Homeownership Loan Programs - PowerPoint Presentation

Homeownership Loan Programs Lender Training

DSHA is committed to following all aspects of the Fair Housing Act in our efforts to promote responsible homeownership and provide competitive and safe financing for same.

Agenda Recent Program Enhancements Eligible Loan Products Eligible PropertiesCredit OverlaysDown payment & Closing Cost Assistance ProductsIncome, Sales price/Purchase Price LimitsDSHA FormsLoan FlowPre-Closing Compliance File DeliveryPipeline TrackingClosed Loan DeliveryDSHA Contact List 3

Recent Program Enhancements DSHA Program Changes Effective May 1, 2018 DSHA Launches its Preferred Plus product SuitePreferred Plus 2% – 5% down payment assistance. Calculated on total loan amount, not sales price.This program will eliminate the requirements to comply with TRID and RESPA thereby eliminating upfront and closing disclosures specifically for DSHAThe assistance amount and cost of recording will be required to be included on the primary mortgage closing disclosureThis will be in the form of a Soft Second Mortgage requiring a note and mortgage be completed at loan closing.The second mortgage is a deferred re-payment for 30 years at 0% interest.There is no subordination allowed on DAP. Must be paid in the event of re-finance, sale of property, or property is no longer owner occupied.

Homeownership Loan Rates Effective 12/17/2018 and subject to change daily Program Options GNMA FNMA Base Loan Rate 4.625% 5.125% Preferred Plus 2% 5.500% 5.750% Preferred Plus 3% 5.625% 5.875% Preferred Plus 4% 5.750% 6.000% Preferred Plus 5% 6.000 % 6.250% FNMA >80% LTV with No MI   N/A 5.750%  

Additional changes DSHA is lowering the required FICO scores to 620 for FHA, VA, USDA and Conventional HFA Preferred (reduced MI) mortgages. The rate lock time will be reduced from 75 to 60 days. One time only rate/product switch allowed. When switching loan products, borrows are subject to “worst case” scenario in pricing. This is based on the original lock date or product switch date.Borrowers with FICO scores at 659 or below, will be required to attend HUD approved Housing Counseling.DSHA will also be increasing Lender Compensation to 2.25%. Lenders will still be able to charge the optional .50% origination fee which could further increase compensation to 2.75%.

Homeownership Counseling HUD approved homeownership classes are required for all borrowers with a FICO score of 659 or lower, regardless of loan product used.A list of HUD approved Housing Counseling Agencies is available on the main DSHA website: www.destatehousing.com

Eligible Loan Products FHA 203(b); 203(b)(2); 234(c); 223(e); 203(ks) and other acceptable FHA products. VA Originated and guaranteed in accordance with VA guidelines under 1810 and 181A. USDA Rural Housing Service LoansOriginated and guaranteed in accordance with USDA guidelines. Fannie Mae Conventional: HFA Preferred product(s) only MI and No MI options available 8

Current Products Offered Welcome Home Loans Mortgages For First-Time Homebuyers Home Again Loans Mortgages for Repeat Homebuyers 9

DSHA Definitions Welcome Home Product - First-Time Homebuyer Definition: A person who has not had an ownership interest in his/her principal residence at any time during the last three years prior to the closing date. Mobile homes not permanently affixed to the ground are not considered real estate; the owner would be eligible for first-time homebuyer programs.Qualified Veterans as defined in 38 USC Section 101, are exempt from the First-Time Home Buyer requirement.  Must provide a copy of their DD 214 Form demonstrating military discharge or release under conditions other than dishonorable. Home Again Product – For Homebuyers who do not meet the First-Time Homebuyer definition. 10

