ARKANSAS DEVELOPMENT FINANCE AUTHORITY …...Montgomery, AL 36117 P.O. Box 242967 Montgomery, AL...

ARKANSAS DEVELOPMENT FINANCE AUTHORITY

HOMEOWNERSHIP DIVISION

PROGRAM GUIDELINES

ADFA Move-Up

Down Payment Assistance (DPA)

Arkansas Dream Down-payment Initiative (ADDI)

Mortgage Credit Certificate (MCC)

900 West Capitol Ave, Suite 310

Little Rock, AR 72201

https://homeloans.arkansas.gov

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Eligible Property Types

Single Family Detached: 1-Unit Primary Residences

Planned United Developments (PUDs): Townhomes or Condos

Manufactured Housing: Permitted by VA, FHA, or RD Program Guidelines.

https://www.facebook.com/arhomefinancing/

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07/08/2019

PROGRAM GUIDELINES Loan Term ADFA “Move Up” 1st Mortgage

Freddie Mac HFA Advantage (Conventional):

Fixed Rate / 30 Year Amortization / Purchase Only

Government Loans, VA, RD, FHA:

Fixed Rate / 30 Year Amortization / Purchase Only

Must meet Conforming Loan Limit

Master Server ServiSolutions— A Division of the Alabama Housing Finance Authority:

In Alabama: 334.244.9200 Toll-free: 800.325.2432 FAX: 334.244.9214

Eligible Borrower Borrowers must qualify for the 1st Mortgage “Move Up” in order to use ADDI or DPA.

ADDI nor DPA are not available independently without ADFA “Move-Up” 1st Mortgage.

Freddie Mac HFA Advantage (Conventional):

Freddie Mac allows for ownership in other property without restrictions, October 2018.

Primary Residence only.

Can be use as a stand-alone program without down-payment assistance.

Governmental Loans:

Follow each specific program guidelines.

Primary Residence only.

Down Payment

Assistance Program DPA—Affordable 2nd Mortgage (repayable): 10-year term, interest rate matches 1st Mortgage.

See DPA for more information & program guidelines.

ADDI—Affordable Soft 2nd Mortgage: 5-year term, forgiven at 1/60th per month.

See ADDI for more information & program guidelines.

AIS Grant—Gift. It can be combined with ADDI or DPA. Only available with ADFA HFA Ad-

vantage Conventional loans. See AIS Grant for more information & program guidelines.

Down-payment assistance programs cannot be combined.

ADDI nor DPA are not available independently without ADFA “Move-Up” 1st Mortgage.

First-Time Homebuyer No first-time homebuyer requirement for MOVE-UP, 1st Mortgage Loan.

Borrowers can own other properties per Freddie Mac HFA Advantage requirements.

When combined with any ADFA down-payment assistance other requirements may apply.

See ADFA Mortgage Credit Certificate Programs for additional information.

Rate Rate is set daily and sent to all participating lenders. Rate subject to change without notice.

MOVEMOVEMOVE---UPUPUP

Secondary Market, 1st Mortgage Loan

7460 Halcyon Pointe Drive, Suite 200

Montgomery, AL 36117 P.O. Box 242967

Montgomery, AL 36124-2967

tel:334.2449200

tel:800.325.2432

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07/08/2019

PROGRAM GUIDELINES MCC Eligible Yes, MCC may be pair with Move-Up, even if 1st mortgage is not pair with any down-payment assis-

tance program.

See ADFA Mortgage Credit Certificate Programs, for additional information.

Affordable Income

Subsidy Grant (AIS)

ADFA Move Up 1st Mortgage HFA Advantage CONVENTIONAL Loans only:

Borrowers at or below 50% of the Area Median Income (“AMI) Limits as published by Freddie Mac are

eligible for an AIS grant in the amount of $2,500 and borrowers above 50% of AMI but at or below

80% AMI are eligible for an AIS Grant of $1,500. AIS Grant funds must be reserved.

