docMSHDA`s Division of Homeownership
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MSHDA`s Division of Homeownership
MSHDA's Division of Homeownership Delivering the Dream to Michigan Families Eric Dusenbury Homeownership Division Business Development Unit May 12, 2011 Printing Compliments of EPI Marketing Services Homeownership Division Printing Compliments of EPI Marketing Services Who We Are • Self-funded mortgage program developer • Federal tax credit issuer • Homebuyer education administrator • Investor utilizing approved lenders Printing Compliments of EPI Marketing Services Who We Aren’t • Mortgage lender • Lender of last resort Printing Compliments of EPI Marketing Services Misconceptions • Run out of money • Low-income and sales price • Too much paperwork • Approval takes too long • Only first-time homebuyers Printing Compliments of EPI Marketing Services General Overview Printing Compliments of EPI Marketing Services Process Flow purchase agreement submitted to lender Lender makes reservation to lock in the % rate Lender packages, underwrites loan Loan package sent to MSHDA MSHDA purchases loan and sends funds to lender Lender sends closing package to MSHDA for purchase Lender closes and funds loan MSHDA reviews & commitment sent to lender Printing Compliments of EPI Marketing Services Interest Rates Without DPA = 4.25% With DPA = 4.625% Step Loan – available with FHA Years 1-3 = 3.75% Years 4-30 = 4.75% Rates good for 90 days (existing) and 180 days (new construction) Printing Compliments of EPI Marketing Services Product Comparison Mortgage Terms MSHDA/FHA/RD FHA/RD 5% 5% 4.250% 5.000% 360 360 Down payment Amount $5,000 $5,000 Loan Amount $95,000 $95,000 Principal and Interest $467.34 $509.98 Property Taxes $187.50 $187.50 Homeowners Insurance $50.00 $50.00 $772.14 $814.78 Percentage of Down Payment: Rate: Term in Months Estimated Monthly Payments Total Payment: Printing Compliments of EPI Marketing Services Targeted vs. Non-Targeted • Targeted area – prior homeownership permitted - income and sales price limits are higher • Non-targeted area – Must be first-time homebuyer Printing Compliments of EPI Marketing Services Sales Price & Income Requirements Sales Price Income Limits $224,500 (maximum purchase price Statewide) $62,800 - $108,000 (maximum combined household income) Income varies depending on location & family size Printing Compliments of EPI Marketing Services Buyer Requirements • Principal residence • Co-signers/nonoccupying co-borrowers not allowed • All adults in household • must apply (unless fulltime student-12 credit hours) Printing Compliments of EPI Marketing Services Credit Requirements • Previous foreclosure/deed in lieu (5 yrs) • No open collections or judgments • Bankruptcies (2-4 yrs) • Alternative Credit Printing Compliments of EPI Marketing Services Seller Contributions • FHA, VA, RD – maximum allowed by these programs • Conventional a) 6% if LTV is 76% - 80% b) 9% if LTV is 75% or less Printing Compliments of EPI Marketing Services Eligible Property Types • Single-family homes • Condominiums • Manufactured housing Multiple-section, taxed as real estate and permanently affixed to a foundation Printing Compliments of EPI Marketing Services Property Requirements • Vacant Homes • Non-arms length transaction involving a sale • Repair Escrows are permitted • Mortgage Survey Printing Compliments of EPI Marketing Services Acreage/Lot Size • Cannot be large enough to construct more than one house • Maximum 2 acres or Minimum lot size established by local zoning • Exceptions - up to a 5-acre maximum Printing Compliments of EPI Marketing Services Mortgage Products Printing Compliments of EPI Marketing Services FHA • 96.5% LTV • Gift allowed for 100% of cash required • Down Payment Assistance available • Step Loan available • May be used for manufactured housing Printing Compliments of EPI Marketing Services Rural Development • LTV determined by RD • Gift allowed for 100% of cash required • Down Payment Assistance • RD commitment required • May be used for new manufactured housing Printing Compliments of EPI Marketing Services Conventional 80% • 80% LTV • Step Loan available • May be used for manufactured housing Printing Compliments of EPI Marketing Services VA • LTV determined by VA • Gift allowed for 100% of cash required • May be used for manufactured housing Printing Compliments of EPI Marketing Services Down Payment Assistance • $7,500 maximum • Income limits • Down payment, closing costs, prepaid/escrow items • 0% interest with no monthly payments • Use with MSHDA FHA & RD Printing Compliments of EPI Marketing Services Down Payment Assistance • Borrower