PROGRAM:
MICHIGAN STATE HOUSING DEVELOPMENT
AUTHORITY: MY NEXT MORTGAGE PROGRAM
PRODUCTS:
30Yr Fixed Rate CONV, FHA, VA,
INVESTOR CODE:
681
BUSINESS TYPE:
SERVICING:
BOND
RELEASED
REVISED:
06/01/2015
PRODUCT CRITERIA
1)
PRODUCT BENEFITS:
MSHDA MY NEXT HOME PROGRAM
 MI Next Mortgage program is opened on November 14, 2013. The
program is open to repeat buyers only utilizing government financing
(FHA/VA). The bond program (MI First Mortgage) will continue to be
available for first-time buyers.
 All borrowers on the loan must have a representative credit score of
640 (minimum representative score of 660 for manufactured homes)
 Any potential red flags in DU must be addressed and documented by
with comments from the U/W on the signed underwriting approval form.
Additional documentation obtained by the lender to support the U/W
decision must be submitted in the underwriting package. Loans must
be resubmitted if the DTI has increased by any increment above
MSHDA’s standard guidelines, based on loan type not to exceed 45%
and on all other loans if the DTI has increased by 3% or more.
 Co-signers and non-occupant co-borrowers are not permitted
 Recapture tax is not applicable to the My Next Home program
 Title commitment and flood certifications must be included in all new
loan submission packages. MSHDA requires that Title Commitment be
ordered without standard exceptions.
This product is restricted for use by Michigan branches only. All properties must
be located in the State of Michigan.
Reservations for MSHDA programs must be made through the Lender On-Line
system at:
https://mshdalenderaccess.cgi-bps.com/Bin/Display.exe/ShowSection.
 Reservations are good for 45 days. The current interest rate is
available through the online system.
 Loans must be closed and delivered to US Bank within 45 days of the
reservation date and purchased by US Bank within 70 days of loan
reservation date..
Reservations for MSHDA programs must be made through the Lender On-Line
system at:
https://mshdalenderaccess.cgi-bps.com/Bin/Display.exe/ShowSection.
Reservations are good for 90 days. The current interest rate is available
through the online system. The Lender Guide and all program documents
can be obtain through the website.
When entering the loan in Unifi, you will need to select “Bond” as the business
type of the Loan Data Tab under Registration in order to be able to select the
MSHDA Programs. Once the bond program is selected and you save the loan
data tab, you will be asked to complete the MI screen, when that is saved and
fees are calculated, the Alternate Pricing Requested Terms window will pop up
requesting the origination fee, discount fee and rate. Enter 1% origination,
discount fees are not permitted. The rate at which the loan was reserved on the
NOT INTENDED FOR PUBLIC DISTRIBUTION
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PROGRAM:
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bond program system is the rate input as the requested and qualifying interest
rate. This is also the rate at which the loan must be locked.
NOTE: Processors are responsible for completion of all MSHDA
Documents for the My Next Home Program documents required for
closing. Specific instructions are to be provided to the closer regarding
the additional bond documents to be signed at closing, in addition to any
ATC conditions required by MSHDA. All MSHDA documents, including the
MSHDA 2nd note and mortgage, if applicable, are to be returned to Huntington
in the closing package
Check the MSHDA website for current interest rates.
NOTE: RESERVATIONS FOR THE MY NEXT MORTGAGE PROGRAM MAY
BE MADE ON MSHDA’S LENDER ONLINE RESERVATON SYSTEM
BETWEEN THE HOURS OF 10:00AM TO 7:00PM MONDAY THROUGH
FRIDAY ONLY.
2)
GENERAL
DESCRIPTION:
30Yr FHA Fixed Rate (54150)
30Yr VA Fixed Rate (55150)
USDA financing discontinued until further notice
3)
TERM:
Minimum: 30 Year. Fixed
Maximum: 30 Year Fixed
4)
MINIMUM LOAN
AMOUNT:
N/A
5)
MAXIMUM LOAN
AMOUNT:
Sales price limits for target and non-target linked here
6)
MAXIMUM LTV:
Financing Option
FHA & FHA w/DPA
VA2
LTV9
Minimum FICO
1,3
96.5%
100%1,
640 / 6601
640 / 6601
1. The minimum FICO will be 640 regardless of the type of financing
use. Manufactured homes will require a minimum FICO of 660.
2. On VA loans, the combination of down payment and the available VA
Guaranty must equal not less than 25% of the purchase price or value
stated on the Certificate of Reasonable Value, whichever is less. VA
does not have a maximum CLTV limit. However, payments on any
subordinate financing must be included in the debt ratios which cannot
exceed the respective guidelines and cannot exceed the borrower’s
repayment ability. Follow VA guidelines
Itemization of fees on VA loans: Effective for all VA loans closed on or
after May 1, 2015, VA will require in the itemization of the following:
a. Lender and seller credits in the 200 series on the HUD-1. If the
credit is displayed as a lump sum, an accurate itemization of
the individual credits, including a clear indication of the source
is required.
b. Lenders are required to provide an itemized breakdown of the
charge on HUD line 801.
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c. Lenders are required to provide an itemized breakdown of HUD
line 802. The breakdown of HUD line 802 should only consist
of amounts for broker compensation and discount points or
premium pricing. In the event there is only one credit or charge
(points) on line 802, the lender must still show the single fee in
an itemized breakdown.
d. A credit showing the Adjusted Origination Charge on line 803
cannot be used to pay or offset any unallowable fees including
fees in line 801.
e. The itemizations can be done as an addendum or attachment
to the HUD-1. These addendums or attachments must be
signed by the Veteran.
3. FHA loans utilizing a second mortgage from a state, county or local
government may be used for the borrower’s entire cash investment.
However, the sum of all liens (CLTV) cannot exceed 100% of the cost
to acquire the property. The cost to acquire is the sales price plus
allowable borrower paid closing, discount points, repair and rehab
costs, and prepaid expenses.
NOTE: the cost to acquire may exceed the appraised value of
the property. For second mortgage programs provided by a
non-profit organization not considered an instrumentality of
government, or private individuals, the CLTV cannot exceed
96.5%. Follow FHA guidelines
NOTE: For any second mortgage programs other than the MSHDA second
mortgage, prior approval must be obtained from MSHDA, regardless of the type
of financing used.
7)
PROPERTY TYPES:
NOTE: All properties financed with a MSHDA mortgage must have their own
Parcel ID Number. If the property is currently part of a larger parcel and has not
been issued its own Parcel ID Number, MSHDA will be unable to issue a
Commitment for Mortgage Purchase until we have been provided with the newly
assigned Parcel ID Number for the property.
 1-Unit SF residences (new and existing)
 Individual PUDs
 Condominiums (MSHA will no longer approve new condo projects. A Spot
Condominium Approval Application (form SFH 131), Condominium
Disclosure statement and Homeowners Association budget are to be
included in the loan application submitted for MSHDA review and approval.)
 New single-section manufactured homes on permanent foundations.
(Manufactured permitted for Government Financing only and must meet
FHA/VA and MSHDA guidelines)
o All Units:
 Units must be multi-section (double-wide) and foundation
must be permanently attached and anchored per
manufacturer specifications and/or state or local building
codes.
 Must be a minimum of 12 feet wide and have a minimum of
600 sq.ft gross living area.
 Must be assessed/taxed as real estate
 Appraiser must use a minimum of one comparable sale of
similar manufactured homes. Most current Uniform
Residential Appraisal Report (Fannie Mae Form
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



1004/Freddie Mac Form 70) and Manufactured Home
Appraisal Report Addendum (Fannie Mae Form 1004C /
Freddie Mac Form 70B) must be utilized.
 Appraiser must certify that all requirements stated above
are met.
o All applicable insurer requirements must be met in addition to those
outlined above.
o When using FHA financing, follow HUD’s Manufactured Housing
Policy Guidance outlined in Mortgagee Letter 2009-16
Vehicular access must be by public road. A private road is also acceptable
if perpetual access is guaranteed to the borrower by means of a recorded
perpetual ingress and egress agreement.
Properties served by joint driveways must be subject to a recorded drive
agreement that runs with the land.
New Construction (property must be at least 90% complete at the
time of reservation):
o Improvement to be completed, and fully paid for, when the
mortgage is delivered to MSHDA, i.e. site preparation for delivery of
the manufactured home, attachment of the manufactured home to
the permanent foundation system, permanent connection to the
septic or sewage system, and permanent connection to all
necessary utilities (water, electricity, gas service, etc.).
o No furniture or personal property other than appliances may be
included in the transaction.
