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04/18/20141 New Mexico Mortgage Finance Authority Working with First-time Homebuyers and the MFA Programs.

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Presentation on theme: "04/18/20141 New Mexico Mortgage Finance Authority Working with First-time Homebuyers and the MFA Programs."— Presentation transcript:

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2 04/18/20141 New Mexico Mortgage Finance Authority Working with First-time Homebuyers and the MFA Programs

3 04/18/20142 Instructor TERI BACA HOMEOWNERSHIP REPRESENTATIVE

4 04/18/20143 Introduction Benefits of First Time Homebuyers to Realtors® Benefits of MFA Programs for the First Time Homebuyer

5 04/18/20144 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

6 04/18/20145 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

7 04/18/20146 National Association of Realtors® Profile of First Time Homebuyers Median age of FTHB = 31 Median down payment = 5% Median Income - $67,400 Avg. Home Price - $170,000

8 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 04/18/20147

9 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 04/18/20148

10 MFA Borrower Stats 63% = single households Average household = 2 persons 51% minority Average borrower age = 34 44% Female/ 56% Male Average FICO score = /18/20149

11 10 Types of Tenants Tenants by Choice Tenants by Circumstance

12 04/18/ 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

13 04/18/ 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

14 04/18/ 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

15 04/18/ 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

16 04/18/ First-Time Homebuyer Program Criteria First-time homebuyer Income limits Acquisition limits Single family residence Owner-occupied

17 04/18/ 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

18 04/18/ 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)

19 04/18/ Single Family Residence Single family dwelling One kitchen, no rental units Tax code restriction on business use cannot be more than 15%

20 04/18/ Owner-Occupied Borrowers must occupy the property Non-occupying co- signers allowed* *Note: Lenders must follow special rules for Down Pmt & Debt/Income Ratios

21 04/18/ 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

22 04/18/ 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

23 04/18/ Mortgage$aver Plus First-time buyer only Interest Rates Government- ** HFA Preferred Conventional- ** 3.5% assistance for down payment & closing costs. (Cannot have MFA 2 nd DPA) Borrower pays no points Priced slightly higher than Mortgage$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

24 04/18/ Income Limits Albuquerque MSA (Bernalillo, Sandoval, Valencia & Torrance Counties) 1 or 2 person household: $ 62, person household: $ 72,335

25 04/18/ Income Limits Santa Fe MSA & Los Alamos County 1 or 2 person household: $62, person household: $71,300

26 04/18/ Income Limits Farmington MSA 1 or 2 person household: $55, person household: $63,595

27 04/18/ Income Limits All Areas of the State (excluding Albuquerque, Farmington MSA and Santa Fe MSA) 1 or 2 person household: $ 54, person household: $ 62,330

28 04/18/ Acquisition Cost Limits Los Alamos County New or Existing:$342,585

29 04/18/ Acquisition Cost Limits Santa Fe County New or Existing:$384,750

30 04/18/ Acquisition Cost Limits San Juan County New or Existing:$253,125

31 04/18/ Acquisition Cost Limits All other areas of the state (excluding Los Alamos, Santa Fe & San Juan Counties New or Existing:$243,945

32 TARGETED AREAS Maps are located on the MFA Website: Bernalillo Cibola Curry Doña Ana Luna McKinley Otero Sandoval Santa Fe Sierra Socorro 04/18/201431

33 04/18/ Mortgage Booster – DPA Loan 1 st time buyer only Can include prepaids; max loan amount $8, year repayment; no prepayment penalty. Rate is 6.00% Lender must follow CLTV rules for applicable loan product

34 04/18/ 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

35 04/18/ 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 **

36 04/18/ 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 **

37 04/18/ 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 **

38 04/18/ 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 **

39 04/18/ 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

40 04/18/ s mart Choice Program (Contd) 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

41 04/18/ 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

42 04/18/ 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

43 04/18/ 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

44 04/18/ 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

45 04/18/ 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.

