2. Chenoa 2nd behind an FHA 1st soft or amortized 2nd
Issued in conjunction with 1st FHA insured loan
3.5% Soft Second, or Amortized Second
No Borrower Investment Required (With Seller or 3rd party paid Closing Costs)
Borrower paid program – max broker charge is 2.25%; must meet 3% points and fees test. We will advise at submission, as this could change based on loan amount, and fees charged if your loan meets the 3% point and fee test.

3. Advantages No borrower investment required
FICO Scores down to 620 – see FICO hits on rate sheet.
Non-occupant co-borrowers OK – income not used toward AMI %
Income on 2nd unit not counted toward AMI limits; can be used to qualify at 75%
Income >115% AMI OK - requires amortized 2nd
Income up to or = 115% AMI – soft 2nd okay
Only Qualifying Income used for AMI calculations
DTI per AUS – required DU approval.
Add an MCC and increase your buying power (CA only) MCC can only be used toward increasing income for debt ratios (not used in the AMI calculation)

4. PROGRAM LOCKING & Program fees – borrower paid only
PROGRAM LOCKING & Program fees – borrower paid only These fees affect the 3% point and fees test.
Loan must be locked by 1:00 PM, PST
All PTD’s must be cleared before locking.
$1095 to Essex
Up to 2.25% Broker fee - (unless loan does not meet 3% points and fees test.
Program hits, i.e, FICO score and loan amount hits also go toward points and fees.

5. Program codes FHA 1ST: 2ND Program Codes Code 3