Income limits for the AIS Grant are determined by the county location of the home:

Home Possible Income & Property Eligibility

There is no repayment of the AIS Grant—it is a grant subsidy. The gran can be applied to the bor-

rower’s down payment and/or closing cost. No Cash back.

If the borrower qualifies, they may receive the AIS Grant, ADFA Arkansas Dream Down-payment

Initiative or ADFA Down Payment Assistance, and a Mortgage Credit Certificate. These programs

are stackable.

A reservation must be made separately for the AIS Grant, after reserving the 1st Mortgage.

AIS Grant funds might be use for down payment, closing cost, and pre-paid items only.

Must be disclosed separately as “AIS” in Section L of Closing Disclosure.

The AIS Grant should be shown as a GIFT (AIS Grant) on the 1003.

Caution: Inclusion of MCC monthly amount in qualifying income may hinder borrower’s ability to get

AIS grant.

Maximum Loan-To-Value

(LTV) & Total-Loan-To-

Value (TLTV)

Follow each Program Guidelines for specific Maximum Loan-to-Value & Total-Loan-To-Value for gov-

ernment backed loans.

For Freddie Mac HFA Advantage Conventional Loans:

Homebuyer Education On a Freddie Mac HFA Advantage Conventional Loans if both borrowers are first time homebuy-

ers, at least one borrower is required to take the course.

Follow Specific product guidelines for other 1st Mortgages: VA, FHA, RD.

When the first mortgage is paired up with any of ADFA down-payment assistance programs fol-

low each specific program homebuyer education course requirements.

**See ADDI, and DPA**

Income Limits Freddie Mac HFA Advantage Conventional—No Income Limits.



Maximum LTV Ratio Maximum TLTV Ratio

97 % 105%

https://adfa.homebuyerexpress.org/Account/Partners/Landing.aspx?ReturnUrl=%2f

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FHA VA RD HFA ADVANTAGE

CONVENTIONAL

DTI 45% 45% 45% 45%

07/08/2019

PROGRAM GUIDELINES Minimum Credit Score

All applicants are subject to Credit Score requirements, including Non-Occupant Borrowers Co-

Signers.

Eligible Purpose Single family detached , 1-Unit Primary Residence, and PUDs (Condos & Townhomes).

VA, FHA, RD or Freddie Mac HFA Advantage Conventional loans types allowed.

Manufacturing housing allowed on FHA, VA or RD Loans ONLY.

Borrower (s) can own other property.+

**ADD nor DPA are not eligible for refinancing**

+ See Eligible Borrower section on page 2 for additional information.

See ADFA Mortgage Credit Certificate Program for additional information.

Purchase Price / Sales

Price

DPA— Arkansas Conventional Conforming Loan Limit—$484,350 (no jumbo)

FHA Conforming Loan Limit—$314,827

ADDI—Purchase Price Limit of $250,000

Non-Occupant

Borrowers

Co-Signers

Non-Occupant borrowers Co-Signers allowed only on FHA Loans.

Co-Signers must sign the Note, and TRID Documents only. Cannot take title or be on the

Warranty Deed.

ADFA does not request income documents on the Co-Signer.

Non-Occupant borrowers Co-Signers must meet credit score guideline as well.

Debt-To-Income Ratio

Maximum (DTI)

Debt-To-Income ratio, including DPA 2nd Mortgage payment, must not exceed 45%.



FHA VA RD HFA ADVANTAGE

CONVENTIONAL

CREDIT SCORE 660 640 640 640

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07/08/2019

PROGRAM GUIDELINES Manufactured Housing Manufactured housing is allowed only on government loan products guidelines (FHA, VA, USDA) to

each specific program, and subject to the State of Arkansas, the following guidelines apply:

The manufactured home must be attached to the land.

The manufactured home must be classified and taxed as real estate.

