chfa firststep program loan operations training

Disclaimer

This Disclaimer applies to all content provided through CHFA webinars or other training events. The training content provided is intended to help explain CHFA’s programs, but should not be relied upon as an alternative to the CHFA Seller’s Guide. CHFA makes reasonable efforts to ensure that information provided in its trainings is up-to-date and accurate. If there are any discrepancies between information provided in a training event, including in slide presentations, and CHFA’s Seller’s Guide and/or eNews, the later documents should be relied upon.

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general chfa guidelines

Only CHFA-approved Participating Lenders can originate

All loans must meet FHA and CHFA guidelines*

Only borrower(s) may take title to the property

No one else may be included on the purchase documents/in title to property

No cosigners or non-occupying co-borrowers

30 year fixed rate mortgages only

Owner occupied primary residence only

Debt to income (DTI) requirements

Credit score of 620-659 or manually underwritten loan max DTI of 50%

Credit score of 660 or higher max DTI 55%

Business use of the subject property cannot exceed 15% as shown on tax returns

Optional Down Payment Assistance available

FirstStep Plus (CHFA Second Mortgage DPA only)

* CHFA Seller’s Guide available on AllRegs via CHFA’s website

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chfa’s income guidelines – household income calculation

Income limits based on number of occupants, county purchasing in and targeted or non-targeted area

CHFA Household Income Calculation – All household income for each applicant, spouse or civil union partner of each applicant and any other household member who is expected to be secondarily liable on the Mortgage Loan is included even if not used to qualify borrower, i.e.; child support, alimony, over-time, etc.

All income documentation for each applicant, spouse or civil union partner of each applicant and any other household member who is expected to be secondarily liable on the Mortgage Loan

Anyone with differing last names on Tax Returns, letter of explanation and Child Support docs if applicable

Profit and Loss Statement signed and dated for all self-employed applicants, self-employed spouse or civil union partner of each applicant and any other self-employed household member who is expected to be secondarily liable on the Mortgage Loan

Review Chapter 5, Section 501 of the CHFA Seller’s Guide

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program guidelines - property

Acceptable Property Types

Single family or PUDs or modular (attached and detached - only 1 living unit allowed)

Condo

Must be approved per FHA guidelines

Submit only the FHA approval in the submission file

Manufactured (permanently affixed)

Singlewide or larger

Deed Restrictions, Land Trusts, Affordable Covenants

Permitted in accordance with applicable guidelines

CHFA Form 780, Affordable Housing Restrictions Approval Certification, must be completed

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program guidelines – property (continued)

Unacceptable Property Types

Income/investment property

Properties where more than 15% of the square footage is used for a business purposes

Properties with accessory dwelling units

2-4 unit properties

Second homes

Non-warrantable condos

Excess acreage – CHFA acreage limit 50 acres

Co-ops

Properties with cistern as only water source

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homebuyer education

Required for ALL CHFA programs except refinance programs

All Borrowers must take Homebuyer Education prior to the loan closing

Classes from CHFA approved provider list on CHFA website

In person Classes

No cost to attendees

Online Class

Fee - $99 for first borrower, $50 for each additional borrower

Required one-on-one counseling session via phone by agency staff after completing online course

Follow information on providers site for scheduling counseling session

Certificates expire twelve (12) months after date of class

Borrower must be under contract prior to expiration of certificate

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chfa program compliance requirements

Must meet appropriate CHFA income limits listed on the CHFA website

Non-traditional credit is acceptable – follow FHA guidelines

Manual underwrite acceptable

Max DTI 50%

Borrower minimum contribution $1,000

Gift funds (follow agency guidelines); and/or

Earnest money deposit; and/or

Application, appraisal, or credit report fee paid to the Participating Lender; and/or

Home inspection fee, including fees paid for additional inspection services, such as sewer scopes, structural engineers report, etc.; and/or

Hazard insurance premium paid outside of closing; and/or

Thirty (30) day Loan Delivery Extension fee of .35% of the total loan amount and/or

Any homebuyer education fee, if applicable

HOA fees paid out of pocket by borrower

Temporary buy downs allowed, permanent buy downs are not allowed

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chfa program compliance submission

Prefer original appraisal uploaded with loan file – pdf format

Compliance turn times – 1 business day from receipt of a complete file. Suspended or incomplete files will result in further delays

Decision letters sent via email

Submission of suspend conditions to CHFA – deliver via:

Upload through document delivery system – preferred method

Must email CHFA Analyst from suspend letter to avoid delays in review of conditions

