1. Essex Mortgage Brings CALHFA PRODUCTS to you!
Welcome to our CalHFA presentation. I hope you come away from this presentation knowing fully how great of a program this is and able to submit smoothly.

2. How do you know what program you want?
Do you want to work with an FHA or Conventional loan? Do you want a 1st, 2nd, and 3rd or just a 1st and 2nd? Is your borrower a FTHB; they must be! (Exception – has not had an ownership interest in any principal residence during the previous 3 years). You have several product options, but they all surround these basic descriptions!
CalHFA 1st – only allows a 2nd (Conventional or FHA) can be combined with:
My Home Assistance 2nd; or
School Program 2nd.
Cal “Plus” 1st - allows for a 2nd and 3rd (Conventional or FHA) can be combined with:
My Home Assistant 2nd
School Program 2nd
My Home Assistant 2nd and a ZIP 3rd
School Program 2nd and a ZIP 3rd
NOTE: My Home and School Program can only be used for down payment and/or closing cost assistance. This is not to be used to pay the difference in sales price and appraised value if the sale price is higher. It also can not be used for paying off borrower debt. ZIP can only be used to pay for closing costs and/or prepaid items only.
You have options on this program. Conventional or FHA? This program is designed for First Time Homebuyers only and only in the state of California.
You can have a 1st and 2nd? Or 1st, 2nd or 3rd? We can go up to as high as 104% CLTV. CalHFA also offers the School Program. We will talk about this in the following slides.

3. Compare: My Home Assistance – ZIP – SCHOOL FHA or Conventional)
MY HOME ASSISTANCE – 2nd only
ZIP – Can be a 2nd or a 3rd
School Program – can only be a 2nd
Can only be used as a 2nd with a CalHFA 1st or CalPlus 1st –
Can be used as 2nd or 3rd with a CalPLUS 1st only. (Must be in third position if used with My Home Assistance
Can be used with a CalHFA as 2nd (not with My Home), or Cal Plus as 2nd and add a ZIP 3RD
3.25% Simple Interest Rate compounded annually; deferred payments.
Due when 1st is paid in full, refinanced, or assumed. No forgiveness of debt.
0% Interest Rate/payments
Due when property is transferred or 1st loan is refinanced, or paid in full.
No forgiveness of debt.
3.25%– simple interest deferred payment
Loan amount: 3 1/2 % of Sales Price or appraised value, whichever is less
Loan amount can be 2% or 3% of 1st loan amount (including MIP)
Loan amount not to exceed 4% of lesser of s/p or a/v/
Must be a FTHB
Home education required
Home Education required
One year homebuyers Warranty & copy of paid receipt. Must cover water heater, air conditioning, heating and oven/stove range.
These are the 2nds and or 3rds that are offered:
My Home Assistance can be used as a 2nd with a CalHFA 1st or as a Cal Plus. MH can never be a 3rd. The rate is currently at 3.25% The loan amount is 3.50% of sales price or a/v whichever is less.
The ZIP can be a 2nd or 3rd but only used for closing cost. The rate is at 0%. A ZIP can be 2% or 3% of loan amount. The rate of the 1st is different depending what loan you use.
The School Program can only be a 2nd, but you can add the ZIP as a 3rd. The rate on the School program is 3.25% but you can have a loan up to 4% of the sales price, or A/V, whichever is lower.
To use the school program, the borrower must be an Employee currently employed in any K-12 CA public school, including public charter schools, school district officer and county/continuation schools

4. CalHFA Made Easy
This is a simple way to look at how you can create your loan. Remember the CalHFA 1st can only work with a 1st and 2nd. If choosing Cal Plus you can have a 1st , 2nd and 3rd. The pricing on the rate sheet for the 1st depends on what program you are using. The pricing can be found on page 8 of our rate sheet.

