Transcript WORKING WITH FIRST TIME HOMEBUYERS & THE MFA

New Mexico Mortgage
Finance Authority
Working with First-time Homebuyers
and the MFA Programs
04/18/2014
1
Instructor
• TERI BACA
• HOMEOWNERSHIP
REPRESENTATIVE
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2
Introduction
• Benefits of First
Time Homebuyers
to Realtors®
• Benefits of MFA
Programs for the
First Time
Homebuyer
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Importance of the First-Time
Homebuyer
• A nationwide
survey shows that
approximately 38%
of total home sales
were made to first
time homebuyers *
*2013 NAR Survey
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Importance of the First-Time
Homebuyer
• Knowledge of MFA programs helps to sell
affordable homes
• Trade-up buyers
• “Tell the world” referrals
• Pay Property taxes; stable community
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National Association of Realtors®
Profile of First Time Homebuyers - 2013
• Median age of FTHB = 31
• Median down payment = 5%
• Median Income - $67,400
• Avg. Home Price - $170,000
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National Association of Realtors®
“Historically, first-time buyers are
instrumental in housing recoveries
because they help existing
homeowners sell and make a
trade.”
Lawrence Yun, NAR Chief Economist
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National Association of Realtors®
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•
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Typical First Time Homebuyer
Sources of Down Payment
78% used savings *
27% used gift funds from relative or friend
7% borrowed from relative or friend
9% sold stocks or bonds
8% used 401k fund
* 54% of those who saved their down payment said student
loan debt delayed their savings
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MFA Borrower Stats
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63% = single households
Average household = 2 persons
51% minority
Average borrower age = 34
44% Female/ 56% Male
Average FICO score = 686
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Types of Tenants
• Tenants by
Choice
• Tenants by
Circumstance
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Profile of Tenants by
Choice
• Choose not to own a
home
• Do not want to be tied
down (military)
• Maintenance (home
and yard)
• Unstable employment
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Profile of Tenant by
Circumstance
• Possess a strong
desire to be
homeowners
• Have little to no
money saved
• Have moderate to
high debt
• Believe home
ownership is a good
investment
• Most would like to
buy ASAP
• Do not have a clue
of what the process
is and where to start
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Homeownership Stats in
New Mexico
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Statewide homeownership rate: 68.9% 2012 USCB
Number of households: 763,844
Median household income: $44,886
MFA average income: $33,450
MFA average sales price: $127,135
MFA average loan amount: $123,818
MFA 2013
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How the MFA works
• Created by Legislature in
1975
• Promote safe, sanitary,
decent and affordable
housing
• Receive volume cap from
state
• Funded by mortgage
revenue bonds
• MFA utilizes lenders
across the state
• IRS tax code
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First-Time Homebuyer
Program Criteria
• First-time homebuyer
• Income limits
• Acquisition limits
• Single family residence
• Owner-occupied
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First-Time Homebuyer
• All occupants must be first-time homebuyers
• 3 year rule
• Single Family detached, Condos, Town
Homes, and permanently attached
Manufactured Housing
• Leasehold land
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Changes
• Waiver of FTHB requirement for Veterans
(even if not utilizing VA loan)
• Minimum credit score of 620 required
except for a manual underwrite with the
HFA Preferred conventional product which
has a minimum credit score of 660
– (Lenders may have their own overlays)
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Single Family Residence
• Single family dwelling
• One kitchen, no rental units
• Tax code restriction on business use
cannot be more than 15%
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Owner-Occupied
• Borrowers must
occupy the property
• Non-occupying cosigners allowed*
*Note: Lenders must follow
special rules for Down Pmt &
Debt/Income Ratios
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Mortgage$aver
• First time buyers only
• Interest Rates
 Government
- **
 HFA Preferred Conventional
- **
 May be coupled with MFA DPA loan
• Can be used with FHA, VA, CONV and RHS loan
products
• Borrowers pay 1+1
** Due to frequency of rate changes,
see MFA Website for current rates
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Mortgage$aver Zero
• First-time buyer only
• Interest Rates
 Government
- **
 HFA Preferred Conventional - **
• Borrower pays zero points
• 30 yr., fixed rate mortgage
• Can be coupled with DPA loan
** Due to frequency of rate changes,
see MFA Website for current rates
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Mortgage$aver Plus
•
First-time buyer only
•
Interest Rates