In accordance with the jurisdictional requirements, the manufactured home title must be surren-

dered/cancelled (copy of the cancellation must be provided at the time of loan purchase by

ServiSolutions)

State of Arkansas Manufactured Housing Requirements

Page 34:

ServiSolutions Loan Delivery & Purchase Guidelines

Required Lien Perfection Documentation

Collection of a DMV retirement confirmation document: Confirmation Letter from the AR Depart-

ment of Finance & Administration stating the mobile home certificate of title has been cancelled.

See Manufactured Housing Requirements for each Program:

FHA Manufactured Homes

USDA Manufactured Homes

VA Manufactured Homes



MINIMUM

CREDIT SCORE

MAXIMUM

DTI

MAXIMUM

LTV

MAXIMUM

CLTV

640 (660; FHA) 45% Per Program Guidelines

https://drive.google.com/file/d/0BwlEubde1yIqOE55Q0N2bURhNVQxQU5wYkk0ZnlJNkZjYk84/view

.%20http:/servsol.com/Content/Uploads/servsol.com/files/Loan%20Delivery%20Guidelines_10418_forweb.pdf

https://drive.google.com/file/d/0BwlEubde1yIqTldiZXozeUhRdkxldlR2bkR6ODJvcG5MU2d3/view

https://drive.google.com/file/d/0BwlEubde1yIqM09SZXVoNDJvTHZlcDRBZ2pVa21rcWNkSXc4/view

https://drive.google.com/file/d/0BwlEubde1yIqZlZ2Mm1RRG5BTnZFSndKSGFUbjJvTXpIYUhB/view

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07/08/2019

PROCEDURES Lock-In ALL program reservations and rate Lock-Ins are from 9:00 am to 7:00 pm, Monday– Friday with

exception of ADFA holidays. https://adfa.mitas.com/mitas/

Origination Loan originated in accordance with program guidelines, Freddie Mac guidelines, and LPA recommen-

dations. (Running Loan Product Advisor as soon as possible is suggested). No ADFA Exhibits re-

quired for origination.

Tax Transcripts / Tax

Returns

Move-Up —have no income limits, ADFA does not require any Tax Information.

Credit Fees in Price No Credit Fees in Price.

Reservations ALL program reservations are from 9:00 am to 7:00 pm

May be reserved or ‘locked’ at application in our Reservation System, keep in mind the following:

Close loan within 30-days of reservation.

Loan will be cancelled if not closed within 45 days. Closing Package reviewed by ADFA.

70-day purchase timeline remains in effect from date loan is reserved or ‘locked’ in our Reserva-

tion System.

If ADFA has not received a closing package within 70 days of the reservation date, the res-

ervation will automatically be cancelled unless notified by the lender that an extension is

needed. If ADFA has received a closing package then the 30 day extension will automatically go

into effect and the $375 extension fee will be netted out at purchase.

If ADFA is notified that an extension is needed and the loan ends up cancelling after 70 days the

extension fee will still be collected by ADFA.

Underwriting HFA Advantage Conventional through Loan Product Advisor (LPA) “ACCEPT/ELIGIBLE” recom-

mendation is required. LPA A Minus Offering is not allowed.

VA, FHA through LPA “ACCEPT/ELIGIBLE” or DU “APPROVE/ELIGIBLE” recommendation.

RD through GUS.

**For ALL Loans Manual Underwriting is not allowed**

Buydowns Freddie Mac HFA Advantage Conventional & Government: Not Permitted.

Assumable Freddie Mac HFA Advantage Conventional: Not Permitted.

Government: Permitted per FHA, VA, or RD Guidelines.

Escrow Waivers Freddie Mac HFA Advantage Conventional & Government: Not Permitted.



https://adfa.mitas.com/mitas/

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07/08/2019

PROCEDURES Fees MOVE UP:

Delivery fees netted out at purchase:

$200—Funding Fee

AHFA will implement a Funding Fee to be paid by the Lender at time of loan purchase (via net

funding) beginning on January 2, 2019 (reservations dated 1/2/2019). This fee is paid directly by

the lender and net funded at time of loan purchase. It is not to be charged to the borrower.