Existing Construction:
o No changes to the original structure may have been made, i.e.
removal of walls, etc.
o Properties must have been constructed after June 14, 1976, have a
remaining economic life of no less than 30 years and meet HUD
manufactured housing standards
o Units must be located on the original site and not moved from a
previous location
New and existing modular homes
PUDs
1. If neither public water nor sewer is available and both are private systems,
the minimum lot size requirement is 12,000 sq. ft.
2. The MSHDA Next Home program has no acreage requirements –
follow standard guidelines.
NOTE: If the borrower owns the land free and clear, there is generally no
maximum lot size; however, the land value cannot exceed 30% of the total
fair market value of the house and land combined.
All loan files must contain the current flood determination.
Loan files on properties located in a flood zone must contain the following:
 Notice to Borrower in Special Flood Hazard Area.
 Proof of adequate flood coverage
 Proof of adequate hazard insurance coverage to determine the value of
insurable improvements is required, if property is located in a flood
zone.
See Section 25 for Flood Insurance Coverage requirements.
8)
MARGIN:
N/A
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PROGRAM:
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9)
INDEX:
N/A
10)
INTEREST RATE
ADJUSTMENT CAP:
N/A
11)
BUYDOWN:
Not permitted with Conventional Financing
Not permitted when MSHDA DPA is used regardless of type of financing
FHA Program:
A 2/1 temporary interest rate buydown option is permitted. The actual note rate
is used as the “qualifying rate.
VA Program:
A 2/1 temporary interest rate buydown option is permitted for fixed and step
rate. The actual note rate is used as the “qualifying rate”, All other VA
Guidelines relative to buydowns are applicable.
12)
CONVERSION:
N/A
13)
ASSUMABLE:
Yes – however new owner must meet MSHDA income and sales price limits
DPA loans are not assumable.
UNDERWRITING
14)
DOCUMENTATION
TYPES:
1. Full Doc – must be full doc only if using MGIC for mortgage insurance
2. Alt Doc :
Income Limits for My Next Home are based on borrowers the income for the
borrowers on the transaction.
Alternative documentation will be accepted under the following conditions
(see Loan Submission Checklist). If the Lender cannot obtain all of the
items below, then a VOE must be used:
3. Lender will be responsible to verify all sources of income covering a
period of at a minimum the last two (2) years.
4. Telephone verification including, but not limited to date of hire; current
position, date of telephone verification; and name, title and phone
number of person verifying employment. The person verifying
information on behalf of the Lender must execute the statement.
5. Pay stubs covering the most recent 30-day period which reflect the
mortgagor’s name, social security number, hourly rate of pay, year-todate earnings, and number of hours worked per pay period. The pay
stub must be dated no earlier than 30 days from the date the loan
submission package is received by MSHDA and must include at least
30 days of YTD earnings.
6. Certified copies of the last two year’s W-2s, which include the
mortgagor’s name, social security number, company name and total
compensation.
7. A three (3) file merged credit report with at least a three (3) year history
will be used to determine first time homebuyer status. NOTE: When
there is not a three (3) year credit history, the most recent three (3)
years federal income tax returns will be required if the property is
located in a non-target area. Tax returns will also continue to be
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required for self-employed borrowers. All returns must be signed and
dated
8. Should a lender be unable to acquire a VOE for an individual Borrower
in active or reserve military or civil service, MSHDA will accept the
Borrower’s last two Leave and Earnings Statement and their previous
year’s W-2 form in place of the VOE.
9. Acceptable alternative documentation for verification of assets include
the most recent bank statements for all accounts of all mortgagors.
Bank statements must cover thirty (30) consecutive days and be dated
within 45 days of the date MSHDA receives the loan submission
package. Should the LP/DU determination require additional source
documents and/or verifications to verify assets, these must be provided
with the loan submission package.
US Bank Documentation Requirements: Effective for all loans delivered to
US Bank following requirements must be met:
10. Documentation Requirements: the Final 1003, 1008 and AUS
findings must reflect identical information for Income, Housing Expense
and Monthly Debt.
11. Address Requirements: The property address on the note must
match the property address on the appraisal exactly. The address on
the note and appraisal should reflect the physical location of the
property. Any corrections to the appraisal as a result of address
discrepancies must be submitted to UCDP and a successful SSR report
obtained.
12. Accurate PITI: PITI includes the borrower’s monthly payment amounts
to cover principal, interest, taxes, insurance as well as both HOA fees
and mortgage insurance premiums, as applicable. HOA dues should
be obtained from the title work; however, if HOA dues are not listed in
the title work, then the appraisal must be used as the source document.
If the title work indicates the property is a PUD but no information on
HOA fees is included and no appraisal is required, a copy of the
borrower’s current HOA statement must be used to determine the HOA
monthly fee amount.
13. Accurate Tax and Title Information: All title work must reflect
accurate subject property and borrower information. Property tax
amounts, as documented by the title commitment or tax certification
must be used for determining the subject property’s annual tax unless
the State requirements provide for a different amount. For new
construction, the taxes for qualifying should be based upon the full
value of the property as indicated by the appraisal or purchase
agreement, whichever is less.
Accurate Insurance Information: All evidence of insurance must
reflect the borrower’s name, subject property address and loss payee
clause. Any changes to any existing policy must have an effective date
on or before the actual closing/disbursement date. Existing policies
with a term ending within 30 days from the date of closing/disbursement
date must be documented with updated evidence of insurance for the
current term in addition to evidence of insurance for the new term. The
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premium for the new term will be used for underwriting purposes
14. Corrective TIL: A Corrective TIL disclosure will be required on any
loan when the APR has increased by more than 0.125% when
compared to the APR on the most recently disclosed TIL. Loans that
are closed before the three (3) (re-disclosure delivered in person) or six
(6) (re-disclosure delivered by mail) precise business day waiting period
has expired will not be purchased.
15. HUD-1 Settlement Statement: The loan terms on the HUD-1 must
match the “Summary of Your Loan on the latest issued GFE.
15)
QUALIFYING RATIOS
FHA:
VA :
31% / 43%
41% single ratio
Exceptions to standard guidelines require documented compensating factors
that are satisfactory to MSHDA. MSHDA will not approved a DTI above 45%
under any circumstances.
16)
UNDERWRITING
GUIDELINES:
All loans must meet the Ability to Repay (ATR) rules established by the
Consumer Financial Protection Bureau (CFPB). The ATR Rule requires that a
reasonable, good-faith determination be made in determining that the consumer
has a reasonable ability to repay the loan. Generally, ATR must consider the
current or reasonably expected income or assets the borrower will rely on to
repay the loan; the current employment status, the monthly mortgage payment
for the subject loan; the monthly payment on any simultaneous loans secured
by the same property; the monthly payments for property taxes and insurance
that the consumer is required to buy; debts, alimony & child support obligations;
monthly debt-to-income ratio or residual income, calculated in accordance with
the ATR final rule; and credit history.
Standard FHA, or VA guidelines unless otherwise noted. Loans are MLP
eligible with proper lending authority for DU Approve/Eligible only. Any manual
underwriting must be by HMG Corporate Underwriting Department. Underwriter
sign-off is required on the MCAW or VA analysis, as appropriate. Loans must
meet US Bank Underwriting Requirements. Click on U.S. Bank Lending
Manuals on the attached link.
NOTE: Loans utilizing any form for downpayment assistance must be
underwritten by Corporate Underwriting.
Drive Report
 Acceptable DRIVE report required with a passing Drive score of >701.
Condition resolution is required for Drive scores of 0-700.
Age of Credit Documents
 Effective with new loans registered on or after June 18, 2013, the maximum
age of credit documents is 120 days

“Credit documents” include credit reports and employment, income, asset,
and appraisal documentation
 The time frame covered by the maximum age of credit documents goes
from the date of the document to the date the note is signed.
FHA, VA Loans
 MSHDA will accept the credit approval of Fannie Mae’s Desktop
Underwriter (DU) automated system.
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
MSHDA accepts the following automated findings:
o Loans receiving an “Approve/Eligible”. This approval will apply to
the credit qualifying requirements only (i.e., credit, ratios,
employment). All other MSHDA regulatory requirements must be
met.
o Loans not receiving an “Approve/Eligible” must meet all standard
MSHDA guidelines as well as FHA guidelines, or VA guidelines, as
applicable. Loans receiving an “Ineligible” or “Out of Score”
recommendation must be traditionally underwritten and meet all
applicable program guidelines and MSHDA guidelines.
o The appropriate approval (DU Findings Report) must be included in
the loan submission package to MSHDA. These are to be placed
on top of the Residential Loan Application (1003) when submitting
the file to MSHDA. The underwriter must sign the approval
certifying the validity of the information submitted for the DU
recommendation. Underwriters are expected to include the
Feedback Report or Findings report for loans, which received the
“Ineligible” or “Out of Score”, but were subsequently approved by
the Underwriter.