 Government
 HFA Preferred Conventional
- **
- **
•
3.5% assistance for down payment & closing costs. (Cannot have MFA 2nd
DPA)
•
Borrower pays no points
•
Priced slightly higher than Mortgage$aver & Mortgage$aver Zero
•
Grant; never repaid
•
Applied as credit on HUD I
** Due to frequency of rate changes,
see MFA Website for current rates
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Income Limits
Albuquerque MSA
(Bernalillo, Sandoval, Valencia &
Torrance Counties)
• 1 or 2 person household:
$ 62,900
• 3 + person household:
$ 72,335
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Income Limits
Santa Fe MSA & Los Alamos County
• 1 or 2 person household:
$62,000
• 3 + person household:
$71,300
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Income Limits
Farmington MSA
• 1 or 2 person household:
$55,300
• 3 + person household:
$63,595
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Income Limits
All Areas of the State
(excluding Albuquerque, Farmington
MSA and Santa Fe MSA)
• 1 or 2 person household:
$ 54,200
• 3 + person household:
$ 62,330
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Acquisition Cost Limits
Los Alamos County
• New or Existing:
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$342,585
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Acquisition Cost Limits
Santa Fe County
• New or Existing:
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$384,750
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Acquisition Cost Limits
San Juan County
• New or Existing:
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$253,125
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Acquisition Cost Limits
All other areas of the state
(excluding Los Alamos, Santa Fe &
San Juan Counties
• New or Existing:
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$243,945
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TARGETED AREAS
Maps are located on the MFA Website:
www.housingnm.org/targeted-area-census-tracts
Bernalillo
McKinley
Cibola
Otero
Sierra
Curry
Doña Ana
Sandoval
Luna
Santa Fe
Socorro
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Mortgage Booster – DPA Loan
• 1st time buyer only
• Can include prepaids; max loan amount
$8,000
• 30 year repayment; no prepayment
penalty. Rate is 6.00%
• Lender must follow CLTV rules for
applicable loan product
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Payment$aver – DPA Loan
• 0% rate - non-amortizing loan due on
sale, transfer or refinance
• 8% of sales price, max of $8,000
• DPA & closing costs (excluding prepaids)
• Program not available in City Limits of
Albuquerque
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Payment$aver
Acquisition Cost Limits
(Varies by county)
Los Alamos County
• New or Existing:
$380,650
**Please note that the Acquisition Cost Limits are higher
than the Mortgage$aver Program,
However, the Mortgage$aver Limits must be used **
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Payment$aver
Acquisition Cost Limits
(Varies by county)
Santa Fe County
• New or Existing:
$427,500
**Please note that the Acquisition Cost Limits are higher
than the Mortgage$aver Program,
However, the Mortgage$aver Limits must be used **
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Payment$aver
Acquisition Cost Limits
(Varies by county)
San Juan County
• New or Existing:
$281,250
**Please note that the Acquisition Cost Limits are higher
than the Mortgage$aver Program,
However, the Mortgage$aver Limits must be used **
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Payment$aver
Acquisition Cost Limits
(Varies by county)
All other areas of the state
(excluding Los Alamos, Santa Fe &
San Juan Counties)
• New or Existing:
$271,050
**Please note that the Acquisition Cost Limits are higher
than the Mortgage$aver Program,
However, the Mortgage$aver Limits must be used **
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Smart Choice Program
What is the Smart Choice Homeownership
Program?
The basic premise of the Smart Choice
Homeownership Program is that instead of
using the Section 8 subsidy to help a family with
rent, the subsidy is provided to help a first-time
homeowner meet monthly mortgage expenses
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smart Choice Program (Cont’d)
 Must be approved by appropriate county agency
or public housing authority
 Must be a first-time homebuyer
 Payment$aver income and acquisition cost limits
apply
 MFA will provide a $15,000 subsidy for down
payment & closing cost assistance for those who
qualify
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Mandatory Homebuyer Counseling
• Required for all borrowers
• Two types of counseling; depends on
loan type (HUD vs. MFA)
• Lenders will coordinate with eHome
America or local non-profit partner
agency
• Counseling done prior to delivery of
Compliance File to MFA
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Mandatory Homebuyer Counseling
• All MFA Borrowers are required to take
pre-purchase homebuyer counseling
regardless of program type.
 Reference Lender Memo 12-03 dated
February 22, 2012 and Clarifications
Lender Memo 12-04 dated April 12,
2012
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Mandatory Homebuyer Counseling
• The pre-purchase homebuyer counseling will be
either:

