IHDA Procedural Guide

The Homeownership Department

IHDA Procedural Guide

The Illinois Housing Development Authority 401 N. Michigan Avenue Suite 700 Chicago, IL 60611 1-877-456-2656 www.ihda.org

Revised July, 2015

2 7/24/2015

T

ABLE OF

C

ONTENTS

PAGE

INTRODUCTION ……… 3

ILLINOIS HOUSING DEVELOPMENT AUTHORITY... 4

IHDA MORTGAGE LOAN PROGRAM………...…... 4

PROCESS OVERVIEW – BASICS….……….….………….……….……….. 5

PRE-SCREENING FOR IHDA COMPLIANCE... 5

REGISTERING/COMMITTING THE LOAN... 6

TAX CODE COMPLIANCE..……….………..…... 7

FIRST TIME HOME BUYER/EXEMPT….…... 7

HOUSEHOLD INCOME………... 10

PURCHASE PRICE LIMIT AND QUALIFIED DWELLING... 14

ASSUMPTIONS………... 17

FEDERAL RECAPTURE TAX... 17

IHDA COMPLIANCE REVIEW PROCESS………... 20

LOAN CLOSING……….………... 20 QUALITY CONTROL……….. 21 POST CLOSE... 21 FEES………..………... 22 SUPPLEMENT -MCC………... 24 PROGRAM DESCRIPTIONS……….…...….……… 27 PROGRAM OPTIONS...………..………. 30

1ST_{HOME ILLINOIS MORTGAGE PROGRAM……….. 34}

RESOURCES……….……… 36

3 7/24/2015 June 2015

Welcome to the Illinois Housing Development Authority’s (IHDA) Procedural Guide. This Guide is designed to assist you in originating IHDA mortgage loan products. Please note that IHDA’s on-line loan reservation system, MITAS, is addressed in its own guide, which can be located at www.ihda.org. Should you have questions or need clarification on anything contained in this Guide, please feel free to contact an IHDA representative or IHDA’s helpline at 1-877-456-2656:

Account Managers:

Scott Bush 312-898-3317 [email protected] Greg Faulkner 312-914-5023 [email protected] Homeownership Staff:

Linda Benson, Supervisor 312-836-5249 [email protected] Allison Crane 312-836-8561 [email protected] Diana Esparza-Navarrete 312-836-5371 [email protected]

John Maksim 312-836-5237 [email protected]

Lee Gattuso 312-836-5324 [email protected]

Aaron Turner 312-836-5347 [email protected]

A Resource Page and Glossary of Terms are listed at the end of this Guide for your convenience. The procedures contained herein are subject to change, so please consult the IHDA website (www.ihda.org) on a regular basis or call an IHDA Homeownership Compliance Specialist. Thank you for participating in IHDA’s mortgage loan programs! We are very excited to offer reliable and relevant products to your clients.

Tara Pavlik 312-836-5204 [email protected]

4 7/24/2015

I

LLINOIS

H

OUSING

D

EVELOPMENT

A

UTHORITY

The Illinois Housing Development Authority (IHDA) is a self-supporting state agency that finances the creation and the preservation of affordable housing throughout Illinois to increase the supply of decent and safe places for people of low or moderate means to live. IHDA accomplishes its mission through a number of federal and state funding sources. IHDA is also a bonding authority and independently sells bonds, based on its own good credit, to finance affordable housing in Illinois. Historically, the Authority utilized Mortgage Revenue Bonds as a primary funding source for its single family loan program(s); however the Authority now uses a variety of funding sources.

Since its creation in 1967, IHDA has allocated more than $14.6 billion to finance more than 245,000 affordable units across the state.

T

HE

I

LLINOIS HOUSING DEVELOPMENT AUTHORITY MORTGAGE LOAN

P

ROGRAM

IHDA mortgage loan programs offer safe and reliable mortgage products with affordable interest rates which can include down payment assistance to first time home-buyers, qualified veterans and non-first time home buyers, subject to income and purchase price limits (see appendix). Eligibility for each product is based on the borrower’s credit profile, household income and the purchase price of the home. The majority of the mortgage loan programs are available statewide.

Currently, the following loan programs are available through Illinois Housing Development Authority:

1) @Home Illinois Mortgage program – includes the following types of transactions: a) @Home First mortgage only (includes FHA, VA, Conventional FNMA HFA Preferred,

USDA/RD) for purchase and refinance (no FHA to FHA)

b) @Home First Mortgage with Down Payment Assistance (DPA)

c) @Home First Mortgage with Mortgage Credit Certificate (MCC) d) @Home First Mortgage with DPA and MCC

e) @Home Conventional with Lender Paid Mortgage Insurance (LPMI) 2) 1st _{Home Illinois program}

Includes FHA, VA, Conventional FNMA HFA Preferred, USDA/RD first mortgage loans for first time home buyers in IL with forgivable Down Payment Assistance (DPA) loan. More detailed information as to individual loan programs follows beginning on page 27.

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PROCESS OVERVIEW

BASICS

1.

L

ENDER PRE

-

SCREENS BORROWER

/

CO

-

BORROWER

/

SPOUSE

2.

L

ENDER REGISTERS AND COMMITS LOAN

(

S

)

IN

MITAS

3.

L

ENDER PERFORMS AND COMPLETES TAX CODE COMPLIANCE REVIEW AND PERFORMS CREDIT UNDERWRITE TO AGENCY REGULATIONS

/

GUIDELINES

4.

L

ENDER CLOSES LOAN

5.

L

ENDER VALIDATES LOAN DATA

/

INFORMATION IN

MITAS

6.

L

ENDER UPLOADS TWO PACKAGES TO

MITAS:

1)

THE COMPLETE LOAN DELIVERY

(

INVESTOR

)

FILE AND

2)

IHDA

DOCUMENTS WITH DATA SUMMARY COVER SHEET

7.

L

ENDER DELIVERS REQUIRED FILE WITH ORIGINAL NOTES TO

US

B

ANK

HFA

DIVISION

8.

L

ENDER DELIVERS

IHDA

DOCUMENTS TO

IHDA

(

INCLUDING ANY

MCC*

DOCUMENTS IF APPLICABLE

)

FOR REVIEW VIA UPLOAD TO

MITAS

9.

U

PON SATISFACTORY REVIEW OF STEPS

6

-

8,

US

B

ANK

HFA

D

IVISION WILL PURCHASE LOAN

(

S

)

FROM LENDER

10.