FHA, VA, USDA Eligible Properties Owner Occupied Residential Properties Single Family Units and Town Houses Agency Approved Condominiums for FHA, VA or USDA only Please refer to Section 4.4 of the Seller’s Guide for specific guidelinesPlanned Unit Developments (PUD’s)1-4 Unit Properties (meeting DSHA purchase price limits and Agency guidelines for the loan product being originated)Double Wide Manufactured Homes; FHA Only. All borrowers must have a minimum 660 FICO score.Properties Not Allowed:Rental homes Co-ops Investment properties Recreational, vacation, or second homes

Credit Overlays Minimum FICO score of 620 * Must have a DU finding of Approved/Eligible for DTI %.DSHA does not accept non-owner occupied co-borrowers. We do accept co-signors.*No manually underwriting is permitted for USDA, VA or Conventional loans.Manual underwriting is permitted on FHA loans in cases where the loan receives an Approved/Eligible DU finding but requires a manual downgrade due to additional information not considered in the DU decision that affects the overall insurability or eligibility of the loan. In these instances, the loans will be subject to a minimum FICO score of 660 and a maximum DTI of 43%

DSHA and Lakeview Correspondent Website: Accessing Product Matrices & Documents Go to to: Lenders.DeStateHousing.com access the Lender Resource Center. The client site provides information about Correspondent Lending programs, product matrices, how to apply, and contact information. You will also find the link to Lakeview Loan Servicing credit overlays.At the Lakeview Loan Servicing site, click on the “Login Here” at the upper right hand corner of the website. Enter your email address and password and click the “Logon” button. This will take you to the Announcements screen. This screen will display all of the announcements we have posted. The navigation tool bar is located on the left hand side of the page. Use this to navigate through the site for loan status, reporting, product matrices, seller guide reference material, and much more. To get to Delaware State Housing Authority’s (DSHA) product matrices, simply click on “Product Matrix Documents-HFA” and then select either: “DSHA Fannie Mae HFA Preferred Program” or “DSHA Government Loan Program” as applicable. If you have difficulty logging in, or have any other questions regarding the website, please contact Client Services at clientservices@bayviewloanservicing.com or 1.855.253.8439 for assistance.

Lender Resource Center CalendarDSHA Contact List & Useful Links Homeownership Programs Homeownership Program Documents Access the library of DSHA Homeownership program documents. Homeownership Program Mitas User ResourcesThe Mitas User Resource page provides step by step User Guides for making the most of Mitas. (This is a secured area. Interested users must submit a request for a user name and password to view content.) Homeownership Program Training PresentationsView the most recent DSHA training presentations Lender Announcement ArchiveView DSHA announcements. Program Brochures View or print DSHA Program Brochures. Marketing Support

FNMA HFA Preferred Credit Overlays HFA Preferred with MI Maximum LTV 95% - CLTV 105% 1-4 Unit Properties Maximum LTV 97% - CLTV 105% 1 Unit Properties OnlyMinimum 620 FICO ScoreHFA Preferred with No MIMaximum LTV 95% - CLTV 105% Minimum 680 FICO Score Maximum LTV 97% - CLTV 105% Minimum 700 FICO Score 1 Unit Properties Only Condos & Rural Properties not eligible All Loans must be underwritten through Fannie Mae DU with an Approved Eligible finding.

FNMA HFA Preferred Eligible Properties Eligible Properties - Owner Occupied Residential Properties Single Family Units and Town Houses Planned Unit Developments (PUD’s) Ineligible PropertiesCondominiums on loans with No MIMultiple Unit PropertiesVacation/Second HomesCo-opsInvestment/Rental UnitsManufactured Homes

Compliance Income Calculation Income calculated is the gross pay and any additional income, including all mortgagors and anyone 18 and older that will be living in the property. All forms of income will be used including: Overtime, Bonus, SSI, Disability Income, Pension, Retirement, Child Support/Alimony, Seasonal/Part-Time jobs, Self-Employment, Interest and Dividend Income, Rental Income, Gambling and Lottery Winnings, Public Assistance, etc. Additional income such as bonuses, commissions, shift differential and overtime, is averaged over a 24-month and YTD period. 17

Compliance Income Calculation – EXAMPLEFor W-2 employees: take YTD income and divide by pay period ending date. EXAMPLE: borrower has $30,500 YTD income on a paystub with period ending date 8/15. Divide the YTD pay by 7.5 and the DSHA compliance monthly income is $4066.67. For Self Employed borrowers: provide a YTD Profit & Loss statement, with profit, loss & net profit/loss. Document must be signed, dated and notarized. DSHA will use that income for compliance calculation. We do not use tax returns to calculate income.

