Welcome
MFA’s Partners Program
Anita Racicot and Cynthia Marquez, MFA
Ted Swisher, Santa Fe Habitat
MFA Contacts for Partners Program
• Cynthia Marquez, Compliance Specialist
 Compliance
 Package #1 (At Application)
 Package #2 (Prior to Closing)
• Lisa Romero, Lending Specialist
 Closed Loan
 Package #3 (Closed Loan)
 Package #4 (Final Documents)
• Anita Racicot, Homeownership Specialist
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Partners Background
• Established in 1992 to serve as a secondary market
for Non-profit housing development organizations,
tribal organizations and public housing agencies
• Borrowers must be very low-income at the time of
qualifying (HFH takes first application)
 50% AMI for most areas of the state
 60% AMI for high cost areas
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Compliance Guidelines
Verification of Employment Income
• High Cost Areas determined and approved by MFA’s
Board of Directors are:
Santa Fe County
Los Alamos County
Catron County
Mora County
Colfax County
DeBaca County
Guadalupe County
Harding County
Quay County
Taos County
Torrance County
Union County
Hidalgo County
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Partners Program Guidelines
• Eligible Borrowers/Homeowners
 Must be first time homebuyers
 Must occupy the home within 30 days of closing
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Partners Program Guidelines
• Use of Other Sources of Financing
 Participants must maximize the use of other sources of
soft money financing where such funding/financing is both
available and appropriate
 The use of such funds must conform to the applicable
governing rules and regulations
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Partners Program Guidelines
• Loan Closing
 Participants may only close a Partners loan upon receipt of
a copy of the MFA Compliance Approval showing the
income calculation and acquisition cost.
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Partners Program Guidelines
• Loan Purchase Requirements
 MFA will purchase loans at a discount of 83.32% of the net
principal balance
 Loans must not be seasoned (i.e. should be newly closed
loans)
 MFA will be in first lien position
 Borrowers must be current on their payments, if any are
due to the Affiliate (if first payment was due prior to MFA
purchasing the loan)
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Partners Program Guidelines
• Loan Servicing
 MFA will service all loans sold to MFA
 Individual Habitat Affiliates have a contract with MFA to
service the Habitat subordinate financing
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Partners Program Guidelines
• Payments
 It is the Affiliate’s responsibility to inform the
borrower that the loan will be sold to MFA and
provide the borrower with clear instruction as to the
first payment to MFA and the correct payment mailing
address.
 Payment Address is: MFA, P.O. Box 25525, Albuquerque, NM
87125
 Also provide borrower with the MFA loan number in order to
ensure timely and accurate application of payments
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Partners Program Guidelines
• Escrow
 Upon closing the loan, the Affiliate should ensure all
taxes are paid and current and the 1st years insurance
in paid. (MFA will need proof that taxes and insurance
are paid when the closed loan package is delivered)
 A minimum of 2 months escrow payment should be collected
at closing
 MFA will be deducting the escrow funds from the wire when
the loan is purchased
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Partners Program Guidelines
• Payment Reserve Account
 This account is a “payment reserve” funded by the
Affiliate. This is a “guarantee” in the case the loan
becomes delinquent
 Affiliate must remit six (6) months of the total payment
(principal, interest, taxes and insurance) for the first six loans
purchased by MFA and three (3) months of total payment for
each loan thereafter.
These funds are deducted from the wire at the
time MFA purchases the loan from the Affiliate
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Partners Program Guidelines
• Payment Reserve Account
 The provisions of the directive allow for the
application of the “payment reserve” in the event the
loan becomes delinquent (30 days +)
 MFA can draw on the account to apply to the
payment(s) due on the loan to cure the default which
is done after the initial collection attempts have been
unsuccessful
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Partners Program Guidelines
• Payment Reserve Account
 If the borrower is able to reinstate, the “payment
reserve” will be replenished and the borrower will
make payments as agreed under the provisions of the
Mortgage Note
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Partners Program Guidelines
• Delinquencies
 On or about the 17th of each month, MFA will provide
the State Program Administrator and the Affiliates
with a monthly delinquency report which will provide
detail of delinquent accounts
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Partners Program Guidelines
• Delinquencies
 MFA will perform the initial contact with the
borrower(s) on delinquent accounts
 After MFA’s initial contact, the Affiliate is responsible
for contacting the borrower in an attempt to cure the
default
 Otherwise the Affiliate is responsible to repurchase
the loan.
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First Time Home Buyer Program
Requirements
• Definition of First -Time Home Buyer
 Borrowers are purchasing first home
 Borrowers have not owned a home as their
primary residence for a full three (3) years.