*IF

MCC,

MCC

DOCS ARE REVIEWED BY

IHDA

AND

MCC

IS ISSUED BY

IHDA

TO BORROWER

PRE-SCREENING FOR IHDA COMPLIANCE – ALL BUYERS/BORROWERS

The borrower should be pre-screened to determine whether borrower is eligible for IHDA’s program. For bond compliant loans, eligibility for the basic IHDA program includes:

1. Borrower (and non-purchasing spouse) must be a first-time home buyer or exempt* at time of application for @Home with MCC

2. Co-borrower/spouse must be a first-time homebuyer or exempt* at time of application for @Home with MCC

3. Total household income must be below program county limit

4. Home must be a qualified dwelling situated on less than 5 acres of land 5. Purchase price of home must be below the program county limit

6. For 1st _{Home Illinois program, borrower (including non-purchasing spouse)}

and co-borrower must be first time home buyers, purchasing an existing qualified dwelling within a program designated county (Boone, Cook, DeKalb, Fulton, Kane, Marion, McHenry, St. Clair, Will, Winnebago).

6 7/24/2015

If the loan officer determines that the applicant is eligible for the IHDA program, the loan application is completed. Before registering/committing the loan, loan officer/originator must make a determination as to borrower’s income threshold in order to select appropriate IHDA program (Above 80% of the Area Median Income (AMI) or Below 80% of the AMI).

For information on income thresholds, please see page 12. *Exempt = qualified veteran or property is in targeted area

Important Note: As of March 1, 2015, non-first time home buyers are able to obtain down payment assistance through @Home Illinois. Remember that the same income and purchase price limits apply, and property must be a qualified dwelling.

All borrower loan files must be reviewed for IHDA compliance as well as for creditworthiness in accordance with agency (FHA, VA, FNMA, RD/USDA) regulations and guidelines, and must comply with US Bank HFA division guidelines.

REGISTERING AND COMMITTING THE LOAN

In order to register/commit a loan for any of the IHDA programs, the Lender must register/commit the loan using IHDA’s online loan reservation system (currently, MITAS). The potential buyer(s) must have a valid real estate contract in place prior to registration/commitment.

Please note that online loan reservation system (MITAS) input is not addressed in this Guide. The document that addresses online reservation system input, the IHDA Reservation Manual, can be found at www.ihda.org → Partners → Info Center → Frequently Used Forms and Documents → Reservation Manual. (link to forms: http://www.ihda.org/partner/forms.htm

At the time the registration/commitment is made, theinterest rate is locked for 60 days

regardless of future rate changes. Loan must be purchased by IHDA / master servicer by the 60th _{day. If a loan has not been purchased by the 60}th _{day, a 25 bps reduction in SRP}

will be made; if a loan has not been purchased by the 90th _{day though IHDA is under no}

obligation to purchase the loan(s), you may incur additional SRP reductions.

A cancellation and re-registration of the same borrower(s) will not be permitted for 60 days unless the borrower has obtained a contract on a different property. It is suggested that you commit the loan when you have received the appraisal and the loan file is fully complete. Generally speaking, once your loan is reserved/committed, you will perform review of the loan file for tax code compliance and for credit underwriting, each of which is a separate and unique review.

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TAX CODE COMPLIANCE REVIEW

Tax Code Compliance Underwriting Review is unique to the IHDA loan program and is required to be performed by the Lender for all IHDA programs, including loans with a Mortgage Credit Certificate (MCC). A Lender signed certification attesting to review and tax code compliance is required to be in each file.

Tax Code Compliance Underwriting Review consists of documenting three basic determinations:

1. Is the borrower (and spouse) a first-time homebuyer or exempt from this requirement? (glossary) OR is borrower a non-first time home buyer meeting income, purchase price and all other IHDA program restrictions?

2. Is the borrower’s total household income within the allowable limits for the area in which they intend to reside? (Appendix) Note that we have developed the IHDA income calculator to be used in determining whether income is compliant or non-compliant. (Income Calculator Guide)

3. Is the residence aqualified dwelling whose purchase priceis within the allowable limits for the area in which it is located? (Appendix)

Again, it’s the lender’s responsibility to determine tax code compliance. The following are parameters for determining tax code compliance.

1.

F

IRST

T

IME

H

OME

B

UYERS

/E

XEMPT

H

OW TO DOCUMENT A FIRST

-

TIME HOMEBUYER

(

S

)

Each borrower and spouse (first time or subsequent) must provide copies of his or her

signed Federal income tax returns (or transcripts directly from IRS) for the most recent three (3) years, including all attached schedules. Copies of W-2 forms from the most recent filed federal tax return must also be included. Please do not ask borrowers to provide State income tax returns and do not submit state income tax returns, as they cannot be used as an alternative to Federal returns.

DETERMINATION: Review the tax returns to see if deductions were taken for mortgage interest or real estate taxes. If deductions were taken, the borrower may not be a first-time homebuyer. It must be determined whether the interest deduction in question applied to a principal place of residence or some other property. It is also suggested that the credit report be reviewed for possible mortgage history.

I

SSUES THAT MAY AFFECT FIRST

-

TIME HOMEBUYER

(

S

)

STATUS

P

RIOR

O

WNERSHIP OF A

M

OBILE

H

OME

:

A prior ownership interest in a mobile home will not disqualify a borrower as a first-time homebuyer if adequate documentation* is provided that confirms the following facts:

8 7/24/2015

1. Those components which operate only during transportation (hitch and axles) have not been removed;

2. The mobile home can be legally transported on state highways without first being disassembled into sections. The legal dimensional limits in Illinois are 14 feet 6 inches wide by 95 feet long (including the truck pulling the mobile home); and, 3. Permanent structures have not been added to the mobile home. Such items

include affixed decks, room additions, etc. If a deck has been built and the mobile home is merely sitting next to the deck, that would not constitute “permanently affixed.”

Prior ownership (within three years) of a “double-wide” mobile home will disqualify a possible borrower since disassembly is required for transport.

*DOCUMENTATION: The best documentation is a photograph of the axles and hitch of

the mobile home, Include the photograph(s) in the loan file when submitted to IHDA.

I

NHERITED

P

ROPERTY

:

An expectancy to inherit property does not constitute an ownership interest. However, if the person occupies the inherited property after acquiring a vested title interest, the person is no longer a first-time homebuyer. [For example: son is taking care of sick mother in her home, she passes away leaving property to son – he is not a first time home buyer because he has beneficial interest in the property and has lived in the home as his primary residence within the most recent three years.]

N

EW

M

ORTGAGE

R

EQUIREMENT: The borrower cannot have had a prior mortgage or other financing on the subject residence, except in the following cases:

Bridge or Construction Loans: A prior mortgage obtained for temporary financing, such as a construction or a bridge loan, is acceptable provided the mortgage has a stated term of 24 months or less. Evidence that the bridge loan has been recorded must be provided.

Contract for Deed: A contract for deed or an installment sales contract is considered seller-financed; therefore a contract purchaser is an eligible borrower as long as the contract has a stated term of 24 months or less. The contract for deed or installment sales contract must be recorded.

Lease with Option to Purchase: Seller financing is established when a rent credit is provided under a lease with option to purchase. The renter is an eligible first-time borrower as long as (a) the lease provides a right of first refusal to purchase and no portion of the rent paid has been or will be credited to the purchase price; or (b) the term of the lease does not extend beyond 24 months of the new IHDA loan closing date.

