1. New Mexico Mortgage Finance Authority
Working with First-time Homebuyers and the MFA Programs
04/18/2014

2. Instructor
TERI BACA
HOMEOWNERSHIP REPRESENTATIVE
04/18/2014

3. Introduction Benefits of First Time Homebuyers to Realtors®
Benefits of MFA Programs for the First Time Homebuyer
04/18/2014

4. 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
04/18/2014

5. 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
04/18/2014

6. 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
04/18/2014

7. 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
04/18/2014

8. National Association of Realtors® 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
04/18/2014

9. MFA Borrower Stats 63% = single households
Average household = 2 persons
51% minority
Average borrower age = 34
44% Female/ 56% Male
Average FICO score = 686
04/18/2014

10. Types of Tenants
Tenants by
Choice
Circumstance
04/18/2014

11. 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
04/18/2014

12. 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
04/18/2014

13. Homeownership Stats in New Mexico
Statewide homeownership rate: 68.9% 2012 USCB
Number of households: 763,844
Median household income: $44,886
MFA average income: $33,450 MFA 2013
MFA average sales price: $127,135
MFA average loan amount: $123,818
04/18/2014

14. 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
04/18/2014

15. First-Time Homebuyer Program Criteria
Income limits
Acquisition limits
Single family residence
Owner-occupied
04/18/2014

16. 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
04/18/2014

17. 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)
04/18/2014

18. Single Family Residence
Single family dwelling
One kitchen, no rental units
Tax code restriction on business use cannot be more than 15%
04/18/2014

19. Owner-Occupied Borrowers must occupy the property
Non-occupying co-signers allowed*
*Note: Lenders must follow special rules for Down Pmt & Debt/Income Ratios
04/18/2014

20. ** Due to frequency of rate changes,
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
04/18/2014

21. ** Due to frequency of rate changes,
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
04/18/2014

22. ** Due to frequency of rate changes,
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
04/18/2014

23. (Bernalillo, Sandoval, Valencia & Torrance Counties)
Income Limits
Albuquerque MSA
(Bernalillo, Sandoval, Valencia & Torrance Counties)
1 or 2 person household: $ 62,900
3 + person household: $ 72,335
04/18/2014

24. Santa Fe MSA & Los Alamos County
Income Limits
Santa Fe MSA & Los Alamos County
1 or 2 person household: $62,000
3 + person household: $71,300
04/18/2014

25. Income Limits Farmington MSA 1 or 2 person household: $55,300
04/18/2014

26. (excluding Albuquerque, Farmington MSA and Santa Fe MSA)
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
04/18/2014

27. Acquisition Cost Limits
Los Alamos County
New or Existing: $342,585
04/18/2014

28. Acquisition Cost Limits
Santa Fe County
New or Existing: $384,750
04/18/2014

29. Acquisition Cost Limits
San Juan County
New or Existing: $253,125
04/18/2014

30. Acquisition Cost Limits
All other areas of the state
(excluding Los Alamos, Santa Fe &
San Juan Counties
New or Existing: $243,945
04/18/2014

31. Maps are located on the MFA Website:
TARGETED AREAS
Maps are located on the MFA Website:
Bernalillo Cibola Curry Doña Ana Luna
McKinley Otero Sandoval Santa Fe
Sierra Socorro
04/18/2014

32. 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
04/18/2014

33. 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 pre-paids)
Program not available in City Limits of Albuquerque
04/18/2014

34. 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 **
04/18/2014

35. 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 **
04/18/2014

36. 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 **
04/18/2014

37. 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 **
04/18/2014

38. What is the Smart Choice Homeownership Program?
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
04/18/2014

39. 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
04/18/2014

40. 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
04/18/2014

41. Mandatory Homebuyer Counseling
All MFA Borrowers are required to take pre-purchase homebuyer counseling regardless of program type.
Reference Lender Memo dated February 22, 2012 and Clarifications Lender Memo dated April 12, 2012
04/18/2014

42. 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 on-line 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
04/18/2014

43. 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
04/18/2014

44. 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.
04/18/2014

45. Recap of DPA products
Mortgage$aver Plus % 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
04/18/2014

46. HUD Funded DPA Products
Payment$aver – Up to $8,000 soft second mortgage; (targeted to 70-80% or below AMI) (excludes pre-paids)
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.
04/18/2014