Homeownership Program without DE Tax Credit (MCC) Income Limits 19 County Household Income Limit New Castle, Kent & Sussex $97,900 Income Limits : Mortgagor’s current total household income must not exceed the Program limits. Income limits are subject to change.

Homeownership Loans without DE Tax Credit (MCC) Loan Limits 20 Income Limits : Mortgagor’s loan amount must not exceed the program limits. Loan limits are subject to change. County Loan Limit Kent, New Castle & Sussex $417,000

What is a Delaware First-Time Homebuyer Tax Credit and What are the Benefits? A Delaware First-Time Homebuyer Tax Credit is a federal income tax credit designed to assist people to better afford individual ownership of housing. The Delaware First-Time Homebuyer Tax Credit provides an annual tax credit up to $2,000 to qualifying homebuyers for the original term of their mortgage, as long as they live in the property and have a mortgage. The annual credit is calculated by taking the annual mortgage interest paid multiplied by the Delaware First-Time Homebuyer Tax Credit rate of 35% which has been established by DSHA. The tax credit is applied to the federal income tax liability of the Delaware First-Time Homebuyer Tax Credit certificate holder. There must be a tax liability to claim the credit. To claim credit, tax payers must file IRS Form 8396. Borrowers must meet First Time Homebuyers definitions, and meet household income/sales price maximum limits to qualify.

Homeownership Loans Using DE Tax Credit (MCC) Income Limits 22 Income Limits : MCC Mortgagor’s household income must not exceed the program limits. Income limits in effect as of 5/15/17 and are subject to change. County Area 1 – 2 Person Households 3+ Person Households New Castle $83,200 $95,680 Targeted $99,840 $116,480 Kent & Sussex $74,900 $86,135 Targeted $89,880 $104,860

Homeownership Loans using DE Tax Credit (MCC) Purchase Price Limits 23 Income Limits : Mortgagor’s purchase price must not exceed the program limits. Purchase price limits in effect as of 5 /15/17 and are subject to change. Property Location by County Purchase Price Limit 1 Unit 2 Unit 3 Unit 4 Unit New Castle County $349,411 $447,283 $540,690 $671,938 Kent County $248,098 $317,655 $383,962 $477,135 Sussex County $291,176 $372,752 $450,552 $559,933

DE Tax Credit ( MCC ) Create as second file in Mitas.One time fee of $350, if using DSHA as purchase loan. Must meet income & purchase price limits Available only to Welcome Home ( First Time Home Buyer ) only. Available as “stand alone” MCC, not using DSHA purchase loan. Must meet income & purchase price limits. Does not need minimum score or Home Buyer class certificate. One time additional fee of 1% on loan amount.

DSHA Forms All DSHA program specific forms are available on DSHA’s Lender Resource website at Lenders.DeStateHousing.com under the Homeownership Program Documents tab. DSHA training presentations, important links & contacts, Mitas user tips, as well as a calendar of holidays and scheduled closings are also available on the Lenders Resource Website. 25