Secure e-mail through CHFA verified link

If you have not been previously approved by our IT department to send conditions via e-mail, have your IT department contact CHFA’s Information Security team to validate the e-mail communications are secure. Send request to TLS_Request@chfainfo.com

Your own company secure e-mail

Fax

Suspend conditions will be reviewed in order received

Program Compliance approval conditions must be submitted with Purchase file. Please ensure closer and shipper are aware of required conditions

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common issues that delay program compliance approval

Underwriting transmittal missing information/not complete

FHA Loan Underwriting Transmittal (92900LT/LUTS)

Ratios and total monthly payment information must match AUS findings

Manually underwritten loans, transmittal must be signed

Risk assessment sections must be completed

LUTS must have the CHUMS number for the appraisal reviewer listed

Incorrect calculation of CHFA DPA

DPA based on total loan amount, whole dollar amount (rounded down)

Missing income documentation (VOE’s, paystubs, profit & loss statements, etc)

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common issues that delay program compliance approval (continued)

Household size differences between loan application and tax return

i.e., letter of explanation from borrower

Missing required federal tax returns (IRS transcripts are acceptable)

CHFA requires most current year of tax returns or transcripts

Extensions not acceptable

No W-2s or Wage and Income Transcripts in lieu of tax returns

All associated loan files are not complete – all loan files (first mortgage and second mortgage) must be complete before any file will check in for review

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CHFA FirstStepsm/FirstStep Plussm

FHA only (no 203(k)) Income and purchase price limits will apply May use DU or LPA AUS Total Scorecard findings Manual underwrites acceptable per insurer/guarantor guidelines Temporary buydowns acceptable Manufactured housing – single, double wide, or larger acceptable to FHA

guidelines

CHFA’s 5% Second Mortgage Loan available Borrower minimum investment of $1,000 Gift funds acceptable as permitted by insurer/guarantor Must be a first time homebuyer or qualified veteran

Never owned or not owned in the most recent three (3) years Exception: may be repeat homebuyer if purchasing in a targeted area

Borrower(s) may not have any ownership in residential property Some exceptions may apply

Homebuyer education required Affidavits are required MCC cannot be utilized Recapture Tax provision

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chfa firststep

fha requirements for chfa second mortgage

FHA Loan Underwriting Transmittal (LUTS) – CHFA Second Mortgage must show as secondary financing and marked as Government. Also include the EIN number for CHFA – 84-0676451

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recapture tax

What is Recapture Tax (IRS)

Factors that determine potential of Recapture Tax

Property is sold within the first 9 years; and

Household income exceeds the maximum income limits (CHFA Form 407 page 4); and

Borrower has a gain on the sale of the property

Recapture Tax disclosure given to borrowers at closing – CHFA Form 407, Notice of Recapture Tax

CHFA will reimburse any Recapture Tax paid by borrowers

Borrower(s) submits CHFA Form 950 and required documents after recapture tax is paid

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firststep program compliance documentation requirements

Follow the list of conditions/documents in the Document Delivery system or utilize the document checklist for the respective program

CHFA Form 750, Compliance Submission Review Checklist

Do not include checklist in file submission

CHFA Form 401, Initial Applicant Affidavit

CHFA Form 719, Veteran Waiver Affidavit – only required if borrower is a non-first time homebuyer who is an eligible veteran

Include copy of DD214 with this form

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chfa form 401, initial applicant affidavit

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chfa form 401, initial applicant affidavit

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chfa form 401, initial applicant affidavit

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chfa form 401, initial applicant affidavit

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chfa form 401, initial applicant affidavit

chfa form 719, affidavit of veteran for exception to first time homebuyer requirement

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Firststep program purchase documentation requirements

Follow the list of conditions/documents in the Document Delivery system or utilize the document checklist for the respective program

CHFA Form 751, Purchase Submission Review Checklist

Do not include checklist in file submission

CHFA Form 220, Tax Exempt Financing Rider

Must be attached to first mortgage loan Deed of Trust

CHFA Form 402, Final Applicant Affidavit

CHFA Form 407, Notice of Recapture Tax

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chfa form 220, tax exempt financing rider

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Must be recorded with first mortgage Deed of Trust.

chfa form 220, tax exempt financing rider

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Must be recorded with first mortgage Deed of Trust.

chfa form 402, final applicant affidavit

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chfa form 407, notice of recapture tax

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chfa form 407, notice of recapture tax

contact information

Call us with questions:

(888) 320-3688 Home Finance

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