47. 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
04/18/2014

48. 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 post-secondary level educational institution.
04/18/2014

49. 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.
04/18/2014

50. 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.
04/18/2014

51. 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).
04/18/2014

52. 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
04/18/2014

53. HERO Program Eligible Program Type: FHA ONLY
Must be owner-occupied single family residence
04/18/2014

54. ** Due to frequency of rate changes,
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
04/18/2014

55. 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
04/18/2014

56. HERO Program Minimum borrower cash contribution
MFA requires a minimum borrower cash contribution of $1, 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.
04/18/2014

57. 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
04/18/2014

58. HERO Program Homebuyer Counseling
Required for first-time Homebuyers (FTHB) only
04/18/2014

59. (Bernalillo, Sandoval, Valencia & Torrance Counties)
Income Limits
Albuquerque MSA
(Bernalillo, Sandoval, Valencia & Torrance Counties)
$ 75,480
04/18/2014

60. Income Limits
Santa Fe MSA
and
Los Alamos County
$ 74,400
04/18/2014

61. Income Limits
All other areas
of the state
$ 65,040
04/18/2014

62. Acquisition Cost Limits
Los Alamos and Santa Fe County
New or Existing: $342,585
04/18/2014

63. Acquisition Cost Limits
All other areas of the state
(excluding Los Alamos and
Santa Fe Counties
New or Existing: $243,945
04/18/2014

64. 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.
04/18/2014

65. 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 to 1
to 1
to 1
to 1
to 1
above to 1
04/18/2014

66. Scoring Models Beacon at Equifax (formerly CBI)
( or
Emperica at Trans Union
( or
FICO at Experian (formerly TRW)
(1-888-EXPERIAN or
04/18/2014

67. 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
04/18/2014

68. Sources of Non-Traditional Credit
Rental Verification
Utilities (gas, electric, water)
Cell phone
Auto Insurance
Rent-to-own
04/18/2014

69. Steps to the MFA Mortgage$aver Program
Reservation
Fees
Compliance
Closing
04/18/2014

70. Reservation Reservations made by lender on MFA website
Signed purchase agreement required
MBS Mortgage Purchase Agreement issued by MFA
04/18/2014

71. Reservation
Loans must be purchased by Master Servicer no later than 60 days from the date of reservation
04/18/2014

72. 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
04/18/2014

73. 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
04/18/2014

74. 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)
04/18/2014

75. 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
04/18/2014

76. Rental History 1 year of rental history Verification of Rent
Credit report
Letter from relative
Cancelled checks
04/18/2014

77. 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
Interest and dividends
SSI
Disability income
Child support-Alimony(if documented)
VA compensation
Rental income
Other income
04/18/2014

78. 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
04/18/2014

79. Closing Documents Affidavits Seller and Buyer
MFA will ensure compliance with income and acquisition limits.
Must be notarized
** Not required for HERO
04/18/2014

80. Closing Documents (Cont’d)
Tax Exempt Financing Rider
VA Rider to Standard Mortgage
Notice of Potential Recapture
** Not required for HERO
04/18/2014

81. Other MFA Programs Multi Family 542 (c) “Build It” HOME/Rental PRIMERO
Multifamily/Rental
LIHTC
501 (c) (3)
Other Assistance
Partners
HOME
WAP
ESG
HOPWA
Continuum
of Care/HUD
Housing Counseling
Program
04/18/2014

82. Land Title Trust Fund
Another resource for affordable housing is now available to Realtors and homebuyers statewide
04/18/2014

83. 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
04/18/2014

84. 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
04/18/2014

85. Fair housing opens doors
The Fair Housing Act
Fair housing opens doors
with your help
04/18/2014

86. Federal Protected Classes
Race
Color
Religion
Sex
Disability
Family Status (children under the age of 18)
National Origin
04/18/2014

87. Additional Protected Classes NEW MEXICO
Ancestry
Sexual Orientation
Gender Identity
Spousal Affiliation
04/18/2014

88. 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
04/18/2014

89. For more information contact:
HUD
US Department of Justice
Your state or local civil/human rights organization
Your attorney
New Mexico Mortgage Finance Authority
Supports Fair Housing
04/18/2014

90. 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
04/18/2014

91. Any Questions???
04/18/2014

92. 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 or
04/18/2014

93. 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.
04/18/2014