$71.50—Tax Servicing Fee

ADFA pays 1.75% SRP on Conventional, FHA and RD loan; and 1.25% SRP on VA loans when

sold to the Master Servicer.

Lenders are allowed to charge up to a 1% Origination Fee (Total SRP 2.75% with FHA, RD or

Conventional; and 2.25% for VA).

***See ADDI & DPA for additional fees.***

See ADFA Mortgage Credit Certificate (MCC) Program for additional fees when using this program.

Closing DPA:

Compliance submission package no longer required.

Awards letter sent prior to closing ([email protected])

Funding Originating lender will fund the 1st mortgage and 2nd mortgage at closing.

Points & Fees ADFA is exempt from ATR-QM (Ability to Repay and Qualified Mortgage Rule)

Delivery Loans must be bought by ServiSolutions within 70 days from loan reservation to avoid exten-

sion fee of $375.

Documents must be uploaded using MITAS as a whole with separated cover scan sheets (preferred),

or individually.

Uniform Closing

Dataset (UCD)

ServiSolutions requires a Freddie Mac UCD findings report in every Conventional Loan file. The re-

port must reflect “successful result” with transfer to AHFA. An embedded CD and no Fatal Error

Edit warnings.

Documents ADFA MOVE UP

1. Exhibit 7-K Signed by Lender

2. Closing Disclosure

3. Final 1003 Singed & Dated by Borrower and Lender

4. Homebuyer Education Certificate (Conventional Only)

5. Lender Approval (DU, GUS, or LPA)

Appraisal Requirements Freddie Mac HFA Advantage Conventional: Full Interior and Exterior Appraisal required; SSR from

FMNA/FHLMC with successful results is required.

Government Loans: Full Interior and Exterior Appraisal required; FHA EAD report with successful

result required.



mailto:[email protected]?subject=Award%20Letters

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07/08/2019

PROCEDURES Mortgage Insurance

Coverage

(HFA Advantage

Conventional)

Freddie Mac HFA Advantage Conventional monthly mortgage insurance automatically ends when

LTV drops to 78%. Single Premium, available, coverage is Life of Loan with no additional cost.

Single Premium Mortgage Insurance is allowed, it can be paid by the borrower, Lender or Seller. If

it is paid by the Lender or Seller it must be included in the maximum interested party contribution of

3% of the sales price.

Subordinate Financing Must be an approved Affordable Second. Lenders are responsible for verifying that the subordinate

financing used meets “Accept/Eligible” from LPA; or recommendation “Approved/Eligible” from DU.

Post-Closing Standard post-closing documents must be submitted to ADFA.

Original Recorded Documents must be submitted to ServiSolutions.

ADFA Compliance Team

Contact Information

ADFA Training

Resources

Arkansas Development Finance Authority

900 W Capitol Ave, Suite 310

Little Rock, AR 72201

(501) 682-5900

ADFA Forms, under SINGLE FAMILY

Loan Delivery &

Purchase Guidelines

Link: ServiSolutions Loan Delivery & Purchase Guidelines

Miscellaneous The information contained herein (including but not limited to any description of ADFA programs and

products, eligibility criteria, interest rates, fees and all other loan terms) is subject to change without

notice. Participants are responsible to find the latest information and guidelines.

(The information contained in this product description does not modify, replace or substitute infor-

mation in the Fannie Mac Selling and Loan Product Advisor Guides and or related release notes or

supplements. Always check for Freddie Mac, ServiSolutions or ADFA announcements and updates

for current underwriting guidelines, changes and/or updates).



