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Welcome Compliance Training 101

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  1. Welcome Compliance Training 101 7/23/2014

  2. Homeownership Staff • Erik Nore, Director of Homeownership • Anita Racicot, Homeownership Specialist • Cynthia Marquez, Compliance Specialist • Shawn Rasmussen, Lending Specialist • Lisa Romero, Lending Specialist • Barbara Tashkandy, Lending Coordinator • Teri Baca, Homeownership Representative • Eunice Duran, Homeownership Representative 7/23/2014

  3. MFA Mandate • In 1975 the New Mexico state legislature created the New Mexico Mortgage Finance Authority (MFA), a public body politic and corporate, separate and apart from the state, constituting a governmental instrumentality, with the power to raise funds from private investors in order to make such private funds available to finance the acquisition, construction, rehabilitation and improvement of residential housing for persons and families of low or moderate income within the state. 7/23/2014

  4. Mission Statement • MFA provides innovative policies, products, education, and services in collaboration with strategic partners to ensure that all New Mexicans have access to affordable housing. We engage in self-sustaining practices to strengthen the social and economic development of New Mexico’s communities and families by financing, developing, and preserving homes. 7/23/2014

  5. Vision Statement • All New Mexicans will have quality affordable housing opportunities 7/23/2014

  6. Program GuidelinesFirst-Time Home Buyer • First -Time Home Buyer • Income Limits • Acquisition Cost Limits • Single Family Residence • Owner Occupied 7/23/2014

  7. Program GuidelinesFirst-Time Home Buyer • First -Time Home Buyer • Definition • Borrowers are purchasing first home • Borrowers have not owned a home as their primary residence for a full three (3) years. • Borrower has not lived with an ex-spouse that owned the property as his/her sole and separate property prior to the marriage for a full three years. 7/23/2014

  8. Program GuidelinesFirst-Time Home Buyer • First -Time Home Buyer - Waiver • Veterans • Veterans do not need to be first time home buyers • Do not need to use a VA loan, can use any loan product • Lender should place proof the borrower is a veteran in the compliance package (VA Form DD-214) 7/23/2014

  9. Program GuidelinesFirst-Time Home Buyer • Owner Occupied • Borrowers must occupy the property as their primary residence • Six (6) month rule for owner occupancy • Borrowers may not rent the property within the first six (6) months of occupancy without the permission of MFA’s Board of Directors 7/23/2014

  10. Program GuidelinesFirst-Time Home Buyer • Owner Occupied (continued) • Non-occupying co-signer(s) allowed** not non-occupying co-borrower(s) • Co-signer will not take title to property • Co-signer(s) must sign Note for first and second mortgages ** Co-signers are not allowed under the HFA Preferred Program 7/23/2014

  11. Program GuidelinesFirst-Time Home Buyer • Single Family Residence • One Kitchen, no rental units • Tax code restriction on business use of property less than or equal to 15% of the home. 7/23/2014

  12. MFA Guidelines • Compliance Manual Posted • Single Family Program reference guide • Will be updated frequently 7/23/2014

  13. MFA Guidelines • Definition of “Household Income” • Income that is considered “Household Income” includes: • All forms of income from the mortgagor (Borrower) or co-mortgagor (Co-Borrower) will be considered as Household Income for the purposes of qualifying for the single-family loan program. • If the Borrower is taking title as sole and separate, all forms of income from the non-purchasing spouse 6/9/2014

  14. MFA Guidelines • Definition of “Household Income” • Income that is not considered “Household Income” includes: • All forms of income earned by a family member or household member that do not have ownership interest in the property and are not liable for the mortgage debt. 6/9/2014

  15. MFA Guidelines • Definition of “Household Income” • Only the borrower or co-borrower’s income will be included in the income calculation for the Compliance Review • If the borrower is married, the income of the spouse must be included in the income calculation for Compliance Review • Income from any other person living in the home (family member, significant other, etc.) will not be included in the income calculation for Compliance Review 6/9/2014

  16. MFA Guidelines • Definition of “Household Income” • However, the definition of “Household Income” remains “all household members age 18 or over” for the Payment$aver and Helping Hand Programs because of the Federal HOME Guidelines. 6/9/2014

  17. MFA Guidelines • Definition of “Ownership Interest” for the 3-year Requirement • For purposes of documenting the 3-year requirement (i.e. no ownership interest in a principle residence at any time during the 3 year period prior to the date the mortgage is executed) 6/9/2014

  18. MFA Guidelines • Definition of “Ownership Interest” for the 3-year Requirement • “Ownership Interest” is defined as including the following: • A fee simple interest • A joint tenancy, a tenancy in common or tenancy by the entirety • The interest of a tenant-shareholder in a cooperative 6/9/2014