D

IVORCE WITHIN THE

L

AST

T

HREE

Y

EARS: A borrower who has divorced within the last three (3) years and had an ownership interest in another residence can still qualify as a first-time homebuyer IF the borrower resided in another property for the three (3) years prior to the closing of the IHDA loan. Please consult the Divorce Decree/Property

9 7/24/2015

Settlement for ownership interest status and provide supporting documentation such as a lease if the borrower resided in another property.

M

ARRIED OR

S

EPARATED

B

ORROWERS

T

AKING

T

ITLE

I

NDIVIDUALLY: For IHDA tax code

compliance, a person is either married or single; there is no gray area. You need to qualify both borrower AND spouse in cases where spouse is not borrowing, and verify that borrower AND spouse are first time home buyers or exempt. Remember that if borrower marries during the mortgage loan process, you will need to document and include new spouse’s income when calculating for compliance, obtain a copy of the marriage certificate and obtain three years signed Federal tax returns (or transcripts).

Please note that this requirement only applies to tax code compliance underwriting within the Program. This is not an issue when performing the credit underwriting.

DOCUMENTATION: Review the tax returns for both the buyer and the spouse to see if deductions were taken for mortgage interest or real estate taxes. If deductions were taken, the borrower or spouse may not be first-time homebuyers. It must be determined whether the interest deduction in question applied to a principal place of residence or some other property.

L

ENDER

E

MPLOYEES OR

IHDA

E

MPLOYEES: Employees of participating lenders and employees of IHDA are eligible for IHDA programs. To prevent any appearance of impropriety, participation by lender employees requires prior approval by IHDA; lender should request approval through their Compliance Specialist in writing prior to submitting a loan for purchase in part, to assure privacy of information.

M

ISCELLANEOUS

:

HOME CONSTRUCTED ON LAND OWNED BY BORROWER

:

If borrower purchased land more than two (2) years prior to start of construction, the cost of the land is not included in the acquisition cost. Obtain a certified copy of the recorded deed to document and determine whether cost of land should or should not be included in acquisition cost. If the land was acquired within the two (2) year limitation, the value of the land must be included in the acquisition cost and can be documented with a copy of the sales contract or closing statement if financed. If the borrower acquired the land through seller financing or inheritance, the acquisition date is the date of the seller finance agreement or date of death.

In all cases, remember to follow agency regulations for credit underwrite, appraisal requirements, etc.

FORECLOSURE

:

In all cases, remember to follow agency regulations with regard to borrowers with prior foreclosure.

NON

-

OCCUPANT CO

-

BORROWERS

:

All borrowers must occupy subject property within 60 days of close. No non-occupant co-borrowers are permitted.

10 7/24/2015

2.

HOUSEHOLD

INCOME

The borrower(s) and relevant parties (defined below) must have a total household income that does not exceed the applicable limit in effect at the time of loan closing.

The term “borrower” includes the borrower(s) and the co-borrower(s). The term “relevant parties” includes a spouse even if they are not going on the title or are waiving homestead rights. Any adult (18 and over) who intends to live in the home is also considered a relevant party and their income must be included in the income calculation. IHDA’s income calculator and checklist are tools to assist you in completing income calculation and can be located at www.ihda.org in the partner forms section. A presentation for use of calculator is also located on our website.

Use the IHDA income calculator at www.ihda.orgeach time you are calculating income for your borrower(s) and household occupants so that you are using the most recent version of the calculator. Once you have completed all sections, including the entire household information section, income must be shown to be compliant. If the income is over the income limit for the county and household size, the borrower is not eligible for our program. This applies to first time AND non-first time home buyers.

CALCULATION

:

Total household income is the borrower’s and relevant parties’ annualized gross income. Annualized gross income is gross monthly income, at the time of application, multiplied by 12. (Tax code requires that IHDA projects income forward for one year). Remember - income from all household occupants 18 years of age and older must be documented. In most cases, obtaining thirty (30) consecutive days of pay stubs which show total year to date income will suffice.

Gross monthly income is the sum of monthly gross pay plus overtime, part-time employment, bonuses, dividends, interest, royalties, pensions, Veterans Administration compensation, net rental income, alimony, child support, public assistance, sick pay, Social Security benefits, unemployment compensation, income received from trusts, and income received from business activities (such as EBay or PayPal, or investments, etc. Basically, it includesall income from all sources. Gross income means that no reduction to income is made for expense such as unreimbursed business expense.

NOTE: If there is a change in income between the time of making the reservation and closing the loan, the Lender must recalculate income to ensure the borrower(s) is still within the income limits for an IHDA loan.

H

OW TO DOCUMENT

T

OTAL

H

OUSEHOLD

I

NCOME

P

AY STUBS

:

Total Household Income is best documented by providing IHDA pay stubs covering the most recent consecutive 30 day period (2 or 3 pay stubs) for each employer for anyone aged 18 or over who will be living in the household. If the pay stubs show that borrower receives a bonus, or overtime, or other sporadic income, obtain a full Verification of Employment (VOE) if total income calculation puts income near limit.

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C

OMMISSION

,

BONUS OR OVERTIME: To determine commission, bonus and overtime income, average the income over the last year and the income from the current year to date (YTD) by using current YTD pay stubs and either Federal income tax return(s) or by obtaining a full Verification of Employment (VOE) which provides a breakdown or itemization of income. Use the average monthly income to predict the income forward (multiply monthly average by 12).

S

ELF

-

EMPLOYED BORROWERS

:

To determine the income of a self-employed borrower, average their income using most recent/current Federal income tax returns and a signed year-to-date Profit and Loss (P & L) Statement for the current year. The P & L should state the gross income, the expenses and the year to date net income. Note that the Profit and Loss Statement may need to come from a third party if required for credit underwriting purposes or if requested by IHDA. Calculate the historical monthly income and use that number to project the income forward (multiply monthly average by 12). For self-employed borrowers, the income calculation allows for the exclusion of legitimate operating expenses. Sometimes, bank statements may indicate deposits that could be from sources such as EBay, PayPal, etc. which would require a signed YTD P & L from borrower/spouse if it appears this income is ongoing.

C

HILD SUPPORT

/

ALIMONY: Child support and alimony payments must be included as household income. The documentation needed to verify the amount of child support/alimony is a copy of the appropriate (and most current) court order/divorce decree, which sets forth the amount of the support.

NOTE:

 You must include child support and/or alimony in your household income calculations even if you are not using it for credit underwriting purposes.

 If a formal court exists you must calculate support/alimony income even if the borrower is not receiving it.

 If custody of child/children is held jointly, then the child/children can be included as household occupants.

N

ON

-

TAXABLE INCOME

:

Social Security, disability and other non-taxable income is to be included in the income calculation for tax code compliance purposes. Even though you may gross up income as permitted for credit underwriting, you do not gross up income when calculating income for tax code compliance.