95% 97%

90.01% to 95% = 16%

85.01% to 90% = 12% 18%

80.01% to 85% = 6%

Denise Wells—Single Family Assistant Manager

(501) 682-5466

[email protected]

Virginia Wright—Single Family Compliance

(501) 682-5923

[email protected]

Dean Norman—Single Family Compliance

(501) 682-5935

[email protected]

Leslie Quisenberry—Single Family Compliance

(501) 682-5930

[email protected]

https://adfa.arkansas.gov/files/

http://servsol.com/Content/Uploads/servsol.com/files/Loan%20Delivery%20Guidelines_10418_forweb.pdf

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07/08/2019

PROGRAM GUIDELINES Loan Term ADDI—Affordable Soft 2nd Mortgage: 5-year term.

Pro-rated , forgiven at 1/60th per month.

Eligible Borrower ***Borrowers must qualify for the 1st Mortgage “Move Up” in order to use ADDI.***

Primary Residence Only.

ADDI must be approved by ADFA prior closing.

ADDI is not available independently without ADFA “Move-Up” 1st Mortgage.

Down Payment

Assistance Program

ADDI

Borrowers are able to receive 10% of purchase price, up to $10,000.

Can receive cash back at closing for POC items.

Can not be used for repairs, principal reduction, or to pay debt to qualify.

ADDI cannot be combined with DPA.

ADDI is not available independently without ADFA “Move-Up” 1st Mortgage.

First-Time Homebuyer No first-time homebuyer requirement for ADDI.


Purchase must be use as primary residency.



ADDI—No Applicable

MCC Eligible Yes (Follow MCC restrictions). MCC may be pair in assistance with ADDI.


Homebuyer Education While using ADDI both borrowers must take an 8 hour pre-purchase homebuyer education class

or an e-home online course through a HUD-Approved homebuyer counseling agency.

Must be done prior closing.

Online, 50% OFF, self-paced course link below:

HUD-Approved Homebuyer Education Online Course

Income Limits ADDI—Household income limits apply by 80% Area Medium Income or below by county:

HUD HOME Program Income Limits.

ARKANSAS DREAM DOWNARKANSAS DREAM DOWNARKANSAS DREAM DOWN---PAYMENT INITIATIVE PAYMENT INITIATIVE PAYMENT INITIATIVE

(ADDI) (ADDI) (ADDI) Forgivable Soft 2nd Mortgage Loan

https://adfa.homebuyerexpress.org/Account/Partners/Landing.aspx?ReturnUrl=%2f

https://drive.google.com/file/d/0BwlEubde1yIqcEdfendhbEJ6RHgtdUZodWZqVzRSX2YxX2VR/view

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07/08/2019

PROGRAM GUIDELINES Eligible Purpose Single family detached , 1-Unit Primary Residence, and PUDs (Condos & Townhomes).



Borrower (s) can own other property.+



Price

ADDI—Purchase Price Limit of $250,000

Non-Occupant

Borrowers

Co-Signers



Warranty Deed.




Returns

ADDI—have income limits, therefore ADFA asks for the most recent on year of signed 1040’s and

W2’s. If 1040 is not available, Lender must provide an IRS Transcript for that year. If W2s are not

available, Lender must provide an IRS RECORD OF ACCOUNT.

ADDI, self-employed—ADFA required last 2 years signed tax documents, W-2/1099’s and a self-

prepared, signed YTD P&L.

Income Verification

Yes, for ADDI you do need signed tax returns, together with W2s, from anyone 18 or older who will

live in the house.

CHILD SUPPORT: Provide proof of the amount of child support rec'd for each child.

You may email your inquiry form, with the borrower's name and SS#, to ARKANSAS CHILD SUPPORT ENFORCEMENT at:

[email protected] OR [email protected]

Send ADFA the e-mail you sent to AR CHILD SUPPORT ENFORCEMENT, together with their response. If there is child support, need proof of the monthly amount rec’d by the borrower. This can be documented by a twelve month printout or a recent court order agreement.