MSHDA will accept packages underwritten through DU. Loans must
receive an “Approve/Eligible” from DU, or “Accept/Approve” from FHA
Total Scorecard. The information provided on the loan application, source
documents and verifications prior to loan closing must conform to the
information contained in the DU recommendation and all approval conditions
must be satisfied and adequately documented. The findings must be included
in the loan file.
Credit recommendations other than Approve/Eligible or Accept/Approve must
be manually underwritten and approved by an HMG corporate underwriter and
must meet all standard MSHDA guidelines as well as the insurer/guarantor
stated program guidelines. The loan file must contain the DU / Total Scorecard
findings that the “Ineligible” or “Out of Scope” but were subsequently approved
by the Underwriter.
MSHDA requires all collections and judgments to be paid at or prior to closing,
regardless of DU findings.
 A Satisfactory letter of explanation for derogatory credit is required for all
derogatory credit.
Homebuyer Education: All loans, regardless of program, that utilizes Down
Payment Assistance must receive Home Buyer Education. Borrowers must
utilize a HUD approved counseling agency or a MSHDA approved counseling
agencies.
Collections/Judgments: Follow AUS.
A Satisfactory letter of explanation for derogatory credit is required for all
derogatory credit.
Homebuyer Education: All loans, regardless of program, that utilizes Down
Payment Assistance must receive Home Buyer Education. Borrowers must
utilize a HUD approved counseling agency or a MSHDA approved counseling
agencies.
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Previous bankruptcy
 Follow Fannie Mae/FHA/VA guidelines, as applicable.
 After a bankruptcy or foreclosure, the borrower must show they have reestablished a good credit history. A borrower with derogatory credit after a
bankruptcy may not be eligible for MSHDA financing, regardless of AUS
findings.
Foreclosure
 A borrower whose previous principal residence or other real property was
foreclosed within the previous three (3) years is generally not eligible for a
new MSHDA mortgage. However, if the foreclosure was the result of
documented extenuating circumstances that were beyond the control of the
borrower and the borrower has re-established good credit since the
foreclosure, MSHDA may grant an exception to the three (3) year
requirement.
 A borrower generally is not eligible for a new MSHDA mortgage if they gave
a deed-in-lieu of foreclosure was the result of documented extenuating
circumstances that were beyond the control of the borrower and the
borrower has re-established good credit since the deed-in-lieu of
foreclosure, MSHDA may grant an exception to the three (3) year
requirement.
 Extenuating circumstances are nonrecurring events that are beyond the
borrower’s control, and result in a sudden, significant, and prolonged
reduction of income or a catastrophic increase in financial obligations.
Documentation provided to support claims of extenuating circumstances
should confirm the nature of the event that led to the foreclosure or deed-inlieu of foreclosure and illustrate that the borrower had no reasonable
options other than to default on his or her financial obligations. Proper
documentation must be provided.
IRS Form 4506-T
 A completed and signed Form 4506-T is required from all borrows at
application for borrowers that are self-employed or otherwise require the
use of tax returns to be used to evaluate income. For all other loans, the
4506-T must be signed by the borrower at closing. The 4506-T transcripts
obtained from IRS prior to closing should be used to validate the income
documentation provided by the borrower and used during the underwriting
process. The transcript information and any subsequent explanation or
documentation of discrepancies must be retained in the loan file.
IRS has implemented a new reject code for individuals have been a victim of, or
a potential victim, of identity theft. When a request for tax transcripts from the
IRS receives the response “Due to limitations, the IRS is unable to process this
request”, the lender will be unable to obtain the tax transcripts. The taxpayer be
contacted by mail and referred to the Identity Protection Security Unit, and may
be able to receive the requested tax transcripts, but IRS will not mail the tax
transcripts to third parties.
In this instance, in lieu of tax transcripts, one of the following options may be
used to document the file:
 For salaried borrowers, when available, utilized The Work Number’s Instant
Access Database which will show employment and income records
provided by the employer’s payroll system; or order W-2 or 1099 transcripts
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

when the only income used to qualified is salaried W-2 or 1099 reported
income.
Request the most recent 1040s from the borrower(s) with proof of filing
(cancelled check for tax payment, or bank statement showing deposit of
refund).
Request the borrower obtain the transcripts from the IRS
Verbal Verification of Employment
 Base and Commission income: A Verbal VOEs are required for all
borrowers within 10 calendar days prior to closing.
 Self Employed Income: Verification of the business existence must be
obtained within 30 calendar days prior to closing from a third party source
such as a CPA, regulatory agency or licensing bureau. The source used to
verify the business (internet, phone book) must be documented in the credit
file for all income sources, along with the full name and title of the eligible
contact person providing the information.
 UW/MLC’s are required to add ATC condition 710 to all applicable loan
files, confirming this documentation will be obtained.
*NOTE: Trailing Secondary Wage Earner Income is no longer
considered as an eligible income source for credit qualifying; however,
total household income is still required to determine program eligibility.
TIP Income may be used to qualify in the following instances:
 Must be verified the borrower received tip income for the last two years and
 Employer indicates the tip income will, in all probability, continue.
An average of the past two year’s tip income is considered in qualifying
the borrower.
Verification of Stocks, Bond, Mutual Funds, and Retirement Accounts
Due to recent volatility, determining the value of investments and retirement
accounts as assets for reserves has been modified. Use the following
calculations when determining the value of an asset being used for reserves:
 Stocks, bonds, and mutual funds: 70% of the value may be used as
reserves (reduced from 100%)
 Retirement accounts: 60% of the vested value may be used as reserves
(reduced from 70%)
 Stock options and non-vested restricted stock are not longer eligible for use
as reserves.
REO Properties:
REO properties may be financed under the MSHDA Bond program; however,
the process allowed by the selling agency for property disposition may be
incompatible with MSHDA’s objective under the bond programs. MSHDA will
require the following criteria be met for any REO transaction:
 Any additional payments made by the agency selling the property as a
sales inducement (e.g. decorating allowance) must either be applied to
down payment, closing costs or escrowed for repairs for permanent
improvements to the subject property. Under no circumstances shall such
money be paid back to the borrower from proceeds of such allowances.
 All utilities must be on and in satisfactory working order during the appraisal
inspection, or the lender is required to submit a full home inspection with
utilities on, dated generally within 30 day s of application with MSHDA.
 Repairs cannot be financed into the loan amount.
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
17)
APPRAISAL
REQUIREMENTS:
Repair escrows are eligible and are subject to MSHDA approval.
Non-Arms Length Transactions: In order to be eligible for MSHDA financing,
the Appraised Value (excluding closing costs) for all Non-Arms Length
transactions cannot exceed 115% of the sales price.
US Bank will not purchase loans that were appraised by appraisers/companies
that are listed on their US Bank Exclusionary List. To access the report, click
on the Exclusionary Report link, then click on “US Bank Lending Manuals”
located within the gray arrow in the upper left corner; click continue. When the
program guide opens, click the “+” beside the Underwriting section to expand it,
then click on “Exclusionary Report”.
MSHDA will permit a spot condominium approval when approval is needed for
only one (1) unit (with a maximum of 2 units) in a new condominium
development. A Spot Condominium Approval Application (SFH 131) must be
completed by the Developer and returned to MSHDA for review. If more three
or more units from the same development will be financed by MSHDA, the
Application for Condominium Project Authorization (SFH 130) must be
completed and sent to MSHDA for review.
o
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
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The borrower has a right to receive copies of all written property valuations
sent to them free of charge, regardless of whether credit is extended,
denied, incomplete.
Appraiser must be provided with the sales contract and other information
concerning all interested party contributions for the subject property and
related appraisal requirements.
An Appraisal complete full appraisal in the borrower’s name is required.
Utilities must be on and in satisfactory working order, or a home inspection
with utilities on, dated generally within 30 days of application to MSHDA is
required. In no instance can the first loan amount exceed the appraised
value.
The appraiser is to report any obvious items or areas that affect the safety,
livability and marketability of the property. Correction of these items is
required prior to loan closing.
Effective for all appraisals dated April 1, 2009 and later the Market
Conditions Addendum to the Appraisal Report (Form 1004MC) will be
required. The Addendum is intended to provide a clear and accurate
understanding of the market trends and conditions prevalent to the subject
neighborhood
See attached for FHA guidelines on Lead Paint in FHA REO Properties
Repair Escrows:
 Funds for landscaping, site work and outside painting may be escrowed by
the Lender only if weather conditions prohibit the completion of such work
and providing compliance with the requirements for such escrows
established by FHA or other insurers or guarantors of the loan have been
met.
 Prior approval from MSHDA for a repair escrow is required. The Lender
must hold and administer completion escrows and comply with
requirements for such escrows established by FHA or other insurers or
guarantors of the loan. Repairs cannot be financed into the loan amount.