M

ARRIED OR SEPARATED BORROWERS TAKING TITLE INDIVIDUALLY: A married or separated person who wishes to apply for a mortgage and take title to the residence in his/her name only (not jointly with the spouse) may be eligible. This is acceptable if the Lender is able to document that the borrower would still be eligible if the spouse was also to apply and take title. Both the borrower and his/her spouse must be first-time homebuyers (or non-first time home buyers for @Home Illinois Mortgage beginning 3/1/2015) AND have a combined household income within the applicable limit. The spouse not taking title must execute the Borrower Affidavit; provide signed Federal tax returns and his/her 30 day’s most recent consecutive pay stubs (2-3). Civil unions have the same requirements as

12 7/24/2015

married couples.

If spouse earns or receives no income from any source, then you must obtain a signed certification attesting to that fact from the spouse. If spouse has not been required to file Federal income tax returns for any year, spouse must sign the IHDA Tax Affidavit. See page 8 for documentation requirement for newly married borrowers.

P

REVIOUS EMPLOYMENT

:

If a borrower/co-borrower/spouse has changed jobs during the most recent tax year (i.e. you have a W2 for 2014 for borrower no longer employed by that employer) you must obtain a prior VOE for any employment that has ended or

terminated during the tax year, and/or current year.

H

OUSEHOLD OCCUPANTS

18

OR OVER

:

Obtain pay stubs for any household occupant 18 or over as noted above. If the household occupant is not employed or does not receive any income from any source, an original signed statement must be obtained. Lender retains the original letter in file and provides copy to IHDA.

D

ETERMINING IF

T

OTAL

H

OUSEHOLD

I

NCOME IS BELOW COUNTY LIMIT

IHDA’s income calculator provides you with the means to determine whether a household income is below or above the county limit, therefore compliant or non-compliant, as the county limits are imbedded in the calculator. You are required to use the income

calculator for all IHDA programs. Lender must fully complete, sign and date the income calculator; the calculator must be included in each and every file submitted to IHDA. A copy of the signed income calculator can be uploaded to MITAS.

Documentation that will assist you in determining household size would be the loan application, the IHDA income certification, the Federal tax returns, etc. Once you have determined the size of the household, you can proceed with completion of the IHDA income calculator.

In the calculator, you must complete the following:

 Income from all sources

 the name of county in which the property is located

 the names, ages, and total number of household members

 select whether income is above or below 80% AMI and

 select whether the property is located in a targeted area

If the finding shows “non-compliant,” your loan is not eligible for IHDA. (FYI-It is strongly encouraged that you have a second review of the documentation if income is within 4% of limit.)

Borrowers are not required to sign the income calculator, however they are required to complete and sign the income certification. The certification must include all household occupants and list of occupants must match that shown on your calculator. It is not

13 7/24/2015

necessary for the income stated on the income certification to match the income on the calculator.

I

NCOME LIMITS

Income limit charts are available on our website for general income limits for targeted and non-targeted areas.

The link to general income limits for targeted and for non-targeted areas is: http://www.ihda.org/partner/documents/LIMITS2014_effective06-01-2014.pdf. Some borrowers fall into an income category which is below 80% of the Area Median Income (AMI), and the link to that chart is:

http://www.ihda.org/partner/documents/Below80Limits_000.pdf

Loan must be correctly reserved / committed in IHDA’s loan reservation system (currently MITAS) prior to close; before you close aloan it is critical that borrower be in the correct income category.

For each income category, you must be certain income is below the county limit; for borrowers with income higher than the below 80% AMI limit, but below the general income limit, you will register the loan for the above 80% category. More details can be found in the IHDA reservation manual.

Income limits will change annually, and will always be posted to our website. Income must be below the county limit at the time the loan closes.

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3.

PURCHASE

PRICE

LIMIT

AND

QUALIFIED

DWELLING

The residence being financed must be a qualified dwelling and the total purchase price must be within the applicable limit for the area (County) in which the property is located.

D

ETERMINING IF THE

T

OTAL

P

URCHASE

P

RICE IS BELOW THE

L

IMIT

Once the borrower’s Total Purchase Price has been calculated, it must be compared against a purchase price limit contained in one of two charts.

Chart 1:

If the borrower is purchasing in a Non-Targeted Area, the total purchase price must be compared against the purchase price limit found in the “Non-Targeted Areas Income and Purchase Price Limits” chart at www.ihda.org → Partner → Lender and Realtor → Program Qualifications → Applicable limits.

Chart 2:

If the borrower is purchasing in a Targeted Area, the total purchase price must be compared against the purchase price limit found in the “Targeted Areas Income and Purchase Price Limits” chart at www.ihda.org → Partner → Lender and Realtor → Program Qualifications → Applicable limits (on 2nd _page).

The total purchase pricemust be within the applicable purchase price limit contained in the chart. If the purchase price limits change prior to IHDA’s prior approval to close of the loan, then the new purchase price limits apply.

QUALIFIED DWELLING

In order for a property to be considered a qualified dwelling, (a) the borrower must acquire a fee simple interest in the real estate; (b) the home must become the principal place of residence of the borrower within 60 days after the closing of the IHDA loan; and, (c) the residence must be located in Illinois and (d) designed for residential use.

The following types of residences can be considered qualified dwellings:

1. Single family detached home (including a factory-made home which is permanently affixed to real property permitted for FHA, VA or USDA only; not permitted for HFA preferred conventional);

2. Townhome

3. Condominium unit (FHA/HUD, VA or FNMA approved); must be warrantable 4. Planned Unit Development (PUD)

5. Duplex unit or zero lot line home, provided a maintenance agreement is of public record

6. Two-unit (one building) existing residential structure or new construction located in targeted area

Note: Co-op apartment units are not eligible under the Program. No 3 or 4 unit properties are permitted at this time.

15 7/24/2015

A

DDITIONAL STANDARDS AND REQUIREMENTS OF A QUALIFIED DWELLING

:

N

EW CONSTRUCTION: This must be the first time the unit will be occupied as a residence for it to qualify as new construction. A model home qualifies, provided it was never rented nor occupied as a residence prior to being sold. Likewise, conversion of an old factory into condominiums qualifies as new construction because previously it was not occupied as a residence.

P

ROPERTIES WITH ACREAGE: Federal regulations prohibit IHDA from financing a residence located on land in excess of that which is needed to “reasonably maintain basic livability.” This has been interpreted to mean five (5) acres. In the case of a property that is more than five acres, consult an IHDA Homeownership Loan Officer.

P

ROPERTIES WITH MORE THAN ONE LIVABLE STRUCTURE: Properties containing a main structure and a “coach house” are eligible as long as the other livable structure (the coach house) has never been occupied as a residence. This may be puzzling since a two-flat is eligible under the program even if both units have previously been occupied as residences.

Why the difference in eligibility? The IRS has made the determination that units that share a wall (I.e. two-flat) are considered one dwelling. But, if the units do not share a common wall (main house + coach house), the IRS views them as two separate dwellings. If the coach house was once used as a residence, the buyer is purchasing two separate housing units in the eyes of the IRS. However, if you have a buyer in this situation, contact IHDA as we will consider these loans on a case-by-case basis.

