CMBA Presentation - Columbus Mortgage Bankers Association

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Ohio Housing Finance Agency
2011 Homeownership
Programs
First-Time Homebuyer Program
Who is Eligible?
1. Actual first-time homebuyers
2. Buyers who have not had an ownership interest in
a principle residence within the last 3 years
3. Anyone buying in a “Target Area”
(this includes previous homeowners )
4. Veterans
Who Invests in OHFA Bonds?
INSURANCE COMPANIES
FINANCIAL INSTITUTIONS
BOND FUNDS
MONEY MARKET FUNDS
TRUST ACCOUNTS
INDIVIDUALS
LOAN PROGRAMS
• Mortgage Revenue Bond (MRB)
• Government Loans (FHA, 203k, VA,
USDA-RD)
• Conventional Loans
• Financial Assistance Options
• 2.5% Down payment Assistance Grant
• Grants for Grads Second Mortgage
LOAN PROGRAMS
Program details:
• 30-year fixed rate loans*
• Owner occupied, primary residence
• Multifamily dwellings
– 1 to 4 unit
• Non-traditional credit permitted
• Acreage limits
– 2 acre limit within a municipal corporation
– 5 acre limit outside a municipal corporation
(Documented exceptions considered)
•
LOAN PROGRAMS
Program details:
Home purchase options:
Existing
Modular
Manufactured
Spec homes
New Construction
LOAN PROGRAMS
Program details:
Home purchase options:
• Manufactured Homes:
– Must be attached to the foundation
– No transportation apparatus
– Titled as Real Property
–(Not through Bureau of Motor Vehicles)
LOAN PROGRAMS
Program details:
Home purchase options:
• Spec homes
• New Construction
– 90% complete
– Certificate of occupancy issued
– Owner must occupy within 60 days
of closing
LOAN PROGRAMS
Ohio Heroes program
.25% Rate Reduction on current rate for:
•
•
•
•
•
•
Active Military
Veterans
Law Enforcement
Public Safety
Teachers
Healthcare
• Full Time employment*
• State license or Certification
LOAN PROGRAMS
Other Government Loans:
• 203 K & Streamline loans available
• Housing Choice Vouchers (aka: Sec 8)
LOAN PROGRAMS
OHFA Credit Score Requirements:
600 without OHFA financial assistance
620 with OHFA financial assistance
Credit Scores:
2007
2009
2010
average = 690
average = 650
average = 665
Sources of Household Income
All Income
from all adults
(18 years and older)
living in the home
Social Security
Medicaid
Food Stamps
Unemployment
VA benefits
Child Support
Alimony
Inheritance
Insurance policies
Lottery winnings
Wages, Tips &
Overtime
Income from
Partnerships
Business profits
OHFA Assistance Grant
• Grant equal to 2.5% of purchase price
• Interest rate is .5% higher than unassisted
mortgage rate.
• Used for down payment or closing costs.
• No requirement for repayment.
• Homebuyer Education required
Target Area
• A HUD-designated economically distressed area
• Most counties have target and non-target areas
• Income and purchase price limits are higher in
target areas
• Do not have to be a “first-time” homebuyer
56
21
11
Federal Recapture Tax
•
•
•
•
IRS regulation
Recapture Tax not just for real estate
IRS Publication 523, Form 8828
Must meet requirements for recapture tax
to apply
Federal Recapture Tax
When does recapture apply?
1.
The home is sold or otherwise disposed of within
the first 9 years of ownership.
AND
2.
The home is sold at a profit.
AND
3.
The homeowner’s income at the time of sale exceeds
the adjusted qualifying income. (adjusted up apx.
5% per year.)
Federal
Recapture
Recapture
Tax Chart Tax
Maximum 6.25% of net profit
7.00
6.00
5.00
%
4.00
Percentage per
3.00
Year
2.00
1.00
0.00
1
2
3
4
5
6
7
Years of Ownership
8
9
Federal Recapture Tax
OHFA Recapture Reimbursement Program
OHFA will reimburse homebuyers
for the full amount of recapture tax
paid to the IRS on loans closed on or
after March 1, 2006.
Federal Recapture Tax
What if. . .
Sales price
Purchase price
Gross profit
6% Real estate commission
Net profit
Recapture tax
=
=
X
=
$ 125,000
$ 105,000
$ 20,000
$ 7,500
$ 12,500
6.25%
$ 781.25
Ohio Housing Finance Agency
Mortgage Credit Certificate
(MCC) Program
Current Guidelines
• $2000 Maximum mortgage interest credit
per year
• Borrower must owe taxes to the IRS at
the end of each year after credits and
deductions.
Current Guidelines
Annual tax credit rates:
– (20%) Credit for non-target areas
– (25%) Credit for target areas
– (30%) Real estate owned (REO)
• Credit is valid for each year of homeownership
Current Guidelines
Applicants Must:
• Use an OHFA participating lender
• Qualify under the current First-Time
Homebuyer Program guidelines
Current Guidelines
MCC Program Exceptions
Ownership status of borrower*
• If the applicant has owned a mobile home in the past
regardless of how it was titled, (BMV or as real property)
the applicant is considered to be a homeowner and is not
eligible for the MCC program unless purchasing in a
Target area.
• One-unit single family home purchases
Current Guidelines
Two options for credit:
• End of the year tax credit
• Adjusting W-4 withholding
Buyers are strongly encouraged to consult a tax
professional for advice on claiming the credit.