Loan Flow Lender pre-qualifies homebuyer per DSHA and Agency guidelines. Lender registers loan(s) through DSHA’s Mitas Online Reservation System at https://MITAS.destatehousing.com Lender uploads loan file to Mitas under “Compliance Review” tab at least 72 hours before closing.Income Homebuyer Status Qualified Veteran (if applicable) Purchase Price/Acquisition Cost Check Mitas often for status change. If “Pending Conditions”, upload requested documents to Mitas under “Pending Conditions ” tab. Once “Committed ” (approved), Lender closes loan and delivers closed purchase file to Lakeview for funding. If using down payment assistance funds, Lender uploads into Mitas, the Wire Request Worksheet by 2 pm. the day before closing . DSHA will wire funds to closing. Lender may upload wire request for funds as soon as status is changed to “Committed” 26

Loan Flow (continued) Registrations are valid for 60 days. Closed loans must be funded by the Master Servicer, Lakeview Loan Servicing within the reservation period. DSHA will transmit registrations to Lakeview Loan Servicing.A one-time 15 or 30-day rate extension may be purchased prior to the expiration of the initial reservation period. The extension fee will be assessed at the time the extension is granted. Loans that are not purchased prior to the expiration of the reservation or extension period will be deemed expired and are subject to additional extension fees once loan is purchased by Lakeview Loan Servicing. Master Servicer will net any extension or other fees due at loan purchase. Please review the Program Notice located on DSHA’s Lenders.DeStateHousing.com website for complete product details. 27

Pre-Closing Compliance File Delivery The Compliance Package for each loan must be uploaded to DSHA at least 3 business days before closing. Note: Incomplete loan files are not placed in the queue for compliance review until all outstanding conditions have been satisfied. Therefore, it is of no benefit to submit an incomplete package ahead of time.Please use the Transmittal of Loan Documentation for Compliance, located on the Correspondent Lending Website. Verify the loan file is approved internally with all DU findings supported and documented. Upload loan file into the Mitas portal under “Document Imaging” tab, “Compliance Review”. Upload “Pending Conditions” into “Pending Conditions” tab, not “Compliance Review” tab. 28

Pre-Closing Compliance File Delivery continuedDo not submit Wire Request worksheet via email , rather upload into Mitas portal via “wire request” tab . Try to avoid 9 a.m. closings, as that is not enough time for funds to be wired to closing agent bank account. All loans must be “DU Approved Eligible” or for GUS as “Approved Eligible”, or for “LP Accept” for FHA & VA only.Follow “Loan Transmittal Checklist” exactly. Do not submit additional non requested docs, i.e.: State Tax returns, bank statements, W-2’s, etc.,Always use forms such as: “Preferred Plus Note”, “Mortgagors Affidavit”, etc., from the document list on Lender Resource Center so as to have the most recent versions.Submit most recent 3 year Federal Tax Returns, transcripts, or official IRS “no record found” letter.Remember to complete the full 3 year address history on the Notice of Potential Mortgage Subsidy Recapture Tax rvsd 5-15-17

Tracking Your Loan Pipeline in MITAS Lenders should use MITAS to see status of files delivered to DSHA for Compliance Review for any Compliance Review conditions and DSHA staff assigned to file. Lenders should cancel reservations of any "dead loans“ prior to reservation expiration to avoid non-cancellation penalty fees.

Closed Loan Delivery Closed loans must be delivered and purchased by Lakeview within the 60 day reservation period (75 or 90 days based on whether a 15 or 30 day extension was purchased). 31

DSHA Origination Contacts 302-577-5001Lender Resource Website: lenders.destatehousing.com Dawn Momot Housing Finance Manager – Lender Support Dawn.momot@destatehousing.comPamela Spencer – Compliance review Housing Mortgage Loan Officer 1pamela@destatehousing.comTomacena McCallop – Compliance reviewHousing Mortgage Loan Officer 1 Tomacena@destatehousing.com

DSHA Post Closing Contacts Brian Rossello Housing Finance Manager Post Closingbrian@destatehousing.comEnid BeltranMortgage Loan Officer IIPost Closingenid@destatehousing.comCarol OrzechowskiAdministrative Assistant II Document Controlcarol@destatehousing.com 33 Telephone: 302-577-5001 Fax: 302-577-5021