Fees ADDI:

No Fees; except ADFA allows a $50 lender application fee

Borrowers are able to receive cash back at closing to cover POC items.

ADFA pays for up to two HQS Inspections. Any additional inspections cannot be paid by the bor-

rower.

Initial & Final Inspection: $125 per inspection plus 42¢ per mile. ADFA only pays for up to 2 in-

spections. Borrower is not allow for ADDI HQS Inspections.

See ADFA Mortgage Credit Certificate (MCC) Program for additional fees when using this program.



mailto:[email protected]


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07/08/2019

PROGRAM GUIDELINES HQS Inspection ADDI:

U.S. Department of Housing & Urban Development requires HQS Inspection.

Lender is allowed to pick its own inspector (Business License & W-2 must be approved).

ADFA pays for Initial & Final Inspection (up to $125 + millage for each inspection).

ADFA must dispatch inspectors in order to pay them.

When using ADDI, please allow up to 45 days for closing. See ADFA ADDI

ADDI INSPECTOR (Pick your own Inspector):

To add any inspector to the ADFA ADDI inspectors list, we simply need your completed and

signed IRS W-9 and a copy of your current business license sent to

[email protected].

It takes about 10 days to get a vendor number assigned from the state, so we can set up future

payments for any future ADDI inspections.

Instructions: To get a specific ADDI Inspector, the lender must make the request, if desired. The

ADDI inspections are not merely a duplicate of a home inspection. They are for safety and health

issues only, not cosmetic issues. Inspectors are not to accept orders from lenders for the ADDI in-

spections, but they are only to be instructed by ADFA underwriters.

Closing ADDI:

Most current year tax returns with W-2’s, signed by borrower (s) unless self-employed.

Self-employed borrower (s) required 2 years signed tax returns, W-2/1099’s and YTD P&L.



Documents ADFA DPA

1. Original ADDI Note.

2. Copy of recorded ADDI Subordinate Mortgage / Copy of un-recorded.

3. Copy of recorded ADDI Mortgage Subsidy Deferred Note Agreement / Copy of un-recorded.

4. Copy of Homeowners Insurance (ADFA listed as 2nd mortgagee).












https://adfa.arkansas.gov/media/file/ADDI_Pick_Your_Own_Inspector_1.pdf



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07/08/2019

PROGRAM GUIDELINES Loan Term DPA—Affordable 2nd Mortgage (repayable): 10-year term.

No penalty for pre-payment.

DPA is not available for refinance.

Eligible Borrower ***Borrowers must qualify for the 1st Mortgage “Move Up” in order to use DPA.***

Primary residence Only.

DPA is not available independently without ADFA “Move-Up” 1st Mortgage.

Down Payment

Assistance Program

DPA

Borrowers are able to receive from $1,000 up to $10,000 for down payment assistance, closing

cost, cash back at closing for POC items, and up to $100.

Can not be used for repairs nor to pay debt to qualify.

Borrowers may increase down payment thus reducing 1st Mortgage amount.

DPA cannot be combined with ADDI.

DPA is not available independently without ADFA “Move-Up” 1st Mortgage.

First-Time Homebuyer No first-time homebuyer requirement for DPA, 2nd Mortgage Loan


Purchase must be use as primary residency.



DPA—Matches 1st Mortgage Rate (ADFA Move-Up).

MCC Eligible Yes (Follow MCC guidelines). MCC may be pair in assistance with DPA.


Homebuyer Education DPA, itself, does not have an education course requirement.

Freddie Mac Credit Smart while using HFA Advantage Conventional to meet Homebuyer Educa-

tion, if required by 1st mortgage, and using DPA is acceptable.

Income Limits

DPA—No Income Limits.

Eligible Purpose Single family detached , 1-Unit Primary Residence, and PUDs (Condos & Townhomes).