A

PPRAISED VALUE EXCEEDS PURCHASE PRICE LIMIT: If the appraised value exceeds the purchase price limit, but the acquisition cost is below the limit AND the transaction is clearly “arms-length” (not a relative), the dwelling may qualify. A statement from the buyer(s) and seller(s) indicating that no relationship exists will be required.

T

OTAL

P

URCHASE

P

RICE

-

A

CQUISITION COST

In order to qualify, the residence must have a total purchase price no greater than the allowable limit at the time of application. The price includes ALL amounts paid, either in cash or in kind, to the seller as consideration for the residence.

Purchase price can include the following:

 The cost of completing an incomplete or unfinished residence. Incomplete or

unfinished means that occupancy is not permitted under the law, or that the residence lacks fixtures or architectural appointments needed to provide adequate living space for the members who intend to occupy the residence.

 If the borrower intends to have a home built on land already owned, the cost of

the land must be included in the total purchase price if the land was acquired within two (2) years prior to the commencement of construction. The cost of the

16 7/24/2015

land is determined based on the following:

 The value of the land can be substantiated by the sales contract or the closing statement.

 If the borrower acquired the land through inheritance, the value must be established by an appraisal and the acquisition date is the date of death.

 If the borrower acquired the land through some form of seller financing, the acquisition date is the date of the seller finance agreement.

DOCUMENTATION: If the land was purchased within the two year window, include a certified copy of the deed from the Recorder’s Office and submit it to IHDA when you submit the file.

If the land was purchased more than two years ago, the cost of the land cannot be included in the total purchase price.

Total purchase price does not include:

 _{usual and reasonable settlement and financing costs;}

 the unpaid value of services (“sweat equity) performed by the borrower or

members of his or her family in completing the residence;

 items of personal property which are not fixtures and/or are not permanently

affixed to the property; and,

 the cost of minor repairs performed after closing and paid for by the borrower.

Ultimately, the total purchase price must be equal to the amount shown on the Sales Contract and reflected on the Buyer and Seller Affidavits.

CREDIT UNDERWRITING

Credit underwriting is performed by you as the lender; however IHDA does have some specific program requirements. Remember that applicable agency (FHA, VA, FNMA, RD/USDA) credit underwriting requirements and regulations apply to the first mortgage loan. The IHDA matrix at www.ihda.org in the partner/lender forms section provides you with an overview of some of the credit “overlays.”

IHDA’s specific program requirementsare as follows:

 _{Minimum credit score of 640 (subject to change - call your compliance specialist}

before committing if you have any questions)

 _{Conventional (HFA preferred) requires minimum credit score of 680 for loans at}

95.01% or greater LTV (must be able to show proof of mortgage insurance) AND purchasers cannot own other property at the time of closing *

 _{Maximum total debt to income (back end) ratio of 45.00 % (percent)}

 _{Buyer must contribute the greater of 1 percent of the purchase price or $1,000 to}

the transaction which will be evidenced on the HUD-1 settlement statement

 _{Home buyer counseling is required for all (except on refinance transactions)}  _{No manual underwrite permitted for conventional loans (generally not permitted}

17 7/24/2015 *US Bank HFA division must underwrite ALL conventional loan products with LTV’s 95.01% or greater; the underwriting fee is $300.00 and will be deducted from your purchase wire at time of funding for all loans reserved after February 1, 2015.US Bank will not accept the new standard MCM at 97%.

If the Lender has a qualified FHA Direct Endorsement underwriter on staff, qualified VA LAPP underwriter on staff or delegated MI underwriter on staff, the Lender performs the credit underwriting. The Master Servicer no longer performs credit underwriting on any FHA loans. U.S. Bank HFA division must underwrite Conventional loans with LTV’s of 95.01% or greater, however, U.S. Bank HFA division will no longer provide any type of underwriting services for Conventional (exception noted above), RD / RHS or VA loan products when the lender employs underwriters with the required level of approval to underwrite the loan product. Contact U.S. Bank HFA division for more information at 1/800-562-5165.

The above requirements are IHDA’s minimum requirements. Keep in mind that you must follow agency (FHA, VA, FNMA, RD/USDA) regulations with regard to all credit

requirements. All credit underwriting decisions are to be made by the underwriting entity. It is up to you, the lender, to be sure that all AUS findings and warnings have been addressed as they apply to whichever loan type you are using, be it FHA, VA, USDA or FNMA (with appropriate special feature codes).

At the time of this writing, loans run through Loan Prospector (LP) will be acceptable ONLY for FHA or VA loans.

For non-delegated loans with Lender Paid Mortgage Insurance (LPMI) underwritten by US Bank HFA Division, US Bank HFA will order mortgage insurance (MI) from company as determined by lender. Lender must provide documented proof that MI is paid in full or loan will not be purchased.

Note: No loan will be purchased by U.S. Bank Home Mortgage MRBP division without IHDA’s approval.

ASSUMPTIONS

The IHDA first mortgage loanis assumable as long as the new buyers are eligible and the property and sales terms are compliant with the program. A Tax Code Compliance Underwrite (by IHDA) will be required. Please contact IHDA for instructions.

FEDERAL RECAPTURE TAX

When tax exempt Mortgage Revenue Bonds are used to finance a first mortgage, the borrower may be subject to Federal Recapture Tax. The tax is designed to help the IRS recapture any profits gained when a homeowner who received a benefit through

non-18 7/24/2015

taxable bond proceeds for their first mortgage. The tax applies when a borrower sells or transfers ownership of their home within the first nine (9) years of ownership.

Recapture is applicable to @Home Illinois Mortgage first mortgages only and all MCC’s. (Note that if the loan includes an MCC, the recapture applies to the MCC, so be sure to use and have the borrowers sign the correct recapture notice).

The payment of recapture tax occurs at the time the property is sold, only if all three of the following conditions apply:

1. The home is sold or disposed of within nine (9) years of being purchased, for reasons other than death; and

2. There is a capital gain on the sale of the home; and

3. The household income for the year in which the home is sold exceeds federal recapture tax limits.

In the event that recapture tax is due, the maximum recapture tax is either 50 percent of the gain on sale or 6.25 percent of the original loan amount, whichever is less.

IHDA’S

R

ECAPTURE

R

EIMBURSEMENT

P

OLICY

Should a borrower find themselves in the position of having to pay the recapture tax,

IHDA will reimburse the borrower in full! The borrower will need to provide documentation showing that the recapture tax was paid. A copy of the IRS tax transcripts for the year in which the borrower paid the recapture tax would be sufficient documentation.

Please note: The IHDA Recapture Reimbursement Policy does not apply to borrowers

utilizing a Mortgage Credit Certificate (MCC).

