Download to read offline
Uploaded byChenoa Fund
1.A All Chenoa Fund Programs Overview (v9.2)
This document provides an overview and summary of Chenoa Fund's down payment assistance programs for conventional and FHA loans. It outlines 13 training topics that are covered, including an overview of all Chenoa Fund programs, how to calculate AMI, the loan registration process, underwriting, locking loans, securing down payment assistance approvals, and loan servicing. Product details are also summarized for various down payment assistance second mortgage options available through Chenoa Fund, including eligibility requirements, terms, interest rates, property types, and other guidelines.
More Related Content
More from Chenoa Fund
1.A All Chenoa Fund Programs Overview (v9.2)
- 1.
- 2. This Training Includes… 1 – All Chenoa Fund Programs Overview Conventional / FHA 2 – How to Calculate AMI 3 – Pre-Registration: The 1003 Conventional / FHA 4 – Underwriting 5 – Lock Desk 6 – How to Lock a Loan 7 – How to Secure DPA Approvals 8 – How to Draw Documents 9 – Purchase Clearing: Uploading 10 – Purchase Clearing: Conditions and Escalations 11 – Final Documents 12 – Servicing 13 – Why Use Chenoa Fund Conventional / FHA
- 3. Chenoa Fund byCBC Mortgage Agency: General Overview • Chenoa Fund is the program name for CBC Mortgage Agency’s suite of DPA products, offered to borrowers in the form of second mortgages. • The programs are allowed in all states except New York. • All programs offer 3.5% for the second mortgage. Up- front fees are limited only by the QM 3% points and fees rule. • The first mortgage must be sold to CBC Mortgage Agency; the down payment funds you advanced are reimbursed at the time of sale. • Your underwriter underwrites the file. • Approved property types include SFR, PUD, Townhome, Condo, Attached, Detached, and Modular Homes. Manufactured Homes are allowed. • HPML (Rebuttable Presumption) is allowed, but no High Cost Mortgages.
- 4. Rate Advantage (FHA) a.)3.5% or 5% offered to cover the down payment, closing costs, prepaid items b.) 2nd mortgage repayable c.) 10-year term with 8% interest d.) 640 minimum FICO score e.) Qualifying income less than or equal to 135% AMI f.) Max DTI 50% g.) First-time homebuyer not required h.) Please see HUD handbook 4000.1 for MIP rates. i.) Homebuyer education not required DPA Edge: Repayable Second (FHA) a.) 3.5% is offered to cover the down payment, closing costs, and prepaid items b.) 2nd mortgage repayable c.) 10-year term with 0% interest –or– 30-year term with 5% interest d.) 620 minimum FICO score e.) No income limits f.) FICO 620–639: 45% DTI or less FICO 640–659: 50% DTI or less FICO 660+: DTI restrictions per AUS guidelines g.) First-time homebuyer not required h.) Please see HUD handbook 4000.1 for MIP rates i.) Homebuyer education required for borrowers with credit scores between 620–639 DPA Edge: Soft Second (FHA) a.) 3.5% is offered to cover the down payment, closing costs, and prepaid items b.) 2nd mortgage forgivable c.) 30-year term with 0% interest (forgivable after 36 consecutive on-time payments on the 1st mortgage) d.) 620 minimum FICO score e.) Qualifying income less than or equal to 115% AMI f.) FICO 620–639: 45% DTI or less FICO 640–659: 50% DTI or less FICO 660+: DTI restrictions per AUS guidelines g.) First-time homebuyer not required h.) Please see HUD handbook 4000.1 for MIP rates i.) Homebuyer education required for borrowers with credit scores between 620–639 Conventional Standard 97% LTV Loans a.) 3.5% is offered to cover the down payment, closing costs, and prepaid items b.) 2nd mortgage repayable c.) 10-year term with an interest rate 2% higher than the first mortgage d.) 640 minimum FICO score e.) No income limits f.) FICO 640–659: 50% DTI or less FICO 660+: DTI restrictions per AUS guidelines g.) First-time homebuyer required h.) MI Coverage 35% i.) Homebuyer education may be required by Fannie Mae HomeReady®️ (Conventional) a.) 3.5% is offered to cover the down payment, closing costs, and prepaid items b.) 2nd mortgage repayable c.) 10-year term with an interest rate 2% higher than the first mortgage d.) 640 minimum FICO score e.) Follow FNMA guidelines on income limits. f.) FICO 640–659: 50% DTI or less FICO 660+: DTI restrictions per AUS guidelines g.) First-time homebuyer not required h.) MI coverage 25% i.) Homebuyer education required Quick Comparison Matrix: All Products
- 5. Check out ourProduct Matrix! A more detailed version of our product matrix can be found on chenoafund.org.
