1. MCC – Mortgage Credit Certificate (sponsored by CalHFA) Increase your disposable income. Increase your buying power. Decrease your tax liability 1 1/29/2015

2. MCC Borrower Eligibility Each CalHFA MCC Tax Credit Applicant must be a US citizen or permanent resident alien. All CalHFA MCC Tax Credit Applicants must meet the credit, income and loan requirements of the CalHFA MCC Tax Credit program handbook, the Lender, and the mortgage insurer/guarantor. 1/29/2015 2

3. MCC Tax Credit Program 2014 Exception to a 1 st time homebuyer Home is located in a Targeted Area - A targeted area has been identified as an area where 70% of the families have an income which is 80% or less than the statewide median income. Qualified Veteran – defined as a person who served in the active military, naval or air service and was discharged or released under conditions other than dishonorable. 1/29/2015 3

4. What products can I use with the MCC? *FHA *VA *Conventional *SAPPHIRE *USDA **CHDAP 2 ND *Tax Credit can help with qualifying –  Conventional add to income; FHA subtract from debt; VA offset fed tax liabilities & deductions ** A tax credit allowed, but not for credit qualifying purposes. 1/29/2015 4

5. Example of Monthly Savings 1/29/2015 5

6. MCC Program Things to considered: Sales Price Limits - see CalHFA sales price charts Income Limits – see CalHFA MCC income charts Ownership status – 3 years tax returns will be required. No homeownership training classes required of the borrower. $500.00 fee collected at closing. This must be disclosed on line 8 of GFE. 1/29/2015 6

7. It starts here…. The applicant applies for a loan with Broker. Broker determines if the Applicant is a possible candidate for a CalHFA MCC Tax Credit based on income, acquisition costs, prior ownership and tax liability. Buyer and seller sign and execute purchase and sale agreement. Broker provides proper paperwork to Lender (later listed in this PowerPoint). Essex will require 3 year tax returns, or Affidavit due to low income and no returns filed. Essex will reserve the funds for 90 days at time docs are drawn. Expired funds are subject to availability of MCC funds. Essex reviews all documentation and provides MCC Certificate after closing. Essex closes the loan and submits to CalHFA after closing Essex does not need to submit paperwork to CalHFA prior to our closing, allowing for a quick close. 1/29/2015 7

8. Where to find MCC Forms 1/29/2015 8

9. Required MCC Forms at Submission Note: Any other required MCC forms will be sent out at time of docs for signature. 1/29/2015 9

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12. Don’t Forget!!!! The $500 fee! THERE IS AN MCC FEE FOR $500.00 IT HAS TO BE DISCLOSED UP FRONT ON YOUR GFE BE SURE TO INCLUDE THE MCC FEE OF $500 ON YOUR GFE – LINE ITEM #8. 1/29/2015 12

13. Lender vs. MCC (CALHFA) Review of Income 1/29/2015 13

14. Notes of Interest on how CalHFA calculates maximum household income for family or anyone who is living in the house – not just borrowers. Schedule C or E Income – do not add back in depreciation. Negative is a wash, not deducted. Do not back out 2106 expenses. 2013 and YTD income (no 2012 income is reviewed since we are in 2014). P&L’s are okay for 2014. In question, CalHFA will always take the higher income. Child Support Payments Social Security Benefits Welfare Payments Spousal support Sick pay Disability payments Deferred income Any regularly occurring additional income including but not limited to earnings 1/29/2015 14

15. MCC (CalHFA) Property Eligibility 1/29/2015 15

16. ELIGIBLE COUNTIES – All Counties In California! 16 1/29/2015

17. CalHFA Sales Price Limits 1/29/2015 17 http://www.calhfa.ca.gov/homeownership/program s/mcc.pdf

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19. Sales Price Limits 1/29/2015 19

20. Sales Price Limits 1/29/2015 20

21. CHDAP MCC INCOME LIMITS 1/29/2015 21

22. MCC INCOME LIMITS 1/29/2015 22

23. MCC INCOME LIMITS 1/29/2015 23