  19. MFA Guidelines • Definition of “Ownership Interest” for the 3-year Requirement • “Ownership Interest” is defined as including the following: • A life estate • A land contract (i.e. a contract pursuant to which possession and the benefits/burdens of ownership are transferred, although legal title is not transferred until some later time) and • An interest held in trust for the mortgagor, whether or not it was created by the mortgagor 6/9/2014

  20. MFA Guidelines • Definition of “Ownership Interest” for the 3-year Requirement • Prior “Ownership Interest” by the spouse of the borrower is considered prior “Ownership Interest” of the borrower, regardless of when the borrower and spouse were married 6/9/2014

  21. MFA Guidelines • Tax Returns (For ALL Borrowers on the loan and if applicable Non-Purchasing Spouse) • Three (3) years Tax Returns are not required if borrower has at least one creditor with a three year credit history on their credit report • Two (2) years Tax Returns are required for all Self-Employed borrowers, only, unless they do not have a three year credit history, then three years of Tax Returns are required 7/23/2014

  22. MFA Guidelines • Minimum Credit Score of 620 • Except for manual underwrite with HFA Preferred Product which has a minimum of 660 • If credit report provides 3 credit scores (tri-merge), then the middle credit score must be at least 620 for each borrower • If credit report only provides 2 credit scores, the lowest credit score must be at least 620 for each borrower 7/23/2014

  23. MFA Guidelines • Minimum Credit Score of 620/660 • If the credit report only provides 1 credit score that score must be at least a 620/660 for each borrower • If either borrower has no credit score, due to insufficient or stale credit, MFA will accept a manually underwritten loan. In addition, the loan must be underwritten to applicable secondary market guidelines 7/23/2014

  24. MFA Guidelines • Minimum Credit Score of 620/660 • When reserving a borrower without a credit score, the system will not allow you to move to the next screen without entering a score. A 620 score must be entered to get to the next page. After the reservation is complete you must call MFA so that the score can be changed and notes added to the reservation screen. 7/23/2014

  25. MFA GuidelinesMortgage$aver and DPA Programs • Minimum borrower cash contribution • MFA requires a minimum borrower cash contribution of $500.00, regardless of program type. • Funds must be from the borrower and cannot be derived from any type of gift, grant, pro-rated taxes or down payment. 7/23/2014

  26. MFA GuidelinesMortgage$aver and DPA Programs • Minimum borrower cash contribution • MFA requires the lender to provide proof of borrower’s funds on the Final First Mortgage Application in Section VII and the HUD 1 • If the borrower contributes more than $500 to the transaction (i.e. Earnest Money, POC Appraisal Fee) the borrower can get those funds back at closing 7/23/2014

  27. MFA Guidelines • Use of Mortgage Booster Funds • May only be used for minimum down payment and allowable closing costs • MFA will allow a principal reduction of up to $100 if the final Mortgage Booster loan is too high. The principal reduction must be applied to the first mortgage 7/23/2014

  28. MFA Guidelines • Reasons for Sole and Separate (Lender Memo 12-11 dated July 11, 2012) • One Spouse of a married couple is not able to enter into a contract (i.e. not of legal age), the spouse that is able to enter into a contract will be allowed to purchase the home as their Sole and Separate property. • Proof that spouse is not of legal age must be provided ** All household income needs to be counted toward income eligibility ** 7/23/2014

  29. MFA Guidelines • Reasons for Sole and Separate (Lender Memo 12-11 dated July 11, 2012) • One spouse of a married couple has insufficient credit history (no credit score), which does not allow for the married couple to qualify for the mortgage jointly, the spouse with the credit score will be allowed to purchase the home as their Sole and Separate property. • Proof of no credit history must be provided ** All household income needs to be counted toward income eligibility ** 7/23/2014

  30. MFA Guidelines • Reasons for Sole and Separate (Lender Memo 12-11 dated July 11, 2012) • One spouse of a married couple does have a Social Security number and the other spouse does not have a Social Security number or has an Individual Tax Identification Number (ITIN), the spouse with the Social Security number will be allowed to purchase the home as their Sole and Separate property. • Proof of no Social Security number or proof of ITIN must be provided ** All household income needs to be counted toward income eligibility ** 7/23/2014

  31. MFA Guidelines • Reasons for Sole and Separate (Lender Memo 12-11 dated July 11, 2012) • One spouse of a married couple has a poor credit history (a credit score of less than 620), which does not allow for the married couple to qualify for the mortgage jointly, the spouse with the credit score above 620 will be allowed to purchase the home as their Sole and Separate property, with the following restrictions; **All household income needs to be counted toward income eligibility ** 7/23/2014

  32. MFA Guidelines • Reasons for Sole and Separate (Lender Memo 12-11 dated July 11, 2012) • A maximum debt-to-income (“DTI”) of 45% for the purchasing spouse, regardless of the automated underwriting system (“AUS”) approval criteria. • Both spouses need to provide proof that they both qualify for any and all First Time Homebuyer Requirements that might apply, including total household Income and prior homeownership. (First Time Homebuyer Requirements do not apply to the HERO Program) • Proof of poor credit history must be provided **All household income needs to be counted toward income eligibility ** 7/23/2014

