Delaware State Housing Authority Homeownership Loan Programs

Delaware State Housing Authority Homeownership Loan Programs Lender Training

DSHA is committed to following all aspects of the Fair Housing Act in our efforts to promote responsible homeownership and provide competitive and safe financing for same.

Agenda Overview of Programs Origination Processing DPA wire request and closing procedure Post Closing 3

Delaware State Housing Authority Overview of Programs

Overview of programs Welcome Home Home Again Home For Grads Preferred Plus MCC **ALL PROGRAMS AVAILABILITY IS BASED UPON FUNDING AND CAN BE SUBJECT TO CHANGE**

Welcome Home Loan Welcome Home Product- First-Time Homebuyer Definition: A person who has not had an ownership interest in his/her principal residence at any time during the last three years prior to the closing date. Mobile homes not permanently affixed to the ground are not considered real estate; the owner would be eligible for first-time homebuyer programs. Qualified Veterans as defined in 38 USC Section 101, are exempt from the FirstTime Home Buyer requirement. Must provide a copy of their DD 214 Form demonstrating military discharge or release under conditions other than dishonorable.

Home Again Home Again Product - Definition For Homebuyers who do not meet the First-Time Homebuyer definition. Eligible for DSHA first mortgage and down payment assistance, but NOT for the DE Mortgage Certificate Tax Credit program (MCC).

Home for Grads Available to borrowers that have graduated from a 4 year degree of college or higher in the last 3 years. The 3 years is from graduation date to date of reservation/lock in Mitas. If borrower qualifies they will receive 50bps rate reduction on all down payment assisted products (2% - 5%). Not available on unassisted products. Homes for Grads is available for both GNMA and FHLMC (Freddie) products.

Preferred Plus Preferred Plus are the down payment assistance loans that are available through DSHA using one of our First mortgage products. This assistance is available as 2%, 3%, 4% or 5% of the final loan amount of the first mortgage, this is after the mortgage insurance premium (MIP). Our down payment assistance loans are exempt from TRID disclosure requirements. There are no fees associated with the Preferred Plus options and all of our down payment assistance loans are at 0%. The assistance amount and the cost of recording the down payment assistance loans must be disclosed on the first mortgage LEs and CDs. All of these assistance loans require the signing of our Preferred Plus mortgage and Preferred Plus note which can be found on our Lenders Resource website, www.lenders.destatehousing.com under Homeownership program documents. You must use our forms and do not alter them in anyway. The down payment assistance loans are deferred at 0% interest with no prepayment penalty and no payment due. There is no subordination allowed on any of our down payment assistance loans. These loans must be paid in full in the event of re-finance, sale of property, or property is no longer owner occupied.

Preferred Plus DPAs Homes for Grads as of MAY 4, 2020 Household Income Limits Maximum Loan Amount 417,000 All counties New Castle 1-2 person 115,920 New Castle 3 person 144,900 Kent & Sussex 1-2 person 98,280 Kent & Sussex 3 person 122,850 Be sure to follow for all Conventional Freddie mac guidelines – not to exceed 80% AMI For up to date income limits and loan amounts, please visit the Lenders Resource website, www.lenders.destatehousing.com – Homeownership program documents or www.kissyourlandlordgoodbye.com

Freddie Income limits Maximum Freddie limits – based upon lender income on final 1003 80% AMI New Castle County 77,280 Kent County 54,720 Sussex County 59,520

Mortgage Credit Certificate (MCC) Tax Credit Overview A Delaware First-Time Homebuyer Tax Credit is a federal income tax credit designed to assist people to better afford individual ownership of housing. The Delaware First-Time Homebuyer Tax Credit provides an annual tax credit up to 2,000 to qualifying homebuyers for the original term of their mortgage, as long as they live in the property and have a mortgage. The annual credit is calculated by taking the annual mortgage interest paid (shown on their 1098 form at the end of the year) multiplied by the Delaware First-Time Homebuyer Tax Credit rate of 35% which has been established by DSHA. The tax credit is applied to the federal income tax liability of the Delaware First-Time Homebuyer Tax Credit certificate holder. There must be a tax liability to claim the credit. In order to utilize this tax credit the borrower must file tax form 8396 with their Federal Tax return. Borrowers must meet the DSHA First Time Homebuyers definition, and meet household income/sales price maximum limits to qualify. This MCC program can be done as a second program along with our DSHA first mortgage/dpa program or it can be done with your lender first mortgage and the MCC would be a Standalone – additional fees apply. The 2,000 can be included as monthly income. This income must be shown only in other income on the 1003 at a maximum of 166.67 per month.