- 6. • Required inthe closed loan package for all programs • The letter states: • Where the down payment is coming from • CBCMA’s promise to reimburse your company for the secondary financing • When we purchase the first mortgage, CBCMA reimburses the funds you advanced for the borrower’s down payment Funding Obligation Letter 600 N 100 E Cedar City, UT 84721 Lender: ABC Lender Loan Application Number: 151110001 FHA Case Number 123-230598230-704 Borrower(s): John Doe Jane Doe Purchase Price of Property: $200,000.00 Property Address: 123 Main Street Anywhere, TN 34222 Form of Assistance: Soft Second Amount of Assistance: $7,000.00 Interest Rate (If Applicable): 0 Term (If Applicable): 360 Monthly Payment Amount (If Applicable): $0.00 Commitment Date: 11/10/15 As of the commitment date, CBC Mortgage Agency has incurred a legally enforceable obligation to provide the funds towards the Borrower(s)’ Minimum Required Investment. Lender should deliver funds for the MRI to the closing entity prior to or at the time of loan closing. CBCMA will reimburse Lender from funds legally belonging to CBCMA at or before closing under this obligation once the following conditions are met: • The first mortgage associated with this assistance must be closed and delivered to CBCMA for purchase. • All purchase conditions for the first mortgage associated with this assistance must be satisfied. If these items are not delivered to CBCMA, this obligation will be void. WARNING: Failure of CBCMA to satisfy the obligation may result in a determination that the funds for the Borrower(s)’ MRI were provided by a prohibited source and the first mortgage obligation may not be insurable under the FHA insurance program. Sincerely, MRI Funding Obligation Image: Soft Second FOL
- 7.
- 8. *Note: to offerconventional products, you must be FNMA approved. Neither CBC Mortgage Agency (CBCMA), nor any Chenoa Fund products, are approved by or affiliated with Fannie Mae. Originating lenders are responsible for ensuring that their use of CBCMA second mortgages and conventional first mortgages are compliant with Fannie Mae requirements. CBCMA’s Correspondent Lending Guide (CLG) include overlays to the HomeReady®️ program. HomeReady®️ is a registered trademark of Fannie Mae. DU®️ is also a registered trademark of Fannie Mae.
- 9. • No borrowerinvestment required • Income limits per FNMA guidelines • Minimum FICO score of 640 • 30-year fixed rate first mortgage • Second lien is a 10-year fixed rate mortgage with an interest rate 2% higher than the first mortgage • Concurrent homeownership not allowed • DU®️ only—see Correspondent Lending Guide for more information on LTV/CLTV limitations • Single family only HomeReady®️ • Purchase only • MI coverage 25% • First-time homebuyer not required • Requires borrower to take homebuyer education class
- 10. Conventional Standard 97%LTV Loans • No borrower investment required • No income limits • Minimum FICO score of 640 • 30-year fixed rate first mortgage • Second lien is a 10-year fixed rate mortgage with an interest rate 2% higher than the first mortgage • Concurrent homeownership not allowed • DU®️ only—see Correspondent Lending Guide for more information on LTV/CLTV limitations • Single family only • Purchase only • MI coverage 35% • One borrower must be a first-time homebuyer • Homebuyer education class required if LTV is 97% or higher (per Fannie Mae guidelines)
- 11. Is my borrowerin the 640–659 range? CBCMA requires DTI of 50% or less The borrower has… • Two (2) years employed with the current employer OR two (2) months PITI reserves. The borrower has… • A maximum DTI 31% front- end OR met VA Residual Income Tests Start Here! Choose one alternative qualification requirement from both boxes that best fits your borrower’s situation: But my borrower exceeds those DTI requirements, and AUS approves above 50%… Choice 1 AND Choice 2
- 12. FHA Second Mortgages: The RateAdvantage Program
- 13. • FHA product •The only Chenoa Fund product to offer 3.5% or 5% DPA • Qualifying Income: < or = 135% AMI • Requires monthly payment • Minimum FICO score of 640 • 30-year fixed rate first mortgage • Second mortgage has a 10-year term at an 8% Interest rate • Non-occupant co-borrowers not allowed • No concurrent homeownership • Manual underwrites not allowed • DTI 50% or less; alternative qualification requirements do not apply Look to this product first to benefit you and your client. Rate Advantage Program