5. Comparing Programs CalHFA Con 1st CalHFA FHA CalPlus Con 1st
Can not use a ZIP
CalHFA FHA
CalPlus Con 1st
CalPlus FHA 1st
MHA
2nd Only
ZIP
2nd or 3rd
SCHOOL Program
Conforming $484,350 or max for county + MIP
97/105CLTV
High balance to $726,525 (subject to an additional fee; see rate sheet);
Max LTV for HB Conventional 95%/105 CLTV
Conforming
$484,350 or max for county + MIP
High balance to $726,525 (subject to an additional fee; see rate sheet)
$484,350
or max for county + MIP
High balance to $726,525 (subject to an additional fee; see rate sheet) Max LTV for HB Conventional 95/105% CLTV
Rate: 3.25%; deferred payment, simple interest rate
Loan Amount:
3 ½% S/P OR A/V, whichever is less
CAN BE USED FOR DP/CC/ AND PREPAIDS
Rate: 0% deferred interest rate
Choice of 2% or 3% of 1st loan amount;
ZIP CAN ONLY BE USED TO PAY C/C AND OR PREPAIDS
Rate:
3.25% deferred payment, simple interest
4% of the S/P or A/V, whichever is less
Employee currently employed in any K-12 CA public school, including public charter schools, school district officer and county/continuation schools
Here is another way to view all the different comparisons of what you can do. The great thing about this product is that you can use this on high balance loans.
The rate sheet does have an extra cost for high balance loans.

6. Comparing Programs (cont.)
CalHFA Con 1st
CalHFA FHA 1st
Cal Plus Con 1st
Cal Plus FHA 1st
MHA 2ND only
ZIP 2nd or 3rd
2nd only :
School Program
640 Minimum FICO
No manual underwrite
660 FICO if manual underwrite
Depending on 1st TD
SFR, Condos and PUD’s
Same
N/O co-signors/borrower are not allowed
Borrower affiliation required
n/a
One employee currently employed in any K-12 CA public school, including public charter schools, school district officer and county/continuation schools
The program requires a 640 FICO SCORE – 660 if you have a manual underwrite. The manual underwrite is only for FHA loans. The 2nd TD guidelines fall behind what is required of the 1st. We can not do units, it is only SFR – owner occupied homes. CalHFA used to allow for non occupant co-signers. No longer. Again, when using the Teacher program, you must be affiliated with what is listed above.

7. Comparing Programs cont.
CalHFA Con
CalHFA FHA
CalPlus Con
CalPlus FHA
MHA 2nd only
ZIP (2nd or 3rd)
SCHOOL PROGRAM
(2nd only)
Home Education required for 1 occupant
Same
same
Not subject to recapture tax
3 Years Tax Return
3 Years Tax Returns or 4506 option
45% Max DTI
43% if Manual underwrite
Same as 1st TD
Home Education is always required for only 1 of the occupants.
Non Occupant Co signers are not allowed on Conventional loans – they are allowed for FHA – their income will not be counted toward the guidelines
None of these programs are subject to recapture tax
Always 1st time homebuyers and
45 max DTI – 43 if a manual underwrite

8. Comparing Programs (cont)
CalHFA Con
CalHFA FHA
CalPlus Con
Cal Plus FHA
MHA 2ND
ZIP (2nd or 3nd)
School Program
MI – Genworth
18% on 97% LTV16% on 95%
FHA MIP
MI 18% on 97% LTV16% on 95% LTV Genworth
n/a
Home Warranty must include water heater(s), air conditioning and heating; oven/stove/range
This is where the beauty is here when doing a Conventional loan. Note the MI on a conventional is much less than on a regular Conventional loan. Home Warranties are required for both conventional and FHA. At closing we will be asking for a paid receipt to show that the warranty was obtained. Be sure to include a fee for this on your up front disclosures.