Current Guidelines
Lenders:
• Must be able to originate, underwrite, close
& fund loans
• Will combine with their own loan product
• Must use a “fixed rate” loan product
• May permit borrower to buy-down the
interest rate
Current Guidelines
Rate cannot be 100 basis points or
more above the current Freddie Mac
Primary Mortgage Market Survey
(PMMS)
Federal Recapture Tax
OHFA will reimburse homebuyers
for the full amount of recapture tax
paid to the IRS on loans closed on or
after March 1, 2006.
Reservation & Commitment
Timeline
Type:
Existing
New
REO
Reservation
60 days
90 days
120 days
Commitment
30 days
60 days
90 days
Issuance
Lender Receives:
Borrower Receives
– MCC certification
– Congratulatory letter
letter
– How to claim credit
– lender duties
– OHFA and IRS websites
– Copy of Certificate
– Original MCC document
Reissuance
If Borrower Refinances:
• One year to request new certificate
• Must be reissued to original holder(s)
– MCC credit non-transferable
• Original Certificate becomes void
• MCC credit percentage will not change
• Review IRS Publication 530
MCC Exercise
If the first year of interest on a
$100,000 loan is $6,467.09, how
much credit would the borrower be
able to claim the first year?
MCC Example
Annual Interest
x%
= yearly credit
$6467.09
20%
$1293.42
25%
$1616.77
30%
$1940.13
Ohio Housing Finance Agency
Grants for Grads
Second Mortgage
Program
Grants for Grads Second Mortgage
• Purpose of Program:
– Offer financial incentive to recent college
graduates toward the purchase of a home in
Ohio.
– Encourage Ohio residents to return to or stay
in Ohio.
Grants for Grads Second Mortgage
The Grants For Grads Program provides down
payment assistance equal to 2.5% of the home
purchase price in the form of a forgivable second
mortgage.
CURRENT MORTGAGE RATE: 4.50%
Grants for Grads Second Mortgage
Homebuyer Qualifications:
• Follow First Time Homebuyer Guidelines
• Single family home purchases only
• Primary residence of borrower
• Borrower must occupy home within 60 days of
closing
Homebuyer Qualifications
• Ohio Resident at time of High School Graduation,
Graduate from an Ohio High School or
Proof of parent’s residency at time of high school
graduation
• GED not eligible at this time
• Graduate from any accredited college or
university
Homebuyer Qualifications
• College Graduation:
• Receive one of the following degrees within the 18
months from a college or university:
- associate
- bachelors
- masters
- doctoral
• Proof of graduation
- Diploma from high school and college/university
Grants for Grads Second Mortgage
What about a degree from a “Technical College”?
The Ohio Board of Regents has determined that a
degree from an approved Technical College is
equal to an associates degree.
Grants for Grads Second Mortgage
Program details:
•
•
•
•
Interest rate is same as OHFA unassisted Rate
(currently 4.50%)
Homebuyer Education required
Income limit is 140% of area median income
Program cannot be combined with other OHFA
down payment programs or Ohio Heroes.
Grants for Grads Second Mortgage
Repayment
• Repayment of second mortgage required if:
-borrower moves out of Ohio within first five years.
• Repayment of second mortgage is not required if:
-borrower sells the house but stays in Ohio.
Ohio Housing Finance Agency
Homebuyer Education Program
OHFA Homebuyer Education
Purpose:
• Educate borrowers about the home
buying process
• Provide additional educational
resources to improve chances of
success as a homeowner.
OHFA Homebuyer Education
Who is required to use Homebuyer
education?
OHFA borrowers requesting additional
financial assistance from OHFA.
OHFA Homebuyer Education
Process:
• Borrower should have a loan reserved with
OHFA
• Access the OHFA website and review and
complete the required documents
– Homebuyer Guide
– 25 question test
– Budget worksheet
OHFA Homebuyer Education
Two options:
• Courses offered through HUD-approved
housing counseling agencies
-OR• OHFA Streamlined education program
OHFA Homebuyer Education
33 HUD approved Counseling Agencies:
• Available for all 88 counties
• Counselor will complete counseling and send
certificate to OHFA
• OHFA will upload the certificate and notify lender
OHFA Homebuyer Education
OHFA Streamline Education:
• Borrower sends test and budget to OHFA
• OHFA one-hour telephone counseling session
with buyer
• OHFA will upload the certificate and notify lender
• $75 fee to borrower
Ohio Housing Finance Agency
New Home Sweet Home
Program
Ohio Housing Finance Agency
Purpose:
To provide qualified homebuyers the same
opportunity to secure a low-interest OHFA
loan for a “new-construction” home to be
built.
Ohio Housing Finance Agency
Details:
•
•
•
•
•
Program follows First Time Homebuyer Program guidelines
Qualified borrowers are eligible for 2.5% Assistance Grant
Lender reserves loan with OHFA and performs underwriting
Interest rate is “locked” at time of reservation
Interest rate is .25% higher than unassisted rate (currently
4.50%)
• Interest rate is locked throughout the building process
Ohio Housing Finance Agency
Additional requirements:
• Single family property construction only
• Builder has 180 days total: 150 days to complete
construction; 30 days to close
• Homebuyer education required
• Additional information on OHFA website:
www.ohiohome.org
OHFA Conference
Ohio Housing Conference
November 29- December 1, 2011
Columbus Convention Center
Sponsored by:
The Ohio Housing Finance Agency (OHFA)
&
The Ohio Capital Corporation for Housing (OCCH)
Ohio Housing Finance Agency
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