 Borrower has not lived with an ex-spouse that
owned the property as his/her sole and separate
property prior to the marriage for a full three years
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First Time Home Buyer Program
Requirements
• Owner Occupied
 Borrowers must occupy the property as their primary
residence
 Non-occupying co-signer(s) allowed NOT NONOCCUPYING CO-BORROWER(S)
 Co-signer(s) must sign Note for first, second and any other
subordinate mortgages, but won’t take title to property
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First Time Home Buyer Program
Requirements
• Restriction on business use of property less than
or equal to 15% of the home.
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Recapture
• Only applies to Partners First Mortgage loans
• Will only be required if all three of the following
events occur
 Borrower sells the home during the first nine years of
ownership
 Borrower has a net gain (net profit) on the sale of the
home
 Borrower experiences a substantial increase in their
income (IRS formula will define)
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Partners Program
Acquisition Cost Limits
Area
Los Alamos County
Santa Fe County
Taos County
All other Areas of the State
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Acquisition Cost Limit
$ 372,375
$360,000
$280,125
$265,158
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Partners Program
Income Limits
• See Notice of Availability of Funds (NOFA) for
county and family size
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MFA Guidelines
• Reasons for Sole and Separate
 One Spouse of a married couple is not able to enter
into a contract (i.e. not of legal age), the spouse that is
able to enter into a contract will be allowed to
purchase the home as their Sole and Separate
property.
 Proof that spouse is not of legal age must be provided
** All household income needs to be counted toward
income eligibility **
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MFA Guidelines
• Reasons for Sole and Separate
 One spouse of a married couple has insufficient credit
history (no credit score), which does not allow for the
married couple to qualify for the mortgage jointly, the
spouse with the credit score will be allowed to
purchase the home as their Sole and Separate
property.
 Proof of no credit history must be provided
** All household income needs to be counted toward
income eligibility **
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MFA Guidelines
• Reasons for Sole and Separate
 One spouse of a married couple does have a Social
Security number and the other spouse does not have
a Social Security number or has an Individual Tax
Identification Number (ITIN), the spouse with the
Social Security number will be allowed to purchase the
home as their Sole and Separate property.
 Proof of no Social Security number or proof of ITIN must be
provided
** All household income needs to be counted toward
income eligibility **
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MFA Guidelines
• Reasons for Sole and Separate
 One spouse of a married couple has a poor credit
history (a credit score of less than 620), which does
not allow for the married couple to qualify for the
mortgage jointly, the spouse with the credit score
above 620 will be allowed to purchase the home as
their Sole and Separate property, with the following
restrictions;
**All household income needs to be counted toward
income eligibility **
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MFA Guidelines
• Reasons for Sole and Separate
 A maximum debt-to-income (“DTI”) of 45% for the
purchasing spouse, regardless of the automated
underwriting system (“AUS”) approval criteria.
 Both spouses need to provide proof that they
both qualify for any and all First Time Homebuyer
Requirements that might apply, including total
household Income and prior homeownership.
 Proof of poor credit history must be provided
**All household income needs to be counted toward income
eligibility **
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MFA Guidelines
• Minimum borrower cash contribution
 MFA requires a minimum borrower cash contribution
of $500.00 (typically shows as borrower down
payment/earnest money)
 Funds must be from the borrower and cannot be
derived from any type of gift, grant, pro-rated taxes or
down payment
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Compliance Guidelines
• Must have pay stub within 30 days of
 Taking initial pre-qualifying application (Package #1)
 Submitting the pre-close package to MFA and
Compliance Approval (Package #2)
• The date that should be within 30 days is the
paid through date on the pay stub; not the date
the check was issued.
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Compliance Guidelines
• Must have VOE within 90 days of:
 Taking initial pre-qualifying application (Package #1)
 Submitting the pre-close package to MFA (Package #2)
• Please use the FNMA VOE form
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Compliance Guidelines
Verification of Employment Income
Monthly gross income includes, but is not limited to:
Monthly gross pay
(wages, salary, tips, etc.)
Overtime
Part-time
Interest and dividends
Bonuses
Business Income
VA Compensation
Child Support
Alimony
Rental Income
SSI
Disability Income
Other Income
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Compliance Guidelines
Verification of Employment Income
• Basic Income Calculation Example
Paystub Dated
September 15, 2014
Paid Through Date
ALL YTD Income
Number of Months YTD
Monthly Income Calculation
September 10, 2014
$18,000.00
8.33
$18,000.00 divided by 8.33
months = $2,160.86 per month
$2,160.86 multiplied by 12 =
$25,930.37 per year
Annual Salary Calculation
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Compliance Guidelines
• Income is calculated by using the sum of ALL
Household members
 **NEW ** Income Disclosure Letter
• Calculating income will be reviewed in further
detail at the next session
 T28 MFA Income Qualifications
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Compliance Guidelines
• **NEW ** Credit Report is required (Package #1)
 Credit Report is required
 If Borrower does not have three years credit history
then 3 years Tax Returns are required (Original
signatures no longer required; MFA will accept
copies)
 If Borrower(s) did not file tax returns, then must
provide transcript from IRS
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Compliance Guidelines
• Verification of Rent is required (Package #1)
 **NEW ** 1 year rental history
 If borrower has a mortgage on their credit
report, then must provide a FULL three
years rental history
 Please use the FNMA VOR form
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Compliance Guidelines
• Real Estate Purchase Agreement
 Full address of the property, full names of all sellers
and buyers, total purchase price of property must be
included. All names persons must sign; include the
name and title whenever required
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Compliance Guidelines
• Real Estate Purchase Agreement (cont.)