9. New CHANGE for 2019 CalHFA Income Calculations
Calhfa no longer has a different version of how to calculate income.
CalHFA will underwrite to industry standards for FHA, Conventional and VA.
REMINDER:
MAX RATIO 45% (43% for manual)
FICO 640
As of March 1st, CalHFA changed their methods of calculating income. They now follow all Agency guidelines when underwriting income for the borrowers. Example – CalHFA would count Overtime even if it was for a week. Agency requires 2 year history. This is good and bad. Good when you needed it for the low DTI requirements, but bad if it pushed you over the income limits. Now…consider it reviewed same as agencies - FHA or FNMA.

10. Fees and Lock Periods FEES FOR THE PROGRAM LOCK PERIODS
BORROWER PAID ONLY
Broker Compensation 2.375% or $3000 whichever is more (must pass 3% points and fees test)
1st TD: $1350 Essex Admin Fee
2nd TD: If using My Home Assistance or Extra Credit Teacher : $250 Essex Processing Fee (you can’t use together)
2nd TD: If using ZIP for a 2nd or 3rd: $11.95 MERS Fee
Home Warranty fee
Third Party Contractors allowed if within the 3% points and fees test.
LOCK WHEN APPROVED AND APPRAISAL SIGNED OFF
Lock Period is for 30 days
LOANS MUST BE LOCKED BY 1:00 – MANUAL LOCK –
CALHFA turn times found at CalHFA.gov
How much of your production with Essex can be CalHFA products? 50%
Option for unlimited CalHFA’s:
origination fee + $ $250 Ask your AE how this can be done.
This a borrower paid program. To meet Mavent, we have figured is a safe bet on how much you can make without exceeding 3 points. We have an Admin fee of $1350 along with a $250 processing fee on the 2nd and a $11.95 fee for the 3rd if you choose to use a 3rd. BE SURE TO INCLUDE YOUR HOME WARRANTY FEE ON YOUR DISCLOSURES. If your commission needs to be reduced because it not passing MAVENT, you will receive a call from our office asking you to reduce your commission, if necessary.

11. Refer to CalHFA Loan limitations for FHA and Conventional
Income Limits - regardless of household size (effective ) & Sales Price Limits
$765,000 Statewide
Refer to CalHFA Loan limitations for FHA and Conventional
Income limits – no longer by number of family members; they are now by county only.
Sales price limitations to $705,000 – refer to county “loan” limitations per FHA.

12. Sample Loan Scenario http://www.calhfa.ca.gov/calc/scenario.html
ON LINE, CALHFA OFFERS A MORTGAGE CALCULATOR. THIS IS A GREAT TOOL. IT WILL HELP YOU CALCULATE THE BEST WAY TO USE THE FUNDS. HAVE YOUR ESTIMATED CLOSED COST AVAILABLE so that your numbers will be accurate.

13. Can CalHFA liens be subordinated
Can CalHFA liens be subordinated? Effective 7/1/2019 CalHFA will not allow for subordination.
As of the moment, CalHFA allows you to subordinate their liens. For more information on this, go to the link shown on this screen.
HOWEVER, EFFECTIVE July 1st, they will no longer allow their liens to subordinate. They will have to be paid off at time of refinance.
FOR MORE INFORMAITON ON REFINANCING AND SUBORDINATION:

14. Property
Guest Houses (granny units) are eligible; zoned for SFR/must meet city/county zoning Cannot be zoned for 2-4
No income producing; personal use only
No Manufactured housing (Essex requirement)
No Leasehold
Non permitted additions/alterations per FNMA or FHA guidelines
Lot size – max 5 acres
A few property guidelines to be aware of.

15. SAMPLE PRICING (subject to change) Rates found on page 8 of rate sheet BE SURE YOU ARE REVIEWING MOST CURRENT RATE SHEET, Effective 3/1/2019, the CalPLUS My Home and School Rates will increase to 3.25
This is a sample of the pricing. Always check the most current rate sheet for rates and product availability.