L

ENDER

R

EQUIREMENTS

The Notice to Homebuyers (available at www.ihda.org) must be provided to and signed by the potential borrowers at the time of application. An additional notice regarding potential recapture tax will be sent to the borrower from IHDA’s office after closing.

W

HAT ARE THE

F

EDERAL

A

DJUSTED

Q

UALIFYING

I

NCOME

L

IMITS FOR CALCULATING

R

ECAPTURE

T

AX

?

The limits are set by statute each year and annually adjusted 5 percent after loan closing. The Adjusted Qualifying Income Limits can be found in the following charts: “IHDA Recapture Worksheet #1” (for non-targeted areas) and “IHDA Recapture Worksheet #1A” (for targeted areas). They can be found at www.ihda.org → Partner → Info Center → Frequently Used Forms and Documents → Recapture Worksheets. Link is:

http://www.ihda.org/partner/documents/RecaptureLimits.pdf EXAMPLE:

19 7/24/2015

Maria is a junior advertising executive at a local PR firm. Her gross annual income is $52,000. She is a single mother of one daughter. She is purchasing a home in a non-targeted area in the City of Chicago.

At the time of purchase, Maria’s income cannot exceed $74,900 (limit provided in the chart titled “Non-Targeted Areas Income and Purchase Price Limits”) in order to be eligible for the IHDA @Home Illinois Mortgage program. Maria’s income of $52,000 is well within the limit.

In order for Maria to have to pay recapture tax, her income would (a) have to grow to $74,900 and (b) continue to grow an additional 5+ percent each year. In the example, if Maria sells her home in year six and realizes a capital gain on the sale, her income would have to be over $95,593 in order to trigger the recapture tax. An income of $95,593 represents an 85% increase over her starting income of $52,000.

Year 1 Year 6

Maximum $74,900 $95,593

Maria’s income $52,000 85% increase!

However, if this occurs, IHDA will reimburse Maria for the entire tax paid!!!

H

OW IS THE

T

AX

A

SSESSED

?

The tax assumes that the amount of subsidy realized by the borrower is equal to 1.25 percent per year. The rate of tax is multiplied by the original loan amount to determine the amount of tax to be paid. The maximum recapture amount increases during the first five years of ownership to its maximum (6.25 percent) in the fifth year. The amount then decreases 20 percent per year through the ninth year. If the sale occurs after the ninth year, there is no recapture tax.

W

HAT DETERMINES HOW MUCH THE ACTUAL RECAPTURE TAX WILL BE

?

1. The date of the sale or transfer;

2. The borrower’s income in relation to the “Adjusted Qualifying Income” in the year of sale or transfer; and,

3. The gain from sale or transfer.

W

HAT IF THE LOAN IS REFINANCED

?

No recapture tax is due at the time of refinancing. If, after refinancing, the owner sells or transfers the property within the initial nine-year period, he/she may owe a recapture tax. In these situations, it is best for the client to seek the advice of a tax attorney.

W

HAT HAPPENS IF THE LOAN IS ASSUMED

?

If the sale or transfer occurs within the first nine years of ownership, the original borrower pays the recapture tax, if applicable, and a new nine-year period begins for the purpose of applying a new recapture tax to the assuming purchaser. (IHDA review required.)

20 7/24/2015

I

S RECAPTURE DUE IF THE BORROWER DIES WITHIN THE NINE

-

YEAR PERIOD

?

No. A death transfer is not a sale or transfer for the purposes of recapture.

I

N THE CASE OF DIVORCE

,

WHO IS RESPONSIBLE FOR THE RECAPTURE TAX

?

A divorce settlement is not a sale or transfer for the purposes of recapture. Whoever receives the home in the divorce settlement pays any recapture tax due as a result of a subsequent sale or transfer if within the nine-year period.

IHDA COMPLIANCE REVIEW PROCESS

As stated earlier in this guide, you, the lender, are responsible for ensuring that each loan meets IHDA’s compliance guidelines prior to closing for all program including loans with a Mortgage Credit Certificate. To assist you with the compliance review, IHDA has provided a lender tax code compliance review worksheet on the IHDA website (www.ihda.org) in the partner – forms section. The worksheet was designed for your use and though it does not need to be provided to IHDA with the IHDA docs, the lender certification that the loan is tax code compliant does need to be in each file.

Ensure that those on your staff responsible for IHDA submission are well versed on the contents of the worksheet and IHDA procedures before reviewing files. Files determined to be non-compliant will require repurchase by the lender.

If you are uncertain about any portion of the compliance review process, please contact IHDA’s Help line or your Compliance Specialist. We are here to guide and assist you. Once the loan has been determined to be compliant from a tax code standpoint and from a credit underwriting standpoint, you will close the loan.

LOAN CLOSING

You as lender, close the loan(s).

Remember that thefirst mortgage loan closes in the Lender’s name, and the IHDA rider is attached to the first mortgage and recorded with the first mortgage. If the borrower is to receive a Down Payment Assistance (DPA) second (2nd_{) mortgage, that loan will close in}

IHDA’s name; no IHDA rider is attached to the second (2nd_{) mortgage.}

Also remember that our programs require occupancy by borrowers within 60 days of close, and that borrowers always maintain occupancy; as such, do not use an “Assignment of Rents” in connection with the mortgage.

After the loan has closed, you will 1) validate final loan data in MITAS; 2) will upload certified true copies of IHDA documentation to MITAS; 3) submit loan package to US Bank HFA Division as per their requirements; and 4) will upload the investor loan delivery file

21 7/24/2015 (same file you send to US Bank HFA Division). The IHDA HFA loan delivery checklist is very similar to the US Bank delivery checklist with some exceptions, such as IHDA requirement for 3 years Federal tax returns, verbal VOE’s for employment terminated in most recent tax year, etc.

The IHDA Reservation manual provides you with information on uploading documents as is available to you through www.ihda.org in the Partner / Lender and Realtor section in Frequently Used Forms and Documents.

For every file, we need you to upload the fully completed IHDA Submission Cover and Final Data Summary form with certified true copies IHDA documents included in your upload to MITAS in the IHDA docs category.

IHDA loans may not close in trust. Please remember to check the US Bank HFA manual for additional credit and closing requirements.

QUALITY CONTROL – PRE-PURCHASE/POST-CLOSE AND POST-FUND

QC reviews of 5% of overall production will be performed prior to funding, and 15% of loan files will be selected for QC review after funding. A discretionary review of 5% of loans determined to be of greater risk (i.e. lender on watch list, high default rate, high LTV with low credit score, etc.) will be performed as well. Since every loan file delivered to IHDA has the potential of being reviewed by our quality control vendor, it is crucial that each file be compliant with all applicable regulations, including but not limited to Reg. Z (Truth in Lending), Reg. X (including HOEPA), Reg. B (Fair Housing/ECOA), etc., and that a complete file be uploaded to MITAS. Each file must be compliant with all applicable Federal, State and Local regulations with regard to mortgage lending.