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18)
INVESTOR APPROVAL
REQUIRED:
The following additional requirements must be met:
o Lender must require the seller or purchaser (whomever will be
responsible for the repairs) obtain an estimate for the repairs from a
licensed contractor. Estimates, which have been prepared by the
borrower or co-borrower will not be accepted by MSHDA.
o At closing, the Lender must require that 150% of the estimate be
withheld and placed in an escrow account. The minimum amount is
$500.
o The person depositing the escrow funds with the Lender must enter
into a written escrow agreement specifying the repairs to be made,
the dollar amount of the escrow and the time frame for completion
of the repairs.
o The agreement must state that if repairs are not completed by the
date specified, the Lender will complete the repairs using the funds
deposited in the escrow account.
o If the repairs are completed within the time specified by the person
escrowing the funds, the escrowed funds should be returned to that
person.
o If the person depositing the money does not complete the repairs
within the time specified, the Lender must complete the repairs
using the escrowed funds.
o If the Lender completes the repairs, the amount remaining, if any,
after the Lender has paid of the repairs should be returned to the
person depositing the funds.
o The time line should be reasonable, but in no event longer than 8
months or a shorter time period, if mandated by FHA or other
insurers or guarantors of the loan.
o The Lender should be sure to contact the person responsible for
the repairs 30 days before the termination of the escrow if the
Lender has not received confirmation that the repairs have been
completed.
o Once repairs are completed, the Lender is responsible for all
necessary paperwork/inspections required by FHA or other insurers
or guarantors to clear the escrow.
MSHDA reserves the right to order random final inspections for any
property and to require repairs to be completed prior to Commitment.
Yes: Loans must be closed and delivered to US Bank within 45 days of
reservation
Once the loan is approved by MSHDA, a Commitment of Mortgage Purchase
will be issued to the Lender. MSHDA should be notified immediately in writing
of any Commitment cancellations.
Changes after Commitment but Prior to Closing
Changes in the Borrower’s financial status occurring after the Commitment has
been issued will not affect the Commitment’s validity unless the change makes
the Borrower an unacceptable credit risk. Changes that result in increased
household income, whether or not foreseen or predictable, will have no effect
on the Commitment validity. The Lender is responsible for notifying MSHDA of
any such changes. If a member of the household whose income is included in
income computations becomes unemployed, the closing must not proceed.
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Any changes in the circumstances under which the Commitment was issued,
such as a change in site location, value, builder, sales price, mortgage amount,
encroachment conditions, or an incorrect legal description must be incorporated
in the Commitment. Therefore, the Lender must notify MSHDA with a written
request for changes along with a satisfactory explanation for each change,
together with supporting documentation. MSHDA will determine the necessity
for and acceptability of such changes on a case-by-case basis.
If the Borrower acquires an additional principal residence between the time of
Commitment issuance and the closing of the MSHDA loan, the Borrower
becomes ineligible for a MSHDA loan and the Commitment becomes invalid.
Closing Documents:
 Each loan must be insured by a Mortgagor’s title insurance policy,
which shows good and marketable title to the mortgaged property and
must be issued “without exceptions.” Standard building and use
restrictions and utility easements are allowable.
 All documents must be properly executed. Certified copies of the credit
documents must be marked as “true copies” and signed by an
authorized employee of the institution issuing the copies. Documents
executed by Power of Attorney must be accompanied by a certified
copy of the recorded Power of Attorney (for Seller only). Borrowers
may not use a Power of Attorney. All MSHDA documents must be
originals.
Required Closing Documents:
The following documents must be submitted to MSHDA for loan purchase, are
listed on the appropriate Mortgage Document Control Sheet:
 FHA
 FHA DAP
 VA
 DPA Funding Verification
19)
SUBORDINATE
FINANCING:
For all DPA loans, the appraised value must be equal to or greater than
the sales price. If the appraised value is lower than the purchase price,
the purchase price must be renegotiated based on the lower approved
value.
Bond Loans Using FHA Financing:
 Effective October 1, 2008, for all loans using FHA financing
 The Employer Identification Number (EIN) will be required on all
government, state, county, city municipalities and non-profit
organizations providing secondary financing assistance, grants or gifts
to the borrower when the borrower is receiving an FHA first mortgage.
 The EIN is to be reflected on the new FHA Loan Underwriting and
Transmittal Summary on all FHA closing utilizing any secondary
financing on or after 10/1/08. Failure to collect this information will
result in an uninsurable FHA loan.
MSHDA’s Employer Identification Number is 38-6000134.
Documentation of Governmental Entity DPA Seconds with FHA Financing:
 For loans with FHA financing, pursuant to Mortgagee Letter 2013-14
effective July 1, 2013, when a borrower’s minimum cash investment is
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coming from a Federal, State or local government agency or its
instrumentality, in order to be eligible for endorsement, the file must be
documented with one of the following:
A canceled check, evidence of wire transfer or other draw request
showing that prior to or at the time of closing the Government Entity had
authorized a draw of the funds on its account provided towards the
borrower’s required Minimum Cash Investment from the Government
Entity’s account; or
A letter from the Government Entity, signed by an authorized official,
establishing that the funds provided towards the borrower’s required
Minimum Cash Investment were funds legally belonging to the
Government Entity at or before closing.
o In situations where the Government Entity cannot legally or
operationally ensure that secondary financing is made by the
Government Entity, a statement that the Government Entity,
signed by an authorized official, has at or before closing
incurred a legally enforceable obligation (commitment) to
provide funds towards the borrower’s required minimum cash
investment, an FHA-approved mortgagee, may provide the
funds at closing, provided the mortgagee has obtained
documentation that a legally enforceable liability or obligation
was incurred at or before closing and the Government Entity
holds the secondary financing prior to endorsement of the first
mortgage for FHA insurance.
Effective immediately, HUD has issued an exemption for certain subordinate
financing programs for purposes of RESPA: specifically the requirements under
Section 5 (c) to provide a separate Good Faith Estimate (GFE); and Section 4
to provide a separate Settlement Statement (HUD-1). In order to qualify for the
exemption, the subordinate loan must meet the following criteria:
 Must be a subordinate lien; AND
 Must be for downpayment, closing costs, or other similar homebuyer
assistance, such as principal or interest subsidies; or property
rehabilitation assistance; or energy efficiency assistance; or foreclosure
avoidance or prevention; AND
 Must have a 0% interest rate; AND
 Must have the following repayment terms:
o Repayment is forgiven, incrementally, or at a date certain; or
o Repayment is forgiven, incrementally, or at a date certain,
subject to certain ownership and occupancy conditions; e.g. the
recipient must maintain the property as his or her primary
residence for 5 years; or
o Repayment is deferred for a minimum of 20 years; or
o Repayment is deferred until sale of the property; or
o Repayment is deferred until the property is no longer the
primary residence of the recipient. AND
 Total Settlement Costs assessed for the subordinate loan is less than
one percent (1%) of the amount of the subordinate loan and includes, at
most, charges for the following items:
o Recording Fee
o Application Fee and/or
o Housing Counseling Fee.
The MSHDA second mortgage meets the criteria for this exemption and thus is
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no longer required to have a separate GFE or HUD-1.
All loans using the MSHDA subordinate financing program should have the
following identifications in Unifi:
 Registration Folder – Loan Data Tab: The Special Mortgage Type
should be indicated as “Bond DAP”
 1003 Application Folder – Property Information Screen:
o Source of downpayment, settlement charges, and/or
subordinate financing should indicate “Secured”
o DAP Program Name: MSHDA Second
 Lender Name and NMLS# and MLO Name and NMLS# must be
included after the Notary Section. Lender and MLO information must
match the information on the final 1003.
MSHDA’s SF-Down Payment Assistance (SF-DPA) Program is available to
lower income households and can be combined with MSHDA/FHA program.
SF-DPA is provided in the form of a second mortgage for a maximum amount of
$7,500 toward the payment of the minimum required down payment, Borrower
paid closing costs and prepaids/escrows less a minimum cash investment
from the borrower’s own resources of 1% of the sales price. All amounts
for Down Payment Assistance must be rounded to the nearest whole dollar.
Eligibility requirements:
 Borrower must not have more than $7,500 in liquid cash assets. Liquid
Cash Assets include, but are not limited to: savings, checking, CDs,
participation in IDA accounts, total balance of any joint account, money
market or mutual funds, trust accounts, bank accounts, funds from gift
letters, funds derived from the sale of real property, mobile home or
other property prior to closing, amount used or borrower from a life
insurance policy, IRA or 401K, equity in any real property, funds paid
outside of closing, earnest money deposit.
 Borrower’s income must not exceed 80% of the area median income,
adjusted for family size, except where lower by state law.
 Sales price limits will be identical to those in effect for the regular
MSHDA loan program.
 All adult members of the household must apply jointly on the DPA
financing.