16. 1ST Time Homebuyer – Homebuyer Education & When due and payable
First Time Homebuyer (FTHB)
Home Buyer Education
For CalHFA purposes, a FTHB is defined as a borrower who has not had any ownership interest in any principal residence during the previous 3 years.
If currently owns a non owner residence, 3 years of cancelled checks would have to be provided to show paying rent elsewhere; living with parents would not suffice. This would only be require if DU calls for a VOR. If no VOR is called for, then no cancelled checks would be required.
Home Education is required for “one” occupying first-time homebuyer
WHEN IS LOAN DUE AND PAYABLE:
Repayment of the principal and interest on the subordinate loan shall be due and payable at the earliest of the following events:
• Transfer of title
• Sale of the property*
• Payoff of the first loan
• Refinance of the first loan, unless the CalHFA junior lien is subordinated
• The formal filing and recording of a Notice of Default (unless rescinded)
Payoff or refinance of the unless the ZIP is resubordinated.
*My Home and the School Program loans behind an FHA first mortgage may be assumed or paid off when the first mortgage is assumed
What constitutes a 1st time homebuyer? Someone who has not had any principal residence during the previous 3 years; proven with 3 years tax returns and proof paying rent elsewhere. The other exception is if your house was destroyed in the by natural disaster, such as the fires in so California.
Home Education is required for only “one” occupying 1st time homebuyer.
Please take note of the answers above to what constitutes a CalHFA loan to be due and payable.

17. New Exception to 1st Time Homebuyer
Here is more information for those affected by natural distasters in CA.

18. How to Submit 1st TD 2nd TD 3rd TD (if there is a 3rd)
Broker to use additional Addendum Submission Sheet for CalHFA in addition to regular Submission Sheet.
Choose the Option Plan.
Broker to register and create a loan number for each loan submitted
Broker to register and create a loan number
Essex will disclose
Submit submission sheet & addendum, fees worksheet, wet signed 4506T, and complete credit package
1003 for the 2nd (3.2)
1003 for the 3rd (3.2)
Additional Forms for the program: CALHFA Borrower Affidavit
and Tax Affidavit if applicable (forms on Essex website)
N/A
3 years 1040’s or 4506 for each year. – Attach top portion of the 1040’s for accurateness when we submit the 4506.
We need a loan number for each loan you upload. Please use the SUBMISSION SHEET ALONG WITH CALHFA ADDENDUM checklist for uploading CalHFA loans which is on the web site: essexwholesale.com PRODUCTS/CALHFA
The more your loan is complete at submission, the faster you will get a clean approval. Your file does require CalHFA approval so add another 5-10 days to your closings. Their approval could be much less than that, but nevertheless, it does need to go to CalHFA for final approval.

19. CALHFA Addendum Submission Sheet http://www. essexwholesale
Under our Products – CalHFA you will find this helpful worksheet in submitting your CalHFA loan. Please review and use this to get a clean submission and quick approval.

20. How to run DU Conventional
Here are some helpful notes on how to run DU if conventional

21. How to run DU FHA Note: The rates and % of loan has changed from this SAMPLE See daily rate sheet for most current rates – below are sample rates and %’s ONLY. Call your AE if you have any questions.
Notes on running your DU for FHA

22. Additional required CALHFA Forms at time of submission: Forms found at:
CalHFA Addendum Submission Sheet
CalHFA Borrower Affidavit & Certification (1/19 – certifying 1st time HB)
CALHFA Borrower Affidavit dated Tax Return Affidavit (only required if borrower not required to file 1040’s) (7/10/2013)
These forms can be found at click on Products - CalHFA
Home Buyer Education: (required for one occupying 1st time buyer – not required for non-1st time homebuyers if using ZIP only – it is required for all My Home Assistance products)
On line:
Here are the forms required at submission and where they can be found on our web site. These too can be found on the web under PRODUCTS CalHFA

23. Conventional Mortgage Insurance
MI requirements for Conventional CalHFA loans – You will see these are much less than a regular conventional loan.
For a 97% loan the coverage is 18%. For a 95% loan the coverage is 16%. On a regular conventional loan it would be 35% or 30%. See what a big difference when using CalHFA.