Face to Face pre-purchase housing counseling provided in
either a classroom or one-on-one setting by a HUD
approved housing counseling agency

Face to Face counseling must be used for the
Payment$aver and Helping Hand Programs (the online counseling is not acceptable for these two
programs)

Borrowers preferring to go to a counselor instead of
taking the class on-line is also acceptable OR
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Mandatory Homebuyer Counseling
• Pre-purchase homebuyer counseling

Through the eHome America on-line Housing counseling
program
 Borrowers may take the course married,
unmarried or jointly for one fee of $45 paid at the
time of registration. When registering type both
names so that the certificate of completion will
print correctly.

The $45 fee can be reimbursed at closing and included
with the closing costs included in the second mortgage
loan
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Homebuyer Counseling
• Pre-purchase homebuyer counseling
 Link to the eHome America site is on the MFA
Home Page
 Be sure borrower has chosen New Mexico as
their counseling agency.
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Recap of DPA products
• Mortgage$aver Plus - 3.5% GRANT – No 2nd allowed
when borrower uses this program.
 3.5% Grant is based on the FINAL loan amount on
the HUD 1
• Mortgage Booster – Provides max loan amount of
$8,000; loan repaid over 30 years, 6% rate
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HUD Funded DPA Products
• Payment$aver – Up to $8,000 soft second mortgage;
(targeted to 70-80% or below AMI) (excludes prepaids)
• Helping Hand - $8,000 soft second for ADA disabled
(targeted to 80% or below AMI) (includes pre-paids)
• Smart Choice - $15,000 soft second for Sec. 8 voucher
recipients(targeted to 70-80% or below AMI) (excludes
pre-paids)
 All Products are due on sale, transfer or refinance of
loan.
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HERO Program
• Eligible Borrower(s):

The HERO program is available only to households
in which at least one person is a Teacher, Safety
Worker, Health Care Worker or an Active Member
of the Armed Forces. Definitions are as follows
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HERO Program
• Teacher:

One of the borrowers must be an employee of an
accredited or state chartered private or public
school; a certified teacher or administrator in an
education agency; or an employee of a postsecondary level educational institution.
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HERO Program
• Safety Worker:

One of the borrowers must be an employee of a law
enforcement agency or fire department administered by an
agency or subdivision of a state or local government; or a
sworn law enforcement officer responsible for crime
prevention and detection, law enforcement, or criminal
incarceration; or a sworn member of a fire department
involved in the fire suppression or prevention, emergency
medical response, hazardous materials response, or
management or response to terrorism.
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HERO Program
• Health Care Worker:

One of the borrowers must be a certified,
accredited, or licensed health care worker who is a
medical resident or fellow; a nurse, nursing
assistant, pharmacist, pharmacy technician,
physician’s assistant, or medical technician,
technologist or therapist.
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HERO Program
• Active Member of Armed Forces:

One of the borrowers must be a current member of
the United States Armed Forced (Active or
Reserve).
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HERO Program
• Eligible Borrower(s):

The borrower does not have to be a first-time
homebuyer (FTHB) under the HERO Program