Price

DPA—Arkansas Conventional Conforming Loan Limit—$484,350 (no jumbo)

DOWN PAYMENT ASSISTANCE DOWN PAYMENT ASSISTANCE DOWN PAYMENT ASSISTANCE

(DPA)(DPA)(DPA) Repayable 2nd Mortgage Loan

13

07/08/2019

PROGRAM GUIDELINES Non-Occupant

Borrowers

Co-Signers



Warranty Deed.




Returns

DPA—have no income limits, ADFA does not require any Tax Information.

HQS Inspection No HQS Inspection required for DPA.

Fees DPA:

No Fees; except ADFA allows a $50 lender application fee

Borrowers are able to receive cash back at closing to cover POC items, and up to $100.

Closing DPA:

Compliance submission package no longer required.



Documents ADFA DPA

1. Copy of DPA final loan application signed and dated by borrower and lender.

2. Copy of DPA Final Closing Disclosure signed at closing.

3. Copy of DPA Note.

4. Copy of Subordinate Mortgage.

5. Copy of Homeowners Insurance (ADFA listed as 2nd mortgagee).










DOWN PAYMENT ASSISTANCE DOWN PAYMENT ASSISTANCE DOWN PAYMENT ASSISTANCE

(DPA) (DPA) (DPA) Repayable 2nd Mortgage Loan


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07/08/2019

PROGRAM GUIDELINES Term Credit may be claimed for the life of the loan, as long as the home is use as primary residence.

Purpose The Mortgage Credit Certificate was authorized by congress in 1984 Tax Reform Act to help lower-

income families afford a home. The program allows homebuyers to claim a dollar-for-dollar tax credit

for a portion of mortgage interest paid per year, up to $2,000.

The certificate is issued by ADFA and allows qualifying homebuyers to claim a tax credit of up to 50%

of the mortgage interest paid per year.

Amount Up to 50% of mortgage interest up to $2,000 tax credit per year that reduces the amount of federal

income tax paid by the borrower, giving more available income to qualify for a mortgage loan and

assist with house payments.

Tax Credit

Advantages Borrower may go to their employer and adjust their W-4’s to reflect the anticipated credit. This will

lower the borrower's federal tax withholdings and increase the monthly take home pay.

$2,000 Tax Credit ÷ 12 = $166.66 monthly results in additional income that can be used for qualifying

purposes.

First-Time Homebuyer First-time homebuyer is defined as a borrower who has NOT had an ownership interest in a

principal residence at any time during the three year period prior to the date of closing.

This ruling applies to a non-borrower spouse of any co-occupant.

MORTGAGE CREDIT CERTIFICATE MORTGAGE CREDIT CERTIFICATE MORTGAGE CREDIT CERTIFICATE

(MCC) (MCC) (MCC) Dollar-per-Dollar Tax Credit

Tax credit is equal to the

annual mortgage interest

paid multiplied by the

MCC tax credit rate of

50%.

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07/08/2019

PROGRAM GUIDELINES Qualifications All Borrower (s) and Household Occupants must qualify by one of the following:

1. Must be a first-time homebuyer (No principal residence ownership within last 3 years).

2. Veteran or Spouse of a Veteran.

3. Purchasing a home in a Targeted County.

Targeted County A targeted county is a qualified census tract or an area of chronic economic distress as designated by

the IRS. If property is located in a targeted country, the first time homebuyer requirement does not

apply.

IRS Filling Form 1040 “U.S. Individual Income Tax Return”— Borrower must claim the tax credit when filling

this form annually.

Form 8396 “Mortgage Interest Credit”— Borrower must use this form to claim this tax credit.

Borrower may itemize if preferred.

Income Limits /

Qualifying Income

Household income limits apply. Might be waived in targeted counties with prior ADFA approval.

MCC can be classified as “Other Income”.

Caution: Inclusion of MCC monthly amount in qualifying income may hinder borrower’s ability to get

AIS grant.