MCC Guidelines – Income and Purchase Price as of May 4, 2020 Income Limits County 1-2 Person Household 3 Person Household New Castle 96,600 111,090 Kent & Sussex 81,900 94,185 Purchase Price County 1 Unit Home New Castle 362,523 Kent 294,600 Sussex 306,357

Q&A Where can I find the daily interest rates? Lenders Resource website http://lenders.destatehousing.com/ A borrower that graduated from a 4 year degree college 5 years ago is eligible for the Homes for Grads program? True or False False The DE MCC tax credit program is only available to first time homebuyers? DSHA’s definition of a first time homebuyer is a buyer that has not owned a PRIMARY residence in the last 3 years.

Delaware State Housing Authority Origination

Origination Required Documents At time of application lender should collect the following required items for DSHA – found on the Loan Transmittal checklist on the Lenders Resource website – www.lenders.destatehousing.com under Homeownership program documents. 1.Signed and dated 1003 application 2.Final typed 1003 application - signature not required 3.Income verification – recent paystubs, signed and notarized YTD P&L statement for self employed borrowers 4.Sales contract – including all addendums 5.IRS 3 years Federal tax returns or Federal tax transcripts or IRS letter “No Record Found” – most recently filed with the IRS - must include 1040, 1040A and all related schedules 6.DSHA Mortgagors affidavit – signed at application - must have section 15a filled out completely if utilizing the DE MCC Tax credit program 7.Homeownership education certificate – ONLY DSHA approved HUD approved counseling agencies are accepted – this list of approved agencies can be found on www.kissyourlandlordgoodbye.com 8.DSHA Notice of Potential Mortgage subsidy recapture tax form – signed at application – only if also using the DE MCC tax credit program 9.College transcripts – only if using Homes for Grads program – must show dates for 4 year attendance and graduation date within the last 3 years from date of graduation to date of lock of new loan in Mitas. 10. College diploma – only if using Homes for Grads program – must show graduation date, school of attendance and borrowers full name.

Rate Lock Procedure When you are ready to lock your loan with DSHA please login to the DSHA lock system, Mitas. https://www.mitas.com/dsha/ . You will need to do the following things: 1. 2. 3. 4. 5. Confirm what loan program you will be locking, example, Welcome Home GNMA 4% DPA. After choosing a program you will be asked if you would like an MCC, please answer yes or no. You will have an opportunity to upload your AUS file import – if not you will need to enter all of your file data into the file in Mitas Once completed in Mitas you will hit submit – this will lock your loan. You will be able to print your reservation confirmation form on the print documents tab – found at the top of the screen in blue. Important information Registrations/locks are valid for 60 days. Closed loans must be funded by the Master Servicer, Lakeview Loan Servicing within the reservation period. There is a one time only rate/product switch allowed. When switching loan products, borrowers are subject to “worst case” scenario in pricing. This is based on the original lock date or product switch date. – reach out to DSHA for new pricing. A one-time 15 or 30-day rate extension may be purchased prior to the expiration of the initial reservation period. The extension fees are .125% for a 15 day extension and .25% for a 30 day extension. These fees will be assessed at the time the extension is granted. Loans that are not purchased prior to the expiration of the reservation or extension period will be deemed expired and are subject to additional extension fees once loan is purchased by Lakeview Loan Servicing. All extension fees will be netted out of loan sale proceeds with Lakeview Loan servicing. DSHA will transmit registrations to Lakeview Loan Servicing. Please review the Program Notice located on DSHA’s Lenders.DeStateHousing.com website for complete product details.

Homeownership Loan Rates Rates change daily by 10:00 am and are posted on www.kissyourlandlordgoodbye.com Rate locks are available from 10 am to 5:30 pm To sign up to receive the daily rate sheet and announcements please visit the Lenders Resource website at www.lenders.destatehousing.com DSHA contact list and useful links.

