentFee(certifiedfunds,lender’scheck,orcashier’scheck)[0.75%ofthetotalloanamountforFHA&conventionalloans]

OR

□ 15-DayReservationNonrefundableCommitmentFee(certifiedfunds,lender’scheck,orcashier’scheck)[0.5%ofthetotalloanamountforFHA&conventionalloans]

□ Copyoftheexecutedloanapplication□ Copyoftheexecutedsalescontract

Revised 04/14

DELEGATED EXAMINERS’ TRANSMITTAL CHECKLIST

Lender:___________________________________ AHFACommitment#:_______________________________Processor’sName:____________________________________________________________________Phone#:___________________________________ FAX#:_________________________________Mortgagor(s):_________________________________________________________________________________________ _________________________________________________________________________________________

STEP 2 - Request for Step Up Delegated Conditional Commitment (Submit to Delegated Examiner)

□ TransmittalChecklist

□ Copy of Step 1 Package

□ CopyofFHALoanUnderwritingandTransmittalSummary(92900-LTforFHA;1008forconventional)

□ CopyofRateCalculationSinglePremiumQuote,ifquotehaschangedsinceStep1submission(AHBIonly)

□ CopyofHomebuyers’EducationCertificate

□ CopyofVerificationofEmployment(VOE)ANDonecurrentpaystub(bothdatedwithin30daysofsubmission)

□ VerificationofEmployment-Self-EmployedBorrowers(signed/datedYTDP&Lstatement&last2years’IRStaxreturntranscripts)

□ CopyofVerbalVerificationofEmployment,ifusingALTDOC

□ Copyofpaystubscoveringcurrent30daysANDW-2forcurrent2years,ifusingALTDOC

□ Allotherapplicableincomedocuments(e.g.,SSIawardsletter,finaldivorcedecree,childsupportdocs,etc.)

□ OriginalDPAPApplication(ifapplicable)□ Copyofcreditreportforalloccupyingborrowers□ Non-BorrowerStatement(ifapplicable)

□ AutomatedUnderwritingFindings

□ Copy of most recent year’s IRS tax transcript

Revised 08/16

DELEGATED CONDITIONAL COMMITMENT

Reservation#: Borrower’sName(s):

PropertyAddress:

SalesPrice: InterestRate:ApplicationExpiration: CommitmentExpiration:

LoanType: □ FHA □ RD □ ConventionalFirstMortgageapprovedfor $ (includingMIP/PMI)SecondMortgageapprovedfor $ (nottoexceedthelesserof$7,500or3%)

VerifiedBorrowerIncome $VerifiedCo-BorrowerIncome $

Doestheverifiedhouseholdincomeexceedcurrentprogramlimit? □ Yes □ No

Step1PackagecommitmentfeereceivedbyAHFA? □ Yes □ No

I,___________________________________________________(typednameofDelegatedExaminer),of ______________________________________________herebycertifythattheloanapplicationdescribedabovemeetsalltherequirementsoftheStepUpprogramspecifiedintheOriginationSalesAgreement,datedJanuary2006,ProgramGuidelinesandProceduralManual.

PrimaryWageEarner’sCreditScore:_________________________

TotalDebt-to-IncomeRatio:__________________________%

ClosingConditionsRequired? □ Yes(listbelow) □ No____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

DelegatedConditionalCommitmentissuedby _____________________________________________(SignatureofDelegatedExaminer)

_____________________________________________(Telephone#ofDelegatedExaminer)

Date _________________________________________

□ [email protected] OR □ Faxedto(334)244-9213

Revised 08/11