 Eligible properties include: New 1-family homes or manufactured homes
on permanent foundation; or Existing 1-family homes or multiple section
manufacture home built on a permanent foundation. NOTE: In order to
be eligible, an existing manufactured home must be built after June 15,
1976.
 Borrowers must occupy the property within 60 days of closing.
 This is a 0% non-amortizing loan with payment due in full the earlier of
30 years or the sale or transfer of the property, or if the property ceases
to be the principal residence of the Borrower(s).
 Prepayment of the principal amount outstanding in whole only – NO
PARTIAL PAYMENTS PERMITTED.
 A minimum cash investment of 1% of the sales price is required
from Borrower’s own resources. NOTE: MI company may have
higher minimum borrower contribution requirement.
 Counseling Certificate from a counselor employed by a counseling
agency certified by MSHDA on any loan where the Single Family Down
Payment Assistance Loan is being requested. Certificates from
counselors that are not part of MSHDA’s counseling network will not be
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accepted.
A maximum of one (1) home inspection fee may be included in the
down payment assistance funds provided it is listed on the HUD-1 as a
cost to the buyer and either paid at time of closing or listed as a POC.
The Lender may include a maximum of 1% Loan Origination Fee in the
amount of the down payment assistance. The Lender may also include
typical and customary third party closing costs paid by the buyer and
permitted by the applicable loan program. Prepaid/escrow expenses
paid by the buyer may also be included as well as the minimum down
payment required of the applicable loan program. No “junk” fees are
permitted.
NONE OF THE FOLLOWING FEES CAN BE INCLUDED: property
repairs, delinquent credit obligations, more than 2 months of private
mortgage insurance premiums on a conventional loan or more than 2
months of mortgage insurance premiums on a FHA loan, the Upfront
Mortgage Insurance Premium for a FHA loan, or “junk” fees.
THERE IS TO BE ABSOLUTELY NO CASH BACK TO THE
BORROWER.
DPA Calculations Worksheets are provided to aid in the calculation of
the maximum dollar amount of DPA:
FHA DPA Worksheet
ENTRY OF THE MSHDA 2ND MORTGAGE IN UNIFI & DU:
Entry in UNIFI:
 When MSHDA SF- Down Payment Assistance 2nd mortgage or other
subordinate financing is part of the transaction, the subordinate loan
must be entered in DU or FHA Total Scorecard as subordinate
financing and not as gift. All subordinate financing must be included in
the combined loan-to-value.
 The amount of the MSHDA second mortgage will be treated as lien on
the property instead of gift funds, even though payments are deferred.
Therefore, the amount of the Second Mortgage should be entered in
Unifi so that it shows as “other liens” in Unifi.
 The Community Seconds indicator on the Additional Pricing Data
Screen must be checked. The Community Seconds indicator in DU
must also be indicated as “Yes”.
 Under the 1003 Application folder in Unifi, select the Property
Information and Purpose Screen, go to the Source of Down Payment,
Settlement and/or Subordinate Financing area and select “Secured”
from the drop down box. Enter MSHDA 2nd Mortgage Program” in the
“DAP Program” field.
FUNDING OF THE MSHDA 2ND MORTGAGE:
 Not all MSHDA 2nd mortgage programs area funded by Huntington.
See breakdown below. The amount of the Second Mortgage should be
entered on the Streamline GFE Screen under the Fee Disbursements
tab and the appropriate name of the DPA program is to be listed on the
HUD-1.
 The MSHDA Single Family Down Payment Assistance Second
Mortgage (SF-DPA) will be funded by Huntington at closing.
o The 2nd Note and Mortgage is to be completed by the MLP from
the MSHDA Lender Online reservation system and included
with the package sent to closing.
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NOTE: THE SUBORDINATE FINANCING DOCUMENTS ARE TO BE
RETURNED TO HUNTINGTON AFTER CLOSING.
ADDITIONAL FORMS REQUIRED:
 Homebuyer Counseling Certificate
20)
MI REQUIREMENTS:
FHA Case Numbers assigned on or after January 26, 2015 will have the
following premiums:
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Upfront Insurance Premium (UFMIP) = 1.75%
Annual Premiums will decrease as follows:
LTV / Annual MIP, terms >15yrs
< 90%
>90% ≤ 95%
> 95%
0.80%
0.80%
0.85%
Duration
11 years
Life of Loan
Life of Loan
FHA case numbers assigned prior to January 26, 2015:
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Upfront Insurance Premium (UFMIP) = 1.75%
Annual Premiums will increase as follows:
LTV / Annual MIP, terms >15yrs
< 90%
>90% ≤ 95%
> 95%
1.30%
1.30%
1.35%
Duration
11 years
Life of Loan
Life of Loan
NOTE: FHA will temporarily approve Case Number Cancellation Requests for
loans with FHA Case Numbers assigned but not yet closed to allow borrower to
obtain the reduced annual MIP rate. Mortgagees may begin requesting Case
Number cancellations on January 15, 2015 through 11:59pm eastern time on
February 25, 2015. New case numbers should not be ordered until FHA
Connection confirms that the previous Case Number has been canceled. In
order to obtain the reduced Annual MIP, new case number should not be
ordered prior to January 26, 2015.
If borrower chooses to have a new FHA case number issued to take
advantage of the reduced Annual MIP, a new GFE and TIL must be
provided to the borrower and a copy retained in the file that reflects the
same payment amount as shown on the final HUD-1. Timelines for closing
and delivery of loans must continue to be adhered to.
VA – VA Guaranteed
Initial Loan with no down payment (First Time
Use)
For loans with a down payment of greater than
5% but less than 10% (First Time Use)
Active
Duty or
Veteran
2.15%
Nat’l
Guard
/Reservist
2.40%
1.50%
1.75%
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For loans with a down payment of 10% or more
(First Time Use)
Subsequent Use:
Purchase:
95.01% LTV and >
90.01% LTV to 95% LTV
90.00% LTV and less
Manufactured Housing
Assumptions (First Time or Subsequent Use)
1.25%
1.50%
3.30%
1.50%
1.25%
1.00%
0.50%
3.30%
1.75%
1.50%
1.00%
0.50%
Any loan approved under standard or investor guidelines must also be
insurable. If Huntington is unable to obtain mortgage insurance on a loan
for which it is required, the loan will be denied.
PROCESSING
21)
ANCILLARY FEES:
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Origination Fee: 1% of Loan Amount
Tax Service Fee: $85
Loan Transfer Fee: $300 for loans reserved on or after June 9, 2014.
Flood Certification Fee: $7.50
Processing Fee – must be charged to Seller
Underwriting Fee – $350
Discount Points: Not allowed
Lock-in/Commitment Fees are no longer permitted.
Attached is a list of the allowable fees for MSHDA Bond loans.
Loans must be closing and delivered to US Bank within 45 days of
Reservation. A one-time 30 day extension may be requested for a $375.00
fee. The fee will be deducted from the SRP at the time of purchase if
necessary. The $375.00 fee cannot be charged to the borrower.
Payment of tax bills: At closing, if the Title Company collects taxes due for a tax
bill currently due, the Title Company should be instructed to make those funds
payable to the appropriate taxing authority.
22)
PROCESSING
DOCUMENTATION:
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The Borrower(s) must meet the income and sales price limits for the
program. Items included in the sales price, in addition to the house and land,
are: construction items, commissions, builder hook-up and tap-in fees,
permits and architectural fees, site improvement, discount points paid by
Seller, Borrower’s sweat equity, subcontracted items, construction loan
interest, estimated cost of completion of or addition to the residence
contemplated by any side deal or agreement (verbally or in writing), for
existing homes, all costs assumed by the Borrower such as repairs and
assessments.
A realistic estimate must be computed for the monthly escrows. The
escrowed amount for real estate taxes is based on the assessed value of
improved land (i.e. value of both property and completed dwelling) for new
construction and the actual taxes assessed for existing properties. Lender
may contact the taxing authority which has jurisdiction over the property to
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obtain an estimate of the taxes to be assessed for newly constructed homes.
A Homebuyer Education Certificate will be required for any loan, regardless
of product, that uses Down Payment Assistance. Counseling must be
obtained from a HUD-approved counseling or an approved MSHDA Housing
Counselor. A Lender Referral Form must be completed and sent to the
counseling agency prior to the borrower receiving education. The
Counseling Agency will request the type of loan feature, (FHA, Conv, etc.), a
copy of the purchase agreement, truth in lending statement, and a copy of a
good faith estimate. Do not furnish this information to the agency
unless they have had a Release of Information form signed by the
borrower. The Certificate of Completion must be included in the closing
package to be signed by the borrower at closing, if the Certificate has not
been executed by the borrower prior to closing.
Mortgage Credit Certificates (MCCs) may not be used in conjunction with the
MSHDA mortgage loan programs.