Origination - Lender Fees Fees for loans are: Lakeview: Funding Fee 275 Tax Service Fee 75 Flood Transfer Fee 10 Compliance Review fee 75 Hilltop Securities: DE MCC fee 350 If not using DSHA first mortgage, MCC fee is 1% of loan amount plus 350 Fees are netted out of purchase funds once completed first mortgage file has been delivered to Lakeview and the DE MCC tax credit file has been delivered to Hilltop Securities

Additional information 1. Please ensure that your file meets the household income limits. Household income includes ALL income at time of application. This includes child support, alimony, bonus income, SSI, etc. And this includes from EVERYONE THAT IS 18 YEARS OR OLDER THAT WILL BE LIVING IN THE PROPERTY. Income limits can be found on the Lenders Resource website, www.lenders.destatehousing.com or www.kissyourlandlordgoodbye.com 2. All borrowers must have a minimum credit score of 620. If 3 scores are available then use the mid score, if 2 scores are available use the lower of the 2 and if only one score available use the one. 3. All files must be run through DU/LP with Approve/eligible findings – Accept/eligible findings 4. For all Conventional Freddie Mac files – must be only run through LP only 5. All files must follow DSHA guidelines, Lakeview overlays (link to matrices found on the Lenders Resource website, www.lenders.destatehousing.com under Homeownership program documents) and follow agency guidelines (FHA, VA, USDA and Freddie Mac) 6. For all GNMA loans with borrowers that have a credit score below 700 the maximum DTI is 45%.

Eligible Loan Products FHA 203(b); 203(b)(2); 234(c); 223(e); 203(ks, streamline) VA - originated and guaranteed in accordance with VA guidelines under 1810 and 181A. USDA - Rural Housing Service Loans - originated and guaranteed in accordance with USDA guidelines. Freddie Mac Conventional: HFA ADVANTAGE product(s) only o Reduced MI premiums available – 18% coverage o No LLPA’s – No additional assistance such as Borrower smart through Freddie Mac

Eligible Properties GNMA Owner Occupied Residential Properties FHA – 1 to 4 units – minimum score of 620 – max LTV 96.5% - max CLTV refer to Hud Handbook 4000.0 VA - 1 to 4 units – minimum score of 620 – max LTV 100% - max CLTV refer to VA Lenders Handbook USDA – 1 to 4 units – minimum score of 620 – max LTV 100% - max CLTV refer to USDA SFH Guaranteed Loan Program handbook (3555) Eligible properties: 1 to 4 unit properties – including FHA/VA approved condominiums/PUDs – Spot condo approval for FHA is NOT permitted Manufactured Homes (FHA ONLY) – All borrowers must have a minimum 660 Fico score. Manufactured home must be a double wide or greater and must have an AUS approve/eligible – manual underwrite is not permitted. Leaseholds are NOT eligible. Ineligible properties: Cooperatives Group Homes Mobile Homes Condotels Timeshares Geodesic Domes Working Farms/Ranches Unimproved land Hotel Condominiums

Eligible Properties Freddie Mac - FHLMC Freddie Mac HFA Advantage ONLY Owner Occupied Residential Properties Primary Residence 1 unit only – minimum score of 620 – max LTV 97% - max CLTV 105% - Maximum DTI – Lesser of 50% or AUS findings LPA AUS findings only. Eligible Property Types 1 unit primary residence Townhomes PUDS Condominiums Leaseholds Construction Conversion Resale Restricted Properties Ineligible Property Types Manufactured Homes Cooperatives Mobile Homes 2 to 4 Unit properties Community Land Trusts Land trusts where the beneficiary is an individual

Credit Scores – Manual underwriting All programs require minimum middle score 620, except: Double Wide Manufactured Homes; FHA Only. All borrowers must have a minimum 660 FICO score. DSHA does not accept non-owner occupied co-borrowers. We do accept cosignors. All files must have a DU/LP approve/eligible AUS finding. Manual underwriting is permitted on FHA loans in cases where the loan receives an Approved/Eligible DU finding but requires a manual downgrade due to additional information not considered in the DU decision that affects the overall insurability or eligibility of the loan. In these instances, the loans will be subject to a minimum FICO score of 660 and a maximum DTI of 43% *No manually underwriting is permitted for USDA, VA or Conventional loans.