cash investment 1% of sales price • Cash asset restriction - $5,000 (includes equity in current home) • Homebuyer Education required • DPA loan due on sale, transfer, refinance, or repayment of first MSHDA mortgage Printing Compliments of EPI Marketing Services HomeChoice Down Payment Assistance • Persons with disability or familymember with disability • 8% of sales price $3,000 for closing costs and prepaids Not to exceed $12,000 • Used with RD, FHA, Fannie Mae HomeChoice Printing Compliments of EPI Marketing Services Mortgage Credit Certificate (MCC) Printing Compliments of EPI Marketing Services MCC Description • Federal income tax credit • Tax credit = 20% of annual mortgage interest • Available for life of original mortgage • Single family, owner occupied principal residences Printing Compliments of EPI Marketing Services MCC Eligibility & Fees • Sales Price and Income Limits • Targeted and Non-Targeted Area • Fee = 1% of loan amount at closing (seller concessions) • MCC participating lender Printing Compliments of EPI Marketing Services MCC – Credit Calculation Total Mortgage Amount x loan Interest Rate =Annual Interest Annual Interest x MCC Rate (20%) = Tax Credit for the Year Assuming a mortgage of $100,000 at 5.5% interest, the annual Tax Credit would be: $100,000 x 5.5% = $5,500 $5,500 x 20% = $1,100 annual tax credit Printing Compliments of EPI Marketing Services Recapture Tax Printing Compliments of EPI Marketing Services Recapture Tax Most borrowers will NEVER pay this tax Capped at 6.25% of original mortgage or 50% of gain on sale ALL of the following must happen: 1) 2) 3) Sell the MSHDA purchased home in nine years Earn significantly more income than when the home was purchased Gain from the sale Printing Compliments of EPI Marketing Services Recapture Tax Reimbursement Program Michigan homeowners that are liable for this tax will receive a reimbursement from MSHDA by providing an IRS form 8828 and a signed copy of their IRS 1040 form Printing Compliments of EPI Marketing Services Homeownership Counseling Program Printing Compliments of EPI Marketing Services Homeownership Counseling Program (HCP) • Statewide network of counselors that help increase homeownership opportunities • Services free to your clients • Required for Down Payment Assistance Printing Compliments of EPI Marketing Services HCP Services Homebuyer education Individual prepurchase counseling* Financial management* Home inspection funds* Home maintenance training* Foreclosure Prevention Counseling Printing Compliments of EPI Marketing Services 866-946-7432 Michigan.gov/HardestHit Printing Compliments of EPI Marketing Services Help for Hardest Hit (H4HH) Programs designed to help Michigan’s residents maintain homeownership during periods of job loss or other involuntary hardships Printing Compliments of EPI Marketing Services Programs • Unemployment Mortgage Subsidy Homeowners currently receiving unemployment compensation • Loan Rescue Homeowners who have fallen behind in their mortgage payments or taxes due to a one-time, involuntary crisis • Principal Curtailment Homeowners that have experienced a decrease in income and are in a severe negative equity position Printing Compliments of EPI Marketing Services Servicer Requirements • Complete and sign Servicer Participation Agreement (original signatures) • Provide Primary and secondary points of contact • Provide ACH transmission information Printing Compliments of EPI Marketing Services Borrower Application Process • Applicant will access the online portal via www.stepforwardmichigan.org or call the hotline at 866.946.7432 • MHA either denies or conditionally approves borrower and sends application to servicer • Servicer accepts or denies application. Denials shall be only for good cause. Printing Compliments of EPI Marketing Services Neighborhood Stabilization Program 2 (NSP2) Printing Compliments of EPI Marketing Services Highlights • Forgivable down payment assistance; 20% or more • Completely rehabbed homes; previously foreclosed • 100% financing to eligible borrower • Income limits (120% AMI; 25% at 50% or lower AMI) • Grantees applied to MSHDA for funding or received directly from HUD Printing Compliments of EPI Marketing Services Lender Information • 500+ rehabilitated or newly constructed homes in 12 communities. Potential origination volume $50M. • Borrowers will be pre-screened for eligibility and required to take 8 hours of homebuyer education • NSP grantees actively seeking lenders • For more information, contact your MSHDA Business Development Representative Printing Compliments of EPI Marketing Services Printing Compliments of EPI Marketing Services