- 14. FHA Second Mortgages: The DPAEdge Program
- 15. • FHA product •Qualifying Income: < or = 115% AMI • No monthly payment • FICO score 620 minimum • 30-year fixed rate first mortgage • Second mortgage has a 0% interest rate and a 30-year term, with no monthly payment • Forgiven after 36 consecutive on-time payments on FHA 1st mortgage • Non-occupant co-borrowers are allowed • Concurrent homeownership is allowed, but one of the borrowers must occupy the property as their primary residence and an LOE is required; see CBCMA’s Product Matrix for more information. DPA Edge Program: Soft Second • Only offered for single-family and two- unit properties • No first-time homebuyer requirement
- 16. • FHA product •No income limits • There is no forgiveness for this product. • FICO Score 620 minimum • 30-year fixed rate first mortgage • Second Mortgage is repayable, with two options for terms: • 10-year term 0% interest rate • 30-year term 5% interest rate • Non-occupant co-borrowers are allowed. • Concurrent homeownership is allowed, but one of the borrowers must occupy the property as their primary residence and an LOE is required; see CBCMA’s Product Matrix for more information. DPA Edge Program: Repayable Second • Only offered for single-family and two- unit properties • No first-time homebuyer requirement
- 17. FHA Homebuyer Education •Pre-purchase counseling required for borrowers within the FICO band of 620–639 • HUD-approved counseling only • If you are unsure of appropriate alternatives, CBC Mortgage Agency pays for pre-purchase counseling through Money Management International • Be sure to visit our Lender FAQs for more information on this topic: https://chenoafund.org/lender/lender-faq/ • MMI reaches out to all borrowers post purchase at months 1, 5, and 10 • MMI is an Outreach program, they do not automatically initiate counseling unless the borrower requests it • They check in with the borrower to make sure they are doing okay and offer encouragement and assistance of any kind to further support the borrower’s path to successful homeownership
- 18. • All borrowersmust have one credit score. • CBCMA requires either a soft pull credit report or UDM of at least that one credit score within ten days of close. • CBCMA prefers UDM; if you do a soft pull, you must pull from all three bureaus, even if the borrower only has one credit score. • If you use UDM, you may pull from only one bureau. • Our primary goal behind this requirement is to verify that there are no new material inquiries, which may require the file to be rerun through AUS. • If a new material inquiry is discovered, then CBCMA will require that an LOE explaining the new material inquiry be provided to determine if new debt was incurred. • If new debt was incurred prior to closing, then FHA guidelines may require that the file be re-run through AUS and the debt added to the borrower’s final application. Undisclosed Debt Monitoring and Soft Pull of the Credit Report
- 19. Is my borrowerin the 620–639 range? Does my borrower have 12 months of current housing expense? Start Here! CBCMA requires… • Verification of 12 months of current housing expense (LLC or management company) • 12 months of cancelled checks or bank statements (family or individual) • HBE • Payment shock of 125% • DTI of 45% CBCMA requires… • A verification of housing payment documenting no rent paid • An explanation in the comments section of the 92900-LT • HBE • Maximum DTI of 31% front-end and 45% backend • 3 months PITI reserves • Minimum 2 years with present employer • Meet VA Residual Income requirements Choose one alternative qualification requirement from both boxes that best fits your borrower’s situation: The borrower has… • Two (2) years employed with the current employer OR two (2) months PITI reserves. Note that the borrower still needs verification of 12 months of housing expense or 12 months of cancelled checks/bank statements, and an HBE. Not to exceed 50% DTI backend. The borrower has… • A maximum DTI 31% front-end OR met VA Residual Income Tests Note that the borrower still needs verification of 12 months of housing expense or 12 months of cancelled checks/bank statements, and an HBE. Not to exceed 50% DTI backend. No… Yes! But my borrower exceeds the payment shock and/or DTI requirements… Choice 1 Choice 2 AND