Calculating Income DSHA compliance household income – ALL PROGRAMS All income is used in household income calculation. Examples: overtime, bonus, SSI, Child support/alimony, seasonal/Part time jobs, self employment, interest/dividend income, rental income, gambling/lottery winnings, public assistance, etc. Examples of calculation of income: For a W2 employee: take YTD income and divide by pay period ending date. Example: borrower has 30,500 YTD income on a paystub with period ending date 8/15. Divide the YTD pay by 7.5 and the DSHA compliance monthly income is 4066.67 For a self employed borrower: provide a YTD profit & loss statement with the profit, loss and net profit/loss. Document must be signed, dated and notarized. DSHA will use that income for compliance calculation. We currently do not use tax returns to calculate income. Freddie Mac (FHLMC) income – This income comes from the lenders final 1003 only. Must meet Freddie income limits – below 80% AMI as shown on slide 11

Housing Counseling Education Homeownership Counseling – DSHA HUD approved homeownership classes are required for all borrowers with a FICO score of 659 or lower, regardless of loan product used – this does NOT apply to DE MCC tax credit standalone product. – A list of DSHA HUD approved Housing Counseling Agencies is available on the DSHA website: https://kissyourlandlordgoodbye.com/housing-counselors/

Q&A One lock extension is available, either 15 day or 30 day only. True or False True If a borrower has a credit score of or below they must attend DSHA HUD approved housing counseling - 659 Freddie Macs income requirement of 80% AMI or below is based upon the 1003 income only. True or False True

Delaware State Housing Authority Processing

DSHA approved documents All required DSHA documents are found on the Lenders Resource Website http://lenders.destatehousing.com/ under Homeownership program documents These documents include: 1. 2. 3. 4. 5. 6. 7. 8. 9. Mortgagors Affidavit – Application and Reaffirmed at Closing Transmittal of Loan Documents – Application Notice of Potential Mortgage Subsidy Recapture Tax – Application No DE tax Credit Certificate for – Application Preferred Plus wire request worksheet – Closing Preferred Plus Mortgage - Closing Preferred Plus Note - Closing Sellers Affidavit – Closing Lenders Affidavit - Closing

Uploading a file for compliance review 1. 2. 3. 4. 5. 6. 7. To submit a file for compliance review please go to https://www.mitas.com/dsha/ and into the file itself. If it is a DSHA first mortgage with or without DPA go into that file number, if it is a DSHA Tax credit stand alone file go into that file number. Once in the file, go to the top tool bar in blue and click on Document Images. There you will have the option of uploading the Compliance Review Package, Submit Pending conditions or the Wire Request (if the file has a DPA with it) If you are submitting the Compliance Review Package you must use the Loan Transmittal checklist (found on the Lenders Resource Website http://lenders.destatehousing.com/ under Homeownership program documents) The checklist must be filled out completely and all required documents in line behind the checklist. All of these documents are uploaded as one document. Once you upload the compliance review file, you are able to see your upload if you click the Received button. There is no need to contact us to let us know that you have uploaded it, if you can see the upload then we do as well and we are notified automatically of the upload. File review time is 72 hours from submission of a completed file. Once reviewed you will see the DSHA underwriters name in Mitas on the file.

Mitas File Tracking Lenders should to MITAS to see the status of files delivered to DSHA for Compliance Review for any Compliance Review conditions and to find the DSHA staff assigned to file. If a file was moved to a status of Pending Conditions you will be able to view your conditions on page one of the loan. When you are ready to submit your pending conditions please go to the Document Images area and upload the pending conditions, you can do this individually or as one upload. If the file was moved to Committed (Approved) you will find your approval letter in the Print documents area. If your file is a first mortgage with or without the DPA you will find the approval letter in the first mortgage loan. If you have a MCC along with the first mortgage/DPA loan or if it is a stand alone MCC you must login to the MCC file separately and pull that approval. None of our approvals are signed documents. If a file was moved to a Non Compliant (Declined) status then your file is declined. This decline is typically due to over income, over purchase price or does not meet the first time homebuyer requirement for the program chosen. You can reach out to the underwriter assigned to that file for guidance. Lenders should cancel reservations/locks of any "dead loans“ prior to reservation expiration to avoid non-cancellation penalty fees. Non cancellation fees are 300 and the compliance review fee for ALL loans is 75.