If the loan file you have provided to IHDA is incomplete, you will be notified to provide the entire file, and/or specific documentation by your compliance officer. Any additional documentation required as a result of quality control review must be provided immediately.

Should any deficiency be discovered as a result of a QC review, you will be notified to remedy immediately; if a deficiency is beyond remediation, the loan may be un-saleable.

POST CLOSE REQUIREMENTS

As stated above, after the loan closes, the Lender must upload the entire loan file into MITAS in the closing section and then deliver the following completed documents to IHDA for review via upload to MITAS, in the order listed below within ten (10) business days of closing.

The following documents are required to be provided in the IHDA delivery upload in the following order:

22 7/24/2015

information – include property data as noted on form revised May 2015. 2) Borrower Affidavit signed and notarized PRIOR to close

3) Seller Affidavit signed and notarized PRIOR to close

4) Lender Tax Code Compliance Certification signed by lender and dated

5) IHDA Income Calculator signed by lender with supporting income documentation (no manual calculation permitted, all HH occupants, all HH data, income compliant)

6) Income Certification fully completed, signed by borrower(s) and dated, all HH occupants listed consistent with calculator with 3 years signed tax returns or IRS transcripts

7) Signed Federal recapture notice dated PRIOR to close (use appropriate recapture notice)

8) Borrower Authorization for Release of Information

9) Homeownership counseling certification (prior to close)

10) Reservation/commitment(s)

11) HUD-1, Copy of face pages of note(s), mortgage(s)

12) DD214 and COE to document veteran exempt status and for VA loans

13) Appraisal

14) Signed MCC Opt Out for all loans OR if loan includes an MCC, upload all applicable MCC documents including a copy of the check payable to IL Housing Development Authority

MCC Check payable to Illinois Housing Development Authority must be promptly

forwarded to the following address with a copy of the MCC reservation/commitment: Illinois Housing Development Authority

Attn: Homeownership Programs 401 N. Michigan Ave., Suite 700 Chicago, IL 60611.

Please note that U.S. Bank HFA Division requires that you deliver the entire loan file for review in order to purchase the loan. It is expected that the loan file you upload to MITAS is exactly the same file you deliver to US Bank HFA. Contact the U.S. Bank Client Support Center at 1-800-562-5165 for information on their specific requirements and/or review their requirements as per their manual at

http://www.mrbp.usbank.com/cgi_w/cfm/personal/products_and_services/mortgages

23 7/24/2015

FEES

 Lender will receive 2.0 percent of the mortgage amount as a Service Release Premium (SRP) for all loans other than as noted below.

 For lenders using the Lender Paid Mortgage Insurance (LPMI) option, lenders will be paid an SRP of:

o 4 for loans with LTV’s of 90% and above o 3.4 for loans with LTV’s of 80% to 89.99%.

 Lender fees to buyer should be limited, as this is an affordable housing program

(If an origination fee is charged, it must be .50 or less; other lender fees cannot exceed $1,200.00) Reg. Z compliance required

 Fees paid to third parties such as courier fees and title company fees are allowed

and are not included in the $1,200 in allowable fees

 _{If a loan is purchased more than 60 days from reservation, lender SRP will be}

reduced by 25 basis points.

 _{There are currently no fees paid to IHDA.}

 _{Note that U.S. Bank HFA division will charge a tax service fee ($85.00) and a}

funding fee ($350.00) which will be deducted at time of purchase. The tax service fee cannot be charged to the borrower

 _{For conventional loans with LTV’s at 95.01% or greater, US Bank HFA will}

underwrite the loan at a cost of $300.00 to the lender. The underwriting fee will be deducted at the time of purchase.

 If a loan is not sale-able after 90 days, additional reduction(s) to SRP may be made  A $350.00 MCC fee is required for all loans with Mortgage Credit Certificates and

must be made payable to Illinois Housing Development Authority forwarded to IHDA with a copy of the MCC reservation/commitment. Should you choose to do so, you may charge $150.00 for MCC processing, for a total of $500.00 for MCC. The HUD-1 must reflect MCC fee(s) paid and to whom.

MCC fee is to be sent to:

Illinois Housing Development Authority 401 North Michigan Ave., Suite 700 Chicago, IL 60611

Attn: Homeownership Department

24 7/24/2015

SUPPLEMENT

25 7/24/2015

MORTGAGE CREDIT CERTIFICATE (MCC)

WHAT IS AN

MCC?

An MCC is a certificate issued by IHDA as authorized by the Federal government (IRS) which permits a borrower to receive a tax credit.

H

OW DOES THE MORTGAGE CREDIT WORK

?

Homebuyers who qualify for the program receive a Mortgage Credit Certificate from IHDA, which can be used to reduce their household’s tax burden every year for the life of their mortgage loan. With an MCC, a percentage of what the homeowner pays in

mortgage interest (20 percent) becomes a tax credit that can be deducted dollar-for-dollar from his/her income tax liability. The remaining 80 percent of the mortgage interest continues to qualify as an itemized tax deduction, as long as the homeowner has sufficient tax liability.

Currently, the MCC can only be used by first time home buyers only with our @Home Illinois Mortgage with MCC or with @Home Illinois Mortgage with DPA and MCC. The recapture tax is a Federal tax and not payable to IHDA.

B

ASIC ASSUMPTIONS

 Borrower is first time home buyer (or exempt)

 Income is below county limit

 Purchase price is below county limit

 Property is a qualified dwelling situated on less than 5 acres of land

H

OW IS THE

MCC

RESERVED

?

At this writing, an MCC can only be reserved in conjunction with an IHDA first mortgage loan product. The IHDA reservation guide provides you with information as to how to register/commit the MCC.

W

HAT UNDERWRITING IS INVOLVED

?

As noted above, you as the lender are responsible for determining tax code compliance. The same basic assumptions apply to an MCC as to our IHDA first mortgage compliance review. As with all IHDA programs, borrowers must provide 3 years signed Federal tax returns or transcripts from IRS.

W

HAT DOCUMENTATION IS REQUIRED FOR AN

MCC?

All MCC documentation must be provided to IHDA along with documentation in support of the basic assumptions listed above. The MCC documentation required to be signed prior to close is as follows:

 MCC 25 – Informational Acknowledgment

26 7/24/2015

 MCC 28 – Affidavit of Seller

 MCC 29 – Lender Initial Certification

 MCC 1094 - Notice to Homebuyers regarding recapture (MCC recapture notice) A borrower not required to file Federal income tax returns for a specific year would sign an MCC 27 – Tax Affidavit.

The documentation required to be completed and signed on or after close is as follows:  MCC32–Buyer Closing Certification

 MCC33– Lender Closing Certificate (any changes from original application must be noted in 6B)

The HUD-1 must reflect MCC fee of $350.00 payable to IHDA. Lender is permitted to charge an additional $150.00, which must be reflected on the HUD-1 as payable to lender.

Remember to include check in the amount of $350.00 payable to Illinois Housing Development Authority with original documents.