Only income from the borrower(s) is included in the calculation for eligibility
purposes.
Borrower must intend to occupy the unit within 60 days of loan closing.
A new home must be built by a builder licensed to do business in the State of
Michigan who acts as the general contractor. For manufactured housing, the
home must be erected by a licensed retailer, either acting as general
contractor or under a licensed builder acting as a general contractor.
Should a new home be a manufactured home permanently affixed to a
perimeter foundation, the Borrower must complete the Affidavit of Intent and
Agreement as to Classification. Any new “stick built” or manufactured home
must be warranted by the builder, dealer, or general contractor for a
minimum of one year against all defects in workmanship or material.
During processing, the Borrower shall sign the Initial Application Affidavit.
All required MSHDA documents are posted on the MSHDA Lender-on-Line
system. Make sure that files contain the most updated version of these
forms.
The Borrower must certify that not more than 15% of the area of the eligible
dwelling will be used for a trade or business. For a new home, the loan
proceeds cannot be used to replace an existing mortgage or land contract
unless the existing mortgage or land contract is for a (1) construction period
loan, or (2) bridge loan or similar temporary initial financing of 24 months or
less. For an existing home, the proceeds cannot be used to replace the
Borrower’s existing mortgage or land contract.
The Seller contributions are restricted to the maximum permitted by FHA,
and VA guidelines
The Mortgage Loan Data Summary Sheet (SFH-117) must accompany the
application and credit documents submitted for commitment. Loans that do
not have the document will not be processed.
Tax returns will also continue to be required for self-employed borrowers. All
returns must be signed and dated. A letter can be requested from the IRS
by filing IRS Form 4506 and indicating in the proper spaces on the form that
a verification letter of filing status for the past three years is being requested.
If the Borrower was not required to file federal income tax returns, the
Borrower must sign the Income Tax Affidavit, which shall be submitted along
with the other documentation for approval
A minimum FICO of 640 (660 for manufactured homes) is required for the
My Next Home Program. Credit reports that have been scored “000” by
FICO due to lack of credit history may still be acceptable if suitable
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alternative credit is provided. A history of slow payments must be
satisfactorily explained and must also state the reason(s) the Borrower
believes a recurrence of derogatory behavior is unlikely. If no credit
references are shown on the credit report, at least two (2) reference letters
must be provided, such as from the present landlord or utility company,
indicating that payments have been made when due. A loan application may
be made no sooner than two (2) years after the date of discharge of a
bankruptcy or five (5) years after the date of a “deed in lieu” of foreclosure. If
the Borrower has been a party to a foreclosure, he/she is ineligible for
MSHDA financing.
Frequent changes in residence or employment in the past five (5) years must
be explained satisfactorily.
At the time of loan submission to MSHDA, the Borrower must have available
and verified sufficient assets to close the loan, including adequate funds to
reduce or pay off outstanding debt obligations as indicated on the loan
application.
All appraisals require the completion of the FNMA Form 1004 Appraisal
Form.
Flood Insurance: Deductibles cannot exceed the greater of $1,000 or 1% of
the face amount of the policy, unless a higher max is required by state law.
Flood policy coverage adequacy is determined as follows:
1. For 1-4 family properties, the minimum amount of flood coverage
required is the lower of: (1) the unpaid principal balance of the
mortgage, or (2) the dwelling coverage from hazard insurance policy,
or (3) the maximum insurance available under the national Flood
Insurance Program. In instances where the hazard dwelling
coverage is the lowest option, the value of the cost approach less
site value on the appraisal must be equal to or less than the dwelling
coverage.
2. For condominiums, the flood coverage is required to equal the
hazard replacement insurance coverage on a per unit basis (up to
the National Flood Insurance Program maximum of $250,000 per
unit).
3. The flood insurance is in effect at time of closing. Any
policy/application that indicates a 30-day waiting period will not be
accepted.
The flood insurance policy must list the flood zone of the subject property
and must match the flood certification. If the flood zone is not listed on the
policy, the insurance agency must provide documentation (i.e. a separate
memorandum stating flood zone).
A borrower whose previous principal residence or other real property was
foreclosed within the previous three (3) years is generally not eligible for a
new MSHDA mortgage. However, if the foreclosure was the result of
documented extenuating circumstances that were beyond the control of the
borrower and the borrower has re-established good credit since the
foreclosure, MSHDA may grant an exception to the three (3) year
requirement.
A borrower generally is not eligible for a new MSHDA mortgage if they gave
a deed-in-lieu of foreclosure was the result of documented extenuating
circumstances that were beyond the control of the borrower and the
borrower has re-established good credit since the deed-in-lieu of foreclosure,
MSHDA may grant an exception to the three (3) year requirement.
Extenuating circumstances are nonrecurring events that are beyond the
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borrower’s control, and result in a sudden, significant, and prolonged
reduction of income or a catastrophic increase in financial obligations.
Documentation provided to support claims of extenuating circumstances
should confirm the nature of the event that led to the foreclosure or deed-inlieu of foreclosure and illustrate that the borrower had no reasonable options
other than to default on his or her financial obligations. Proper
documentation must be provided.
Mortgage Credit Certificates (MCC) may not be used in conjunction with
MSHDA mortgage loan programs.
New Construction: A Builder must be licensed in the State of Michigan as a
residential builder or as a manufactured home retailer. The following
documents must be in the builder file and submitted with or in advance of the
application for MSHDA financing consideration:
1. Copy of current residential builder’s license or manufactured housing
retailer’s license.
2. Equal Opportunity Builder Certificate
Both new and existing homes must pass the inspections the following
inspections:
FHA: New & Existing – inspections as necessary to meet the
requirements of the FHA conditional commitment
VA: New & Existing – all inspections required by the VA Notice of
Reasonable Value.
MSHDA Staff Inspections – A random selection of new and existing homes
will be inspected by MSHDA. The MSHDA Commitment returned to the
Lender will indicate if a MSHDA inspection is required. In these cases,
MSHDA’s final inspection must be completed prior to the loan closing.
EXHIBITS FOR COMMITMENT PACKAGE
The loan package submitted to MSHDA for Commitment must contain the
following exhibits completed and signed where appropriate. The documents
must be dated within 30 days of the date of submission to MSHDA. FHA and VA
packages must be certified true copies, except for MSHDA forms, which must be
original documents.
1. Mortgage Loan Data Summary
2. Informational Certification
3. Photocopy of the Insurance Guaranty Certificate
4. Loan Application (FNMA 1003). The two-page FHA/VA Addendum must be
included for FHA and VA loans. The phrase “Due on Sale” must be typed on
the application near the signature box for FHA and VA loans.
5. Government issued identification with photograph
6. Satisfactory evidence of social security number issued to applicant (i.e.
social security card, W-2, pay stub, etc.)
7. Credit reports
8. Verification of Income
9. Verification of Prior Residency
10. Explanation of Recapture Requirement
11. Verification of Assets Required to Close: VOD, Gift letters, Work Credit
Agreement, Land Ownership
12. Purchase Agreement/Contract to Build
13. Required Builder Information (New homes only)
14. Appropriate Appraisal with color photographs and a detailed site location
map.
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Where applicable, the following documents must also be included:
1. Existing Homes Standards Certificate
2. Counseling Certificate from a counselor employed by a counseling agency
certified by MSHDA on loans with 97% LTV or greater and/or any loan where
the Single Family Down Payment Assistance Loan is being requested.
Certificates from counselors that are not part of MSHDA’s counseling
network will not be accepted.
MSHDA Closing Documents
The MLP must complete all MSHDA documents required for closing and include
instructions to the closer the documents required to be signed at closing.
NOTE: Borrower may not receive cash back at closing other than what they
have paid in. If using MSHDA down payment assistance, borrower is required to
have 1% of their own funds invested. Therefore, when MSHDA is utilized,
borrower may only receive cash back that exceeds the 1% required contribution.

Sample DPA Docs
If MSHDA DPA funds are used, provide the MSHDA Certificate of
Homeownership Counseling, Seller Notification, and the Existing Home
Standards Certificate. The appropriate form is required with the Origination
package and certified completed at Closing
23)
PRODUCT SPECIFIC
DISCLOSURE:


Standard RESPA and Reg Z disclosures
For FHA or VA insured loans, the appropriate Notice to Buyers must be
signed and dated by Borrowers: FHA Notice to Buyers or VA Notice Buyers.
RESPA Requirements
 Initial GFE issued must be incompliance with Reg X and be complete and
accurate.
 Re-disclosed GFE’s due to a Change of Circumstance must be documented
and a Change of Circumstance re-disclosure log must be included in the
loan package.
 The Final HUD-1 must reflect the accurate GFE amounts in the GFE Column
and must match the last valid GFE disclosure.