- 20. Is my borrowerin the 640–659 range (and not using Rate Advantage)? CBCMA requires DTI of 50% or less. The borrower has… • Two (2) years employed with the current employer OR two (2) months PITI reserves Start Here! Choose one alternative qualification requirement from both boxes that best fits your borrower’s situation: As of June 15, 2020, CBCMA also requires borrowers in the 640-659 range to have a verification of their current housing expense. But my borrower exceeds those DTI requirements, and AUS approves above 50%… The borrower has… • A maximum DTI 31% front- end OR met VA Residual Income Tests Choice 1 Choice 2 AND
- 21. • Borrowers inthe 620–639 FICO range making a present housing payment must either: • Provide a 12-month verification of housing payment (if renting from an LLC or management) • Provide 12 months of cancelled checks or bank statements (if rending from family or an individual) Verification of Housing Expense • All borrowers in the 640–659 FICO must provide a verification of current housing expense, but a payment history is not required. Acceptable documentation includes: • A copy of the rent/lease agreement • Bank statements tracking payments for the amount of reported rent • A letter from the landlord • A filled our VOR (if a VOR is provided, the rental history will be used in credit qualification) • All borrowers making no present housing payment in the 620–650 FICO range must provide verification of housing payment documenting that no rent is required to be paid.
- 22. Admin Fee Clarifications •$399 Admin Fee on first mortgage • Charged to the correspondent • Reflected on the PA as a deduction from total loan sale proceeds • No lender fees on secondary financing • Additions to the lender fees to offset the Admin Fee: • NEVER reflect as a charge payable to CBCMA • List fee must always be listed in Section A, in Origination Charges or as a separate line item Admin charge • If passed to the borrower, this fee is subject to the QM 3% points & fees test
- 23. • No lenderfees should be charged on the second. • The only fees allowed to be charged on the second: • Prepaid interest • Recording fees for the Deed of Trust • Reasonable settlement fees • A courier fee to return the signed documents to the lender • At no time will CBCMA purchase a loan that exceeds the QM 3% points and fees test. Displaying 2nd Lien Loan Fees on the 2nd CD
- 24. • Review theBuckley Sandler memo on converting points and fees between borrower and seller: https://chenoafund.org/lender/cbc- documents-and-tools/ • Converting seller credits can pay this fee if the following is done before closing: • Borrower has signed an addendum to the note (found at the above link) • The fee is itemized in the seller’s column on the CD • This allows the charges to not be counted for the 3% points and fees rule. Rate Sheet Clarification • CBCMA: • Offers one rate for each product and its FICO band • Does not charge discount points • Cannot, in the current market, offer the alternative par rate necessary for discount points to be bona fide • Our rate sheets refer to fees from specific FICO bands as “Fee Paid by Lender.” • Any fees paid by the lender to CBCMA are a reduction in the YSP/SRP. • If this fee is passed on to the borrower, the QM 3% points and fees rule applies. • Fees from corporate margins (from lower rates) belong in section A of the CD, “points and fees.”
- 25. Maximum Origination Fee •CBCMA will allow a maximum origination fee of 1.5%. • Additionally, the lender may charge for any CBCMA loan level pricing adjustments (LLPAs). • Lenders will be required to refund borrowers for any origination fees (including non-bona-fide discount points) exceeding 1.5% plus CBCMA LLPAs. • Reasonable lender underwriting, administrative, or program fees are not considered in this calculation; however, they are considered in the QM 3% points and fees test.