46 04/18/ Recap of DPA products Mortgage$aver Plus - 3.5% GRANT – No 2 nd 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

47 04/18/ 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.

48 04/18/ 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

49 04/18/ 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.

50 04/18/ 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.

51 04/18/ 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, physicians assistant, or medical technician, technologist or therapist.

52 04/18/ 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).

53 04/18/ 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

54 04/18/ HERO Program Eligible Program Type: FHA ONLY Must be owner-occupied single family residence

55 04/18/ HERO Program Interest Rate- ** 3.00% assistance for down payment & closing costs. (Cannot have MFA 2 nd 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

56 04/18/ 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

57 04/18/ 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.

58 04/18/ HERO Program Minimum borrower cash contribution MFA requires the lender to provide proof of borrowers 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

59 04/18/ HERO Program Homebuyer Counseling Required for first-time Homebuyers (FTHB) only

60 04/18/ Income Limits Albuquerque MSA (Bernalillo, Sandoval, Valencia & Torrance Counties) $ 75,480

61 04/18/ Income Limits Santa Fe MSA and Los Alamos County $ 74,400

62 04/18/ Income Limits All other areas of the state $ 65,040

63 04/18/ Acquisition Cost Limits Los Alamos and Santa Fe County New or Existing:$342,585

64 04/18/ Acquisition Cost Limits All other areas of the state (excluding Los Alamos and Santa Fe Counties New or Existing:$243,945

65 04/18/ 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.

66 04/18/ 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 6008 to to to to to 1 above to 1

67 04/18/ Scoring Models Beacon at Equifax (formerly CBI) ( orwww.equifax.com) Emperica at Trans Union ( orwww.tuc.com) FICO at Experian (formerly TRW) (1-888-EXPERIANor

68 04/18/ 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

69 04/18/ Sources of Non-Traditional Credit Rental Verification Utilities (gas, electric, water) Cell phone Auto Insurance Rent-to-own

70 04/18/ Steps to the MFA Mortgage$aver Program Reservation Fees Compliance Closing

71 04/18/ Reservation Reservations made by lender on MFA website Signed purchase agreement required MBS Mortgage Purchase Agreement issued by MFA

72 04/18/ Reservation Loans must be purchased by Master Servicer no later than 60 days from the date of reservation

73 04/18/ 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

74 04/18/ 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

75 04/18/ Compliance MFA must review and approve file prior to closing Lenders Underwriter reviews for tax code compliance 72-hour turn around (3 business days after receipt of file)

76 04/18/ 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

77 04/18/ Rental History 1 year of rental history Verification of Rent Credit report Letter from relative Cancelled checks

78 04/18/ 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

79 04/18/ 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

80 04/18/ Closing Documents Affidavits Seller and Buyer MFA will ensure compliance with income and acquisition limits. Must be notarized ** Not required for HERO

81 04/18/ Closing Documents (Contd) Tax Exempt Financing Rider VA Rider to Standard Mortgage Notice of Potential Recapture ** Not required for HERO

82 04/18/ 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

83 04/18/ Land Title Trust Fund Another resource for affordable housing is now available to Realtors and homebuyers statewide

84 04/18/ 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

85 04/18/ 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

86 04/18/ The Fair Housing Act Fair housing opens doors with your help

87 04/18/ Federal Protected Classes Race Color Religion Sex Disability Family Status (children under the age of 18) National Origin

88 04/18/ Additional Protected Classes NEW MEXICO Ancestry Sexual Orientation Gender Identity Spousal Affiliation

89 04/18/ 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 persons fair housing rights

90 04/18/ 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

91 04/18/ 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

92 04/18/ Any Questions???

93 04/18/ MFA Information Contact Us... All of MFAs forms available via web page Program Fact Sheets Newsletter Housing Services Directory Annual Report Homeownership Department at or

94 04/18/ 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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