Dodd-Frank Related RESPA Requirements
 Effective for all applications taken on or after January 10, 2014:
o A Homeownership Counseling disclosure must be provided to
applicants within three (3) business days of receiving a loan
application. Evidence must be included in the loan file that the
disclosure was provided in the appropriate time frame required.
o Effective for all loan submitted on or after May 11, 2015, US Bank
will no longer accept the CFPB’s temporary alternative
Homeownership Counseling Disclosure. In order to be eligible for
purchase all loans must include a copy of the 10 counseling
agencies provided to the borrower; evidence that the list was based
upon the applicant’s current mailing address or ZIP code, unless
specified differently by the applicant; evidence that the list was
created no more than 30 days prior to providing it to the borrower;
and evidence that the list was provided to the borrower within three
business days of receipt of the RESPA application.
o Lenders may rely on document print dates or a cover letter to show
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o
the list’s creation date. Separate evidence must be given to show
timely delivery to the applicant.
Evidence of the above requirement must be included in the loan
file submitted to US Bank for purchase.
Truth-in-Lending (TIL) Disclosure
 The TIL disclosure must be complete and accurate and proper and accurate
fees must be included in the finance charge calculations.
 A new TIL disclosure must be provided when the APR is no longer
considered accurate. (An APR is inaccurate if it increases by more than
.125% from the last disclosed APR.)
 The loan may not close prior to the seventh business day after the initial
disclosure was sent.
 If the loan is re-disclosed, the loan may not close prior to the third business
day after re-disclosure was received by the borrower
24)
AUDIT GUIDELINES:
Standard HMG Policies & Procedures
25)
HAZARD / TITLE
INSURANCE:
Title Insurance is required
 Name of Insured must show as “The Huntington National Bank” on the title
policy and any endorsements.
 All final title policies must have the following endorsements:
o ALTA 9 – Comprehensive Endorsement 100
o ALTA 8.1 – Environmental Protection Lien Endorsement
o ALTA 4 – Condominium Endorsement, if applicable
o ALTA 5 – Planned Unit Development, if applicable
o Manufactured Home ALTA, if applicable
For Manufactured Homes
 the title policy must contain an ALTA 7 form endorsement or the equivalent
 evidence that the manufactured home title has been surrendered to the state
Hazard Insurance:
Required. The policy must be written by a hazard insurance carrier licensed to
do business in the State of Michigan.
 The hazard insurance policy must be written by a hazard insurance carrier
which has a financial rating by Best’s Insurance Reports of B/VI or better.
 The homeowners insurance must be in effect on the date of closing and paid
for, in advance, for a full year from the closing date evidenced by the
declaration page.
 The Hazard Insurance deductible requirements are outlined in the chart
below:
Property Type
One to four family; Individual
PUD units; Individual condo
units (i.e. detached condo’s,
town or row houses)
Association Policy
requirement for CONDO/PUD
Projects and common areas
Maximum Hazard Deductible – FHA, VA, RHS,
Loans
Unless a higher maximum amount is required by
state law, the maximum deductible clause may not
exceed the greater of $2,500 or 2.5% of the face
amount of the policy
Deductibles may not exceed the higher of $2,500 or
2.5% of the policy’s insurance limits for all covered
losses.
NOTE: If the borrower is using MSHDA DPA, the homeowners insurance can be
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financed into the MSHDA DPA 2nd mortgage and paid at closing.
Flood Insurance:
 Flood insurance coverage must be at least the lower of:
o Unpaid principal balance of all liens against the property,
o The insurable value of the property; or
o The National Flood insurance Program (NFIP) insurance maximum
($250,000 for Regular Program, $35,000 for Emergency Program).
 Flood Insurance Disclosure Requirements for non-residential structures:
The Homeowner Flood Insurance Affordability Act (Section 13(b)) details an
amendment to the Home Buying Information Booklet provided by the CFPB.
The amendment provides specific guidance to the borrower regarding flood
insurance, even if the lender does not require it. U.S. Bank Home Mortgage
will send the HFIAA non-residential detached structures disclosure directly to
the borrower on all conventional loans where the property is identified to be
in a special flood hazard area.
o On conventional loans, Flood insurance coverage is not required on
non-residential detached structures. To be defined as residential, if
any part of the detached structure is designed to contain sleeping,
bathroom and kitchen facilities, flood insurance coverage would be
required. As an example, flood insurance would not be required for
a shed or a workshop, but if the property has a separate structure
such as a guest house, flood coverage for that structure would be
required.
o Until further instruction is received from FHA or VA, flood insurance
coverage will be required on all detached structures located in a
Special Flood Hazard Area for loans using government financing
where the replacement costs value of the detached structure is more
than $1,000. Detached structures that are permanently affixed to a
foundation (as documented by an appraiser or hazard insurance
agent) and valued at less than $1,000, do not required flood
coverage. A value of $0.00 is not permitted. The appraiser must
provide a replacement cost for the structure.
 The National Flood Insurance Program (NFIP) policy covers only one
structure per policy. An exception is for detached garages, used for storage
or parking, which are typically included in the NFIP policy for the primary
residence. Therefore, if there are additional structures with a replacement
cost value exceeding $1,000 and insurance is provided by the NFIP policy,
an individual NFIP policy for each additional structure will be required. If
private flood insurance is obtained, the policy should include a list of all
structures covered and indicate the amount of coverage provided for each
structure.
 Calculations to determine the insurable value of the property must include
the foundation. Acceptable documentation for establishing the insurable
value of the property is listed here in order of preference:
o The Estimated Cost New from the appraisal (Cost Approach
section). This includes the foundation so no additional reference to
the foundation is required. If there are additional structures or
buildings on the property, the appraiser must provide a replacement
cost value for each of the structures or buildings.
o The hazard insurance policy. The hazard policy must provide the
insurable value (replacement cost) of each building or structure on a
property, and it must have confirmation that the foundation is
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


included. If the agent or insurance company cannot or will not verify
in writing that the hazard insurance includes the cost of the
foundation, the hazard policy cannot be used as the insurable value
for the flood policy.
o A construction cost calculation. If the insurance company will not
provide this information, a quote from a builder or contractor is
required. The calculation should be no more than 12 months old
and must include a value for the foundation.
o For condominium loans, if the policy is a RCBAP, the insurable
value of each unit will be calculated using the Replacement Cost
Value (RCV) and number of units obtained from the association’s
flood policy. If the condominium policy is not a RCBAP policy (a
master policy for residential condominiums issued by FEMA), the
cost approach from the appraisal or the hazard coverage (inclusive
of foundation) may be used to establish the insurable value of each
unit. Any flood insurance shortage must be covered by an individual
flood policy obtained by the borrower if the association refuses
increase coverage to 100% of the RCV or the NFIP maximum
$250,000 per unit.
For individual flood policies, a copy of the flood policy reflecting paid in full or
a completed Application for Flood Insurance and a paid receipt is required.
NOTE: A flood insurance binder is not acceptable evidence of insurance.
An ACORD Certificate of Insurance can only be accepted on single family
flood policies that have been in existence for over 60 days. It is acceptable
to have the premium for a flood policy paid at closing; however, evidence is
required to show that the settlement agency remitted a check to the insurer.
For condominium flood policies (non-RCBAP policies), as ACORD Certificate
of Insurance is acceptable as evidence of insurance as long as the original
policy was in place more than 60 days prior to closing.
The flood zone on the flood policy must match the flood zone on the flood
determination.
Follow the Flood Deductible requirements outlined in the charts below:
Minimum Deductibles (NFIP Policies Only)
Coverage of
Rating / Loan Type
$100,000 or
less
Full risk rate policies (Post-FIRM, pre-FIRM
$1,000
elevation-rated, and all X-zone rated policies)
Pre-FIRM subsidized policies
$1,500
Emergency program (all ratings)
$1,500
Coverage over
$100,000
$1,250
$2,000
$2,000
Maximum Deductibles
Single Family Dwelling
Housing and bond agency
loans
Condominium (association
policies)
Freddie, Fannie, whole loan
investors
Government loans,
association, housing and
bond agency loans
Allowable Deductibles for Flood Coverage
Unless a higher maximum is required by state law or
the agency, $2,000 (please refer to state law or bond
agency policy and procedure for property amounts)
Allowable Deductibles for Flood Coverage
Maximum of $25,000
Maximum of $25,000
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The Hazard/Flood insurance policy must have one year paid receipt for first year
premium included in loan file and must contain the following mortgagee clause at
closing:
U.S/ Bank National Association, its Successors and/or assignees as their
interests may appear
c/o U.S. Bank Home Mortgage
P.O. Box 7298
Springfield, OH 45501-729
26)
SURVEY:
Surveys are required for all new construction and, when necessary, to address
multiple lots for documentation that the additional lot is not buildable. In the
absence of a survey, MSHDA will require the Title Company to provide an ALTA
9 Endorsement. In the event that the Title Agent is requiring a survey, MSHDA
will also request a copy to be provided in your funding package. The survey
must be dated within six (6) months of the Note date.