  33. MFA Guidelines • Mandatory Homebuyer Counseling • All MFA Borrowersare required to take pre-purchase homebuyer counseling regardless of program type. • HERO Program onlyif the borrower is a first-time homebuyer Counseling Certificates cannot be older than One (1) Year 7/23/2014

  34. MFA Guidelines • Mandatory Homebuyer Counseling • The pre-purchase homebuyer counseling will be either: • Face to Face pre-purchase housing counseling provided in either a classroom or one-on-one setting by a HUD approved housing counseling agency • Face to Facecounseling must be used for the Payment$aver and Helping Hand Programs (the on-line counseling is not acceptable for these two programs • Borrowers preferring to go to a counselor instead of taking the eHome America class on-line is also acceptable for the Mortgage$aver, HERO and Mortgage Booster Programs 7/23/2014

  35. MFA Guidelines • Mandatory Homebuyer Counseling • Pre-purchase homebuyer counseling • eHome America on-line Housing counseling • Borrowers may take the course married, unmarried or jointly for one fee of $45 paid at the time of registration. When registering type both names so that the certificate of completion will print correctly. • The $45 fee can be reimbursed at closing and included with the closing costs included in the second mortgage loan 7/23/2014

  36. MFA Guidelines • Mandatory Homebuyer Counseling • Pre-purchase homebuyer counseling • Link to the eHome America site is on the MFA Home Page • Be sure to refer all borrowers to the MFA Home Page to ensure MFA is chosen as their administrator. 7/23/2014

  37. Questions? 7/23/2014

  38. Overview of Programs • Continuous Lending Program (Mortgage$aver and HERO Programs) • Funds are always available statewide for reservation • MFA will periodically “re-price” the Programs, based on market conditions • Due to frequency of rate changes, see MFA website for the current rates 7/23/2014

  39. Overview of Programs • May use FHA, VA, Conv, USDA [RHS], Section 184 Indian Housing (Section 184) • 1st Mortgage Options • Mortgage$aver, Mortgage$aver Zero, Mortgage$aver Plus • DPA Options • 3.50 % Grant (Mortgage$aver Plus), Mortgage Booster, Payment$aver, Payment$averSmartChoice (SmartChoice) and Helping Hand • 3.50 % Grant is based on the finalloan amount (including the MIP) • HERO 1st Mortgage • 3.00 % Grant is based on the finalloan amount (including the MIP) • FHA ONLY 7/23/2014

  40. Overview of Programs • Fees • Mortgage$aver: 1.00% Origination + 1.00% Discount to the borrower(s) • Mortgage$aver Zero, Mortgage$aver Plus and HERO: : 0.00% Origination + 0.00% Discount to the borrower(s) • Lender will be paid 1.00% origination when loan is purchased by Master Servicer 7/23/2014

  41. Overview of Programs • Fees • Mortgage$aver, Mortgage$aver Zero, Mortgage$aver Plus and HERO • Master Servicer (Idaho Housing) will pay a Service Release Premium of the Higher of 1.50% or $750 7/23/2014

  42. HFA Preferred Loan ProgramSpecial Housing Finance Agency Conventional Loan Product • Definition of “Ownership Interest” for the HFA Preferred Loan Program • An ownership interest is defined as a borrower whose name appears on the deed to any residential property. Residential properties include single family detached, townhomes, condos, manufactured homes, investment properties and vacation homes. 6/9/2014

  43. HFA Preferred Loan ProgramSpecial Housing Finance Agency Conventional Loan Product • Eligible Occupancy for the HFA Preferred Loan Program • The property must be owner-occupied and the borrower may not have an ownership interest in any other residential dwelling at the time of loan closing. 6/9/2014

  44. HFA Preferred Loan ProgramSpecial Housing Finance Agency Conventional Loan Product • Term Sheet • Posted on the MFA website 6/9/2014

  45. Income Limits(Mortgage$aver and Mortgage Booster Programs) 7/23/2014

  46. Income Limits (Targeted Areas)(Mortgage$aver and Mortgage Booster Programs) 7/23/2014

  47. Acquisition Cost Limits(Mortgage$aver and Mortgage Booster Programs) 7/23/2014

  48. Acquisition Cost Limits(Targeted Areas)(Mortgage$aver and Mortgage Booster Programs) 7/23/2014

  49. Questions? 7/23/2014

  50. HERO PROGRAM • Eligible Borrower(s): • The HERO program is available only to households in which at least one person is a Teacher, Safety Worker, Health Care Worker or an Active Member of the Armed Forces. Definitions are as follows: 7/23/2014