Accessing Overlays and Matrices Lakeview Loan Servicing is DSHA’s master servicer. Although DSHA may have overlays to the products FHA, VA, USDA and Freddie Mac you must also follow the overlays for Lakeview Loan Servicing to ensure that your final loan is a saleable loan to Lakeview. You can find the DSHA matrices and Program notices on the Lenders Resource website http://lenders.destatehousing.com/ under Homeownership program documents. You can access a link to the Lakeview matrices on the Lenders Resource website under Homeownership program documents/accessing Lakeview Product Matrices. You will then need to follow the directions in order to obtain a login/password from Lakeview for access.

Q&A You are able to modify the DSHA mortgage to fit the lenders needs. True or False - False Compliance file review turn time is hours. - 72 hours The master servicer of all DSHA first mortgage loans is Lakeview Loan Servicing. True or False - True

Delaware State Housing Authority DPA Wire Request and Closing Procedure

Wire Request/Closing This is ONLY for files that are utilizing the DPA funds. Once a file status is ‘Committed’ status 1.The Lender will print the compliance approval letter from Mitas https://www.mitas.com/dsha/ - Print Documents field 2.The Lender will pull the DSHA DPA note and mortgage from the Lenders Resource website http://lenders.destatehousing.com/ - Homeownership program documents and fill in completely and submit to the closing attorney for signatures at closing. Recorded DSHA DPA mortgages must be returned to DSHA after recording. 3.If utilizing the DE Tax MCC the Lender will pull the approval from the MCC file and submit the MCC closing affidavit (part of the approval) to the closing attorney for signatures at closing. 4.The Lender uploads the wire request – found on the Lenders Resource Website - into Mitas (Document Images) no later than 2 pm the day prior to closing. 5.DSHA will then wire funds directly to closing attorney the morning of closing – the DSHA DPAs are table funded by DSHA and DSHA holds the servicing on ALL of the DPAs – no exceptions. 6.DSHA owned DPAs are exempt from TRID and do not require disclosure in the form of a LE or a CD. All recording fees for the DPAs must be disclosed on the first mortgage LE and CD.

Wire Request/Closing Continued There are no minimum funds required on borrower’s behalf – unless required by AUS findings DSHA down payment is considered “borrower’s own” funds – please follow agency (FHA, VA, USDA and Freddie Mac) guidelines The borrower can get back all of the POC (paid outside closing) items that they have paid into the transaction (must follow agency guidelines FHA, VA, USDA and FHLMC) If there are funds left over they can do a principle reduction to the First Mortgage only*

Q&A Wire requests must be uploaded into Mitas no later than 2 pm the day prior to closing. True or False - True All leftover funds at closing can be sent to DSHA. True or False - False If the borrower is utilizing the Tax MCC program the borrower must sign at closing in order to participate in the program. - MCC Closing Affidavit

Delaware State Housing Authority Post Closing

Post Closing: First Mortgage and DPAs Lender to submit complete loan package to Lakeview Loan Servicing for purchase, including compliance approval letter Closed loans must be delivered and purchased by Lakeview within the 60 day reservation period (75 or 90 days based on whether a 15 or 30 day extension was purchased) All fees and extension costs will be netted out of the delivery costs once the file is successfully delivered to Lakeview. Contact information Lakeview: Lakeview Loan Servicing LLC Lender Support Telephone: 855 253 8439 Option 2 Email: [email protected] Quick Reference Guide for Sellers Lakeview Loan Servicing Lakeviews Correspondent website for Post Closing https://lakeviewcorrespondent.com/

Post Closing – Tax Credit MCC Lender to send the following documents to Hilltop Securities – Check for 350 (Plus 1% origination if not using a DSHA first mortgage program) – DSHA approval letter – MCC closing affidavit – Closing package checklist

Q&A All documents including the DSHA DPA mortgage must be delivered to Lakeview Loan Servicing. True or False - True If using the Tax MCC program as a stand alone program the fees are and . - 350 and 1% origination of the first mortgage amount. All locks are for a period of days and there is one rate lock extension available for days for costs or days for costs. - 60 days – 15 days for .125% or 30 days for .25%

Final Test Please click on the link – To take the final test. You must receive an 80% in order to pass. Please submit your certificate to [email protected] with your full name, company name, address and email address. Access to Mitas will be given with 72 hours.