The borrower may not own any other Real Property
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HERO Program
• Eligible Program Type:

FHA ONLY

Must be owner-occupied single family residence
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HERO Program
• Interest Rate
- **
• 3.00% assistance for down payment & closing costs.
(Cannot have MFA 2nd DPA)
• Borrower pays no points
• Pricing subject to change based on market conditions,
could change mid day
• Grant; never repaid
• Applied as credit on HUD I
** Due to frequency of rate changes,
see MFA Website for current rates
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HERO Program
• Tax Code Criteria:

No Tax Code Criteria required for the HERO
Program
 No “Recapture” requirement
 Tax Exempt Financing/VA Rider not required
 Seller and Purchaser Affidavits are not required
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HERO Program
• Minimum borrower cash contribution
 MFA requires a minimum borrower cash
contribution of $1,000.00 for the HERO
Program.
 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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HERO Program
• Minimum borrower cash contribution
 MFA requires the lender to provide proof of
borrower’s funds
 If the borrower contributes more than $1,000
to the transaction (i.e. Earnest Money, POC
Appraisal Fee) the borrower can get those
funds back at closing
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HERO Program
• Homebuyer Counseling
 Required for first-time Homebuyers (FTHB) only
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Income Limits
Albuquerque MSA
(Bernalillo, Sandoval, Valencia &
Torrance Counties)
$ 75,480
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Income Limits
Santa Fe MSA
and
Los Alamos County
$ 74,400
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Income Limits
All other areas
of the state
$ 65,040
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Acquisition Cost Limits
Los Alamos and Santa Fe County
• New or Existing:
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$342,585
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Acquisition Cost Limits
All other areas of the state
(excluding Los Alamos and
Santa Fe Counties
• New or Existing:
04/18/2014
$243,945
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What is a Credit Score?
• A highly specialized score based on the
information supplied within a single credit
repository - Experian, TransUnion, or Equifax
• Relative degree of risk a potential borrower
represents
• 230 different attributes
• Scores weigh and balance information more
quickly and precisely than an underwriter.
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Credit Score Ranges
• Credit Bureau Scores range from
approximately 375 to 900 points, the higher
the score the lower the risk of defaults.
Score range of: ODDS (good to bad)
below 600
8 to 1
620-659
26 to 1
660-679
38 to 1
680-699
55 to 1
700-719
123 to 1
above 800
1292 to 1
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Scoring Models
• Beacon at Equifax (formerly CBI)
(1-800-685-1111
or
www.equifax.com)
• Emperica at Trans Union
(1-800-888-4213
or
www.tuc.com)
• FICO at Experian (formerly TRW)
(1-888-EXPERIAN or www.experian.com)
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How Credit Data Are Analyzed
• A primary indicator of risk is the
severity, frequency & recency of any
delinquencies.
• Past payment history
• Outstanding debt utilization
• History of credit establishment
• Inquiries-pursuit of new credit
• Type of credit
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Sources of Non-Traditional Credit
• Rental Verification
• Utilities (gas, electric, water)
• Cell phone
• Auto Insurance
• Rent-to-own
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Steps to the MFA
Mortgage$aver Program
• Reservation
• Fees
• Compliance
• Closing
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Reservation
• Reservations made by
lender on MFA
website
• Signed purchase
agreement required
• MBS Mortgage
Purchase Agreement
issued by MFA
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Reservation
• Loans must be
purchased by Master
Servicer no later than
60 days from the date
of reservation
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Fees
• No reservation fee
• Zero points on Mortgage Saver Plus,
Mortgage Saver Zero and HERO!
• 1+1 on Mortgage Saver
• Normal and customary closing costs
• $100 Mortgage Booster loan origination fee
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Fees
• Lender can request either a 15 day or a 30
day extension for the purchase of the loan.
 15 day extension (0.1875% of the loan amount)
 30 day extension (0.3750% of the loan amount)
• Only ONE extension is allowed
• The extension fee may be charged to the
borrower
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Compliance
• MFA must review
and approve file
prior to closing
• Lender’s
Underwriter reviews