If the Borrower (s) have no tax liability, the MCC income cannot be used as qualifying income.

See the ADFA Mortgage Credit Certificate (MCC) Program-Income Limits List.

Maximum Purchase

Price Limit

$270,000

Income Verification In non-targeted counties:

Most current year tax returns with W-2’s, signed by borrower (s) unless self-employed.

Self-employed borrower (s) required 2 years signed tax returns, W-2/1099’s and YTD P&L.

Non-Occupant

Borrowers /

Co-Signers

Can sign the LE, CD and Note only. Cannot take title or be on the Warranty Deed.

Can be on the LPA.

MCC Co-signers are allowed and do not meet the first-time homebuyer requirement if they are

not occupying the property. Anyone occupying the property must meet the first-time homebuyer

requirement and sign Exhibit I.

ADFA does not require income verification documents from co-signer.

Must be signed by the Borrower:

Exhibit A—Notice to Borrowers Potential Recapture

Exhibit B—Application for Conditional Commitment

Exhibit C—Disclosure

Exhibit I—Non-Borrower Occupant income Affidavit



https://www.irs.gov/pub/irs-pdf/f1040.pdf

https://www.irs.gov/pub/irs-pdf/f8396.pdf

https://drive.google.com/file/d/0BwlEubde1yIqUUZmbXoycWZ0Wml6Z3JqQlQweXQtSFlJUGlN/view

16

07/08/2019

PROGRAM GUIDELINES Fees $150—Lender Fee. Lender may charge up to $150 per each MCC transaction.

Issuance Fee—when using a participating lender’s fixed-rate and fully amortizing first mortgage 1/2%

(.50) of the loan amount as issuance fee will be charged for MCC. Payable to ADFA.

ADDI funds may be used for MCC fees. Other fees may apply if combining with any other ADFA Prod-

ucts.

Issuance Fee waived on MCC when using “ADFA Move-Up” 1st Mortgage Loan.

Issuance Fee waived on MCC when used without “ADFA Move-Up” 1st Mortgage Loan for Veterans,

or Spouse of Veteran ONLY (with Form DD214 required).

Eligible Purpose MCC is not eligible for refinance.

Documents 1. MCC Transmittal Checklist.

2. Copy of Loan Approval & Copy of Application.

3. Copy of Credit Report (non-targeted only).

4. Copy of Real Estate Contract.

5. Original Exhibit A, B, C, E, F, G, I, and P with County Income Limit Page.

6. Copy of Income Verification Documents.

7. Copy of Closing Disclosure.

Recapture Tax For the Recapture Tax to apply, ALL of the following conditions must be met:

Home is sold or disposed of within 9 years of being purchased, for reasons other than death, and

There is a capital gain on the sale of the home, and

Household income for the year in which you sell your home exceeds at least 5% each year, which

is the federal recapture tax limits.

We estimate that 97% of borrowers will not be subject to the Recapture Tax.

Disclosures MCC CAN’T reduce your Federal Income Tax if you don’t owe any taxes!

ADFA or any associate representing ADFA are not tax professionals and cannot give tax

advice. ADFA recommends that borrowers seek the advice of a qualified tax professional when

deciding whether or not to take advantage of an MCC. For more information regarding this

provision, please contact the IRS or consult a tax professional.

Note: ADFA will not reimburse MCC borrower’s that are required to pay the Recapture Tax.





mation in the Freddie Mac Selling and Loan Product Advisor Guides and or related release notes or





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AFFORDABLE INCOME SUBSIDY GRANT

AREA MEDIAN INCOME LIMITS BY FREDDIE MAC (2018)

22


AFFORDABLE INCOME SUBSIDY GRANT

AREA MEDIAN INCOME LIMITS BY FREDDIE MAC (2018)

ARKANSAS DEVELOPMENT FINANCE AUTHORITY …...Montgomery, AL 36117 P.O. Box 242967 Montgomery, AL...

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