 Chattel should not be included in the contract. Chattel
is described as personal property such as refrigerator,
washer and dryer. The stove usually comes with an
existing home.
 If new construction and the appliances come with the
home they should not be listed in the purchase
agreement.
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Compliance Guidelines
• Appraisal
 Full address of the property must be on all appropriate
pages
 Sales price must be in all appropriate spaces and
pages
 The appraisal must not be more than four (4) months
old when the file is submitted for compliance and
from the date of closing.
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Compliance Guidelines
• Loan Application
 Pre-qualification (first application)
Application will be the HFH Application taken when
the borrower(s) initially are pre-qualified to
participate in the HFH program
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Compliance Guidelines
• Loan Application
 Preliminary Application (second application)
Application will be taken on the FNMA form 1003
at the time it is determined that the borrower has
obtained a property from HFH
Required to be signed and dated by ALL parties
There must be a separate 1003 for ALL loans
involved in a transaction
MUST comply with RESPA
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Compliance Guidelines
• Loan Application
 Final Application (third application)
Application will be typed on the FNMA form 1003
Required to be signed and dated by ALL parties at
closing
There must be a separate 1003 for ALL loans
involved in a transaction
Must comply with RESPA
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Compliance Guidelines
• Partners Funding Worksheet
 Preliminary to be completed at the time of submitting
the Compliance Package (Package #2) (This is an
estimate of the loans included in this transaction and
estimated purchase amount of Partners loan)
 Final to be completed at the time of submitting the
Delivery Package (Package #3) (This is the actual loan
amounts and purchase amount of Partners loan)
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Compliance Guidelines
• Good Faith Estimate (GFE) and Truth In Lending
Statement (TIL)
 Must be generated and signed at the time of the
Preliminary Application (second application) and Final
Application (third application)
 Must comply with RESPA and re-disclose if required
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Compliance Guidelines
• Fees must be reflected on the initial GFE and TIL
as well as any additional disclosures that are
required
• Fees must also appear on the final HUD-1, in
accordance with the applicable regulations
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Compliance Guidelines
• HUD-1 Settlement Statement
 Buyer, seller and closing agent must fully execute
the HUD-1
 There must be a separate HUD-1 for each loan
regarding this transaction.
 All appropriate proceeds must be transferred
properly from the subordinate financing HUD-1(s)
to the first mortgage HUD-1
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Lien Positions
• Loans must be in the appropriate lien positions:
 Partners is in First Lien position
 If any subordinate financing is from other MFA Funds
must be in appropriate lien positions before any other
funding source
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Loan Packages
• Packages must be delivered according to the
appropriate checklists in the order of the
checklist and complete
• Affiliates to deliver all packages to the Habitat
Program Administrator for review
 Program Administrator will deliver all packages to MFA
after review
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Loan Packages
• Package #1
 Preliminary – pre-qualification package
Information from the time the borrower was
approved for a Habitat loan
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Loan Packages
• Package #2
 Compliance – pre-close package
Sent to MFA prior to closing the loan. Loan
CANNOT close until Affiliate received Compliance
Approval with the income calculation and
acquisition cost to be placed on the Affidavit of
Purchaser
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Loan Packages
• Package #3
 Closed Loan Package
Package is sent to MFA after the loan has closed
and is reviewed for purchase
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Loan Packages
• Package #3
 First Time Homebuyer Documents
Affidavit of Purchaser
Affidavit of Seller
Notice of Potential Recapture
Tax Exempt Financing Rider (attached to the first
[Partners] mortgage)
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Loan Packages
• Package #3
 Be sure to include the pre-close TIL along with the
final TIL
Loan must comply according to RESPA rules
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First Mortgage [Partners] Purchase
• Loan will be funded at 83.32% of out-standing
(net) principal balance
 Deduct two (2) months Escrows (Escrows to be
collected at the time of closing on the HUD 1)
 Deduct three (3) or six (6) months of Payment
Reserves.
Determined by how many loans the Affiliate
has sold to MFA
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Loan Packages
• Package #4
 Final Documents are due within 90 days of the date of
purchase
Please send the original Mortgage plus one (1)
copy
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Questions?
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Thank you for your
participation in
MFA’s programs
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