NOTE: US Bank will require a plat drawing/ survey or “Mortgage Inspection
Report” to be included in the loan package. The correct dimensions of the lot,
the location of any improvements, the measurement from the improvements to
the various lot lines, the location and identity of all easements and
encroachments must be identified and illustrated on the drawing. All permanent
structures must be identified and the location of easements must be described in
the title policy.
27)
ESCROW
AGGREGATE
ACCOUNTING:
Please refer to the HMG Escrow Waiver Policy
28)
POST
CLOSING/SHIPPING


U.S. Bank Delivery & Funding Requirements
In addition to the items listed in the US Bank Delivery & Funding
Requirements, purchase package submissions must also include the
following documents:
o Asset verification for all borrowers, as required by the underwriting
approval (i.e. bank statements, VODs, etc.)
o Most recent paystub(s) as required by the underwriting approval for
all borrowers and all employers
o Most recent W-2(s) or SA-1099(s) as required by the underwriting
approval for all borrowers and all employers
o IRS Tax Transcripts for all borrowers (as of last filing year)
o Current (as of last filing year) IRS tax returns for all borrowers
including all pages and schedules along with signature(s) as
required by the underwriting approval, if applicable per the loan
product guidelines.
o All required underwriting and closing documentation for any sources
of down payment assistance program, grants, second mortgages,
etc. which includes all required Agency (FHA, VA, RD, etc)
documentation
o If gift funds are used, proof of existence of funds within donor
account, gift letter, and proof of transfer to borrower as required by
the underwriting approval
o Proof of Homebuyer Education documentation signed by
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









borrower(s), if applicable.
o Closing protection letter or final title policy for subject property.
o Letter regarding HB Education Disclosure requirements.
o Proof of delivery of property valuation.
For FHA loans, the following documents are also required:
o Real Estate Certification and Amendatory Clause signed and dated
by all borrower(s) and seller(s). Must be signed prior to closing,
cannot be signed same date as closing.
o Conditional Commitment signed by U/W including FHA Case
number of subject property with all listed conditions cleared.
o FHA Loan Underwriting Transmittal including the CAIVRS
Authorization number with LDP/GSA section marked appropriately.
o FHA New Construction Documentation. If “Subject to Completion”,
the following fully executed documents are required:
 HUD 92544 Warranty of Completion of Construction
 HUD 92541 Builder’s Certification
 Builder’s Permit and Certificate of Occupancy or 10 year
warranty
 Final Inspection by appraiser
 Termite Report/Wood Destroying insect report/Soil
Guarantee.
The complete closing package must be submitted for purchase within 45
days of the date of reservation. All loan files are to be “two hole punched”
fastened in a legal size folder according to the Loan Delivery Checklist. All
loan files and original documents should be sent to:
US Bank Home Mortgage - MRBP
Attn: Operations Department
17500 Rockside Road
Bedford, OH 44146All loans must be purchased by US Bank within 70 days of reservation date.
A copy of the GFE for the first mortgage that includes the actual property
address will be required to be included in the purchase package when the
loan is submitted for purchase. If the loan began as a Headstart, the GFE
that was issued after the loan went live will be required.
A copy of the TIL disclosure for the 1st mortgage must be included in the
purchase package.
A copy of the HUD-1 for the 1st mortgage and any subordinate lien must be
included in the purchase package.
Subsequent to loan purchase and prior to transfer of the loan by the lender
to U.S. Bank, should a borrower make a payment and should it include an
extra principal payment, a determination will be made by the Loan Purchase
Staff on a case-by-case basis. Lender should contact Connie Knoblauch at
517-335-0017 or e-mail knoblauchc@michigan.gov
Use the MSHDA Purchase Submission Control Sheet for all packages
submitted for purchase.
Original Notes must be endorsed as follows:
U.S. Bank National Association
Hazard/Flood Insurance Loss Payee Clause should read as follows::
U.S/ Bank National Association, its Successors and/or assignees as their
interests may appear
c/o U.S. Bank Home Mortgage
P.O. Box 7298
Springfield, OH 45501-7298
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


The Policy must provide that the insurance carrier will provide advance
written notice to the sub-Servicer if there is a change in the effective date, a
change in the coverage, or cancellation of the policy.
The complete final document package must be submitted within 90 days. A
late fee of $50 may be assessed after 120 day. Final documents should be
delivered to:
U.S. Bank
Document Control
17500 Rockside Road.
Bedford, OH 44146-2099
Final Document Delivery
LEGAL DOCUMENTS
29)
NOTE:
FHA – Multistate Note Form VMP-1R
VA – Multistate Note Form VMP-5G
DPA Note, if applicable
Lender Name and NMLS# and MLO Name and NMLS# must be
included after the Notary Section on all MSHDA second mortgage
notes. Lender and MLO information must match the information on the
final 1003
30)
RIDER:
Condo/PUD Rider, as appropriate
31)
SECURITY
INSTRUMENT:
FHA – State Specific Mortgage/Deed of Trust
VA – State Specific Mortgage/Deed of Trust
DPA Mortgage, if applicable
Assignment of Mortgage
Lender Name and NMLS# and MLO Name and NMLS# must be
included after the Notary Section on all MHSDA second mortgage
notes. Lender and MLO information must match the information on the
final 1003
OTHER
32)
MARKET
RESTRICTIONS:
This product is restricted for use by Michigan branches only. All properties must
be located in the State of Michigan.
33)
CONSTRUCTION
PERMANENT
MODIFICATIONS:
N/A
PRODUCT REVISION HISTORY
3/01/2012
Drive Language added
04/01/2012
New FHA MIP premiums
06/13/2012
Processors to complete all required MSHDA Bond documents for closing and submit to closer
with instructions
7/24/2012
Added DPA instructions for HomeChoice DPA & CD/NSP/DPA – included sample MSHDA
commitment and closing package
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10/18/2012
12/20/2012
03/01/2013
05/01/2013
06/11/2013
07/01/2013
09/14/2013
10/14/2013
01/10/2014
01/15/2014
03/01/2014
04/01/2014
05/23/2014
06/01/2014
08/01/2014
12/19/2014
01/26/2015
04/16/2015
05/18/2015
06/01/2015
MICHIGAN STATE HOUSING DEVELOPMENT AUTHORITY:
MY NEXT MORTGAGE PROGRAM
If using MSDHA DPA, homeowners insurance can be financed into the 2 nd mortgage loan amount
and paid at closing.
New income and sales price limits & lender referral form for HB counseling
Increased FHA Annual MIP for case numbers issued on or after April 1, 2013; limitation on funds
borrower may receive back at closing; clarification on requirements for repair escrows.
New Income/Sales Price Limits; New Recapture Tax Limits; Increase in duration of Annual FHA
MIP for case numbers issued on or after June 3, 2013.
Clarification on when 4056-T and tax transcripts
Huntington FICO restriction of 640 has been removed; Age of Credit Documents extended &
Documentation Requirements for Government Entity DPA funds
MSHDA minimum FICO Requirement 640 (660 for Manufactured Homes); requirements for REO
properties; requirements for repair escrows
US Bank Documentation Requirements; new allowable fee chart
Incorporated ATR requirements and GFE, Homeownership Counseling and TIL disclosure
requirements; US Bank Delivery Requirements
Maximum liquid assets for DPA assistance and clarification of items to be included when
determining liquid assets.
New income and sales price limits; revised target areas; required endorsements for title
insurance
USBank requirements for list of HB Counseling Agencies; Name of Insured as “The Huntington
National Bank” on Title Policy and Endorsements
New Recapture limits and Recapture Notice; Updated MSHDA Fee Chart; HomeChoice DPA
program discontinued
Special low rate program in select cities
Lender Name and NMLS# and MLO Name and NMLS# must be included after the Notary
Section. Lender and MLO information must match the information on the final 1003; elimination
of Child Support Disclosure and Seller Affidavit and new Initial Application Disclosure.
Eligible Property Types updated to include Individual PUDs, Individual condo units (i.e. detached
condos, town or row house; Maximum Deductible on Hazard/Flood Insurance increased to
$2,500 or 2.5% of face amount of policy.
New FHA Annual Premiums effective with FHA Case Numbers issued on or after January 26,
2015
New Income / Sales Price Limits
Homeownership Counseling Disclosure requirements; Flood Insurance requirements for
conventional loans with non-residential detached structures; itemization of fees for VA loans
Documentation requirements when IRS rejects a request for tax transcripts due to identity theft
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