The Mortgage Credit Certificate is issue directly to borrower. You, the lender, will receive a report from IHDA which provides you with the information necessary to file your 8329 form with the IRS at year end.

MCC REISSUANCE

If a borrower currently has an MCC on their primary residence, and the borrower refinances their 1st _{mortgage loan, they may request reissuance of their MCC as long as} the home remains their primary residence. Processing time varies.

To request a re-issued MCC, borrower provides the following documentation:

 Request for re-issued MCC on primary residence with contact information

 Copy of signed HUD-1 Settlement Statement from refinance

 Copy of existing (and any other re-issued) MCC

 Check in the amount of $150.00 payable to Illinois Housing Development Authority Forward the above documentation to:

Illinois Housing Development Authority 401 N. Michigan Ave., Suite 700, Chicago, IL 60611

27 7/24/2015

@HOME ILLINOIS MORTGAGE PROGRAMS

1

ST

MORTGAGE

OPTIONS

1

ST

_M

ORTGAGE WITH

DPA

1

ST

_{MORTGAGE WITH MCC}

28 7/24/2015

@Home Illinois Mortgage Program

The

@

H

OME

I

LLINOIS

M

ORTGAGEProgram offers a 30-year, fixed rate mortgage that is FHA, Conventionally or USDA insured. It has a minimum down payment requirement of 0 to 3.5 percent and offers an affordable interest rate (often below-market) to the borrower. The required down payment depends on the program used. Applicable credit underwriting guidelines apply for FHA, VA, USDA and conventional mortgages with IHDA overlays listed below.

The qualifications for eligibility are:

 First-time homebuyer or exempt (see exemption in glossary) or

 Non first-time homebuyer

 Minimum credit score of >640 (Conventional > 95.01% LTV minimum score is 680)

 Maximum total debt to income (back end) ratio of 45 percent

 Household income and property purchase price must be within the program limits as per county

 Property must be a single family dwelling (one or two unit property) situated on less than five (5) acres

 Buyer must contribute the greater of 1 percent or $1,000 of the purchase price toward the subject transaction

 Homeownership counseling is required for all purchase transactions

 Mortgage Insurance is required as applicable (see below)

 Please note that conventional borrowers cannot own other real estate at the time of closing on the property being purchased using our program

 MCC Opt Out form must be signed

 Borrower Authorization for Release of Information required for all transactions Check www.ihda.org for today’s competitive interest rate and current program guidelines! For Conventional loans, it is important that FNMA’s most current version of Desktop Underwriter be utilized with special feature code HFA Preferred selected from the dropdown on the additional features page. (Remember that US Bank HFA division MUST underwrite all conventional loan products with LTV’s greater than 95.01%). No condos

permitted for loans with LTV of 95.01% or more.

By utilizing DU HFA Preferred, reduced mortgage insurance is available as follows: Conventional (FNMA HFA Preferred) mortgage insurance requirements:

LTV Ratio Coverage Required

95.01% - 97% 18%

90.01% - 95% 16%

85.01% - 90% 12%

80.01% - 85% 6%

29 7/24/2015  Single Premium Borrower- Financed MI, up to 97% LTV

 Split Premium ( which can be paid with contribution from seller)

 Monthly Borrower- paid Premium

 Lender Paid Mortgage Insurance (LPMI) available – interest rates will vary NOTE: LP permitted on FHA or VA loans only.

30 7/24/2015

@H

OME

I

LLINOIS

M

ORTGAGE

P

ROGRAM

31 7/24/2015

@Home Illinois Mortgage 1

st

_{Mortgage with}

Down-payment Assistance

The

@H

OME

I

LLINOIS

F

IRST

M

ORTGAGE WITH

D

OWN

P

AYMENT

A

SSISTANCEis a package consisting of a First Mortgage (described above) plus a Down Payment Assistance Loan.

There are no additional qualifications for eligibility for the Down Payment Assistance Loan. If the buyer meets the requirements for the @Home Illinois First Mortgage, the buyer is also eligible for the @Home Illinois Down Payment Assistance Loan as the basic qualifications remain the same.

The characteristics of the@HOME ILLINOIS DOWN PAYMENT ASSISTANCE LOANare:

 Provides $5,000, for households with income over 80% of the area median income (AMI) at a 0% rate with payment amortized over 10 years ($41.67 per month)

 Provides $5,000 in down payment assistance for households with income below 80% of the AMI as a 0% 10 year forgivable loan

 First-time homebuyer or exempt (see exemption in glossary)

 Non first-time homebuyer permitted

 Minimum credit score of >640, (Conventional loans with LTV’s of 95.01% must have minimum FICO of 680 and must be run through FNMA DU as HFA preferred)

 Maximum total debt to income (back end) ratio of 45 percent

 Household income and property purchase price must be within the county limits

 Property must be a single family dwelling (one or two unit property)

 Buyer must contribute the greater of 1 percent or $1,000 of the purchase price toward the subject transaction

 Homeownership counseling is required for all purchase transactions

 Mortgage Insurance is required as applicable for conventional

 Conventional borrowers cannot own other real estate at the time of closing on the property being purchased using our program.

 Optional Lender Paid Mortgage Insurance (LPMI) available for Conventional FNMA HFA preferred (higher interest rate may apply)

32 7/24/2015

@Home Illinois Mortgage with Mortgage Credit Certificate

(MCC)

The

@H

OME

I

LLINOIS

M

ORTGAGE WITH

MCC

(NO

DPA)

loan package is a first mortgage with Mortgage Credit Certificate (MCC). The same qualifications apply to this as to our other @Home Illinois Mortgage loan programs.

The characteristics of the@HOME ILLINOIS WITH MCCare:

 Original MCC documentation required

 First-time homebuyer or exempt (see exemptionin glossary)

 Minimum credit score of >640, (Conventional loans with LTV’s of >95.01% must have minimum FICO of 680 and must be run through FNMA DU as HFA preferred

 Maximum total debt to income (back end) ratio of 45 percent

 Household income and property purchase price must be within the program limits as per county

 Property must be a single family dwelling (one or two unit property) situated on less than five (5) acres

 Buyer must contribute the greater of 1 percent or $1,000 of the purchase price toward the subject transaction

 Homeownership counseling is required for all purchase transactions

 Mortgage Insurance is required as applicable

 Conventional borrowers cannot own other real estate at the time of closing on the property being purchased using our program

 Optional Lender Paid Mortgage Insurance (LPMI) available for Conventional FNMA HFA preferred (higher interest rate will apply)

A fee of $350.00 must be obtained on every @Home Illinois Mortgage with MCC and must be payable to Illinois Housing Development Authority. (Fee must be made payable to Illinois Housing Development Authority or we cannot process the MCC). The charge MUST appear on the HUD1 Settlement Statement as IHDA MCC. You as the lender may charge an additional $150.00 for a total of $500.00 for MCC; HUD-1 must show breakdown of what is payable to IHDA and what lender retained.