for tax code
compliance
• 72-hour turn around
(3 business days
after receipt of file)
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Documentation
• 3 years’ federal tax returns are not
required if borrower has at least a
3 year history with the credit
bureau!
• 1 year rental history
• Verification of Employment
• Affidavits and closing documents
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Rental History
• 1 year of rental history
• Verification of Rent
• Credit report
• Letter from relative
• Cancelled checks
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Verification of Empl & Income
Monthly gross
income includes, but
is not limited to:
• Monthly gross pay
(wages, salary, tips,
etc.)
• Overtime
• Part-time
• Bonuses
• Business income 04/18/2014
• Interest and
dividends
• SSI
• Disability income
• Child supportAlimony(if
documented)
• VA compensation
• Rental income
• Other income
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Closing Package
• Mortgage$aver and
HERO Programs
 Must be purchased by
the Master Servicer no
later than 60 days from
reservation date
• Second Mortgage
(DPA) Programs
 MFA Funds loan to Title
Company at the time of
closing and Lender ships
file to MFA for QC review
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Closing Documents
Affidavits
• Seller and Buyer
• MFA will ensure compliance with income and
acquisition limits.
• Must be notarized
** Not required for HERO
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Closing Documents (Cont’d)
• Tax Exempt Financing Rider
• VA Rider to Standard Mortgage
• Notice of Potential Recapture
• ** Not required for HERO
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Other MFA Programs
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Multi Family
542 (c)
“Build It”
HOME/Rental
PRIMERO
Multifamily/Rental
LIHTC
501 (c) (3)
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•
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Other Assistance
Partners
HOME
WAP
ESG
HOPWA
Continuum
of Care/HUD
Housing Counseling
Program
81
Land Title Trust Fund
Another resource for affordable
housing is now available to Realtors
and homebuyers statewide
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Land Title Trust Fund
Summary
• Legislature and title industry established the
fund as renewable financial resource for
affordable housing
• Funded by interest earned on certain title
company escrow funds
• Can be used for loans or grants to eligible
organizations
• Demonstrates statewide industry support of
affordable housing initiatives
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Support the Land Title Trust Fund
• Utilizing title companies that are participating in
the fund
• Encouraging title companies to participate in this
important housing initiative
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The Fair Housing Act
Fair housing opens doors
with your help
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Federal Protected Classes
•
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Race
Color
Religion
Sex
Disability
Family Status (children under the age of
18)
• National Origin
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Additional Protected Classes
NEW MEXICO
• Ancestry
• Sexual Orientation
• Gender Identity
• Spousal Affiliation
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What is discriminatory housing
practice?
•
•
•
•
Refusing to show a property
Refusing to sell, rent, or to deal with a person
Telling a person housing is not available when it is
Advertising housing as being available to only
certain people
• Denying a loan or offering different loan terms
• Harassing, coercing, intimidating, or interfering
with the exercise of a person’s fair housing rights
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For more information contact:
• HUD 1-800-669-9777
• US Department of Justice 1-202-514-4713
• Your state or local civil/human rights
organization
• Your attorney
New Mexico Mortgage Finance Authority
Supports Fair Housing
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Recapture Tax
• IRS imposed tax
• Only applicable if 3 things happen:
 Sell home in 1st 9 years AND
 Realize a net gain on the sale AND
 Income exceeds threshold income *
 * Borrowers should seek advice from a qualified tax
preparer
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Any Questions???
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MFA Information
•
•
•
•
•
•
•
Contact Us...
www.housingnm.org
All of MFA’s forms available via web page
Program Fact Sheets
Newsletter
Housing Services Directory
Annual Report
Homeownership Department at
505-843-6881 or 1-800-444-6880
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Thank you from the MFA
• Thank you from all of us
at the MFA
• You have just completed
4 credit hours towards
your continuing
education
• Your credits will be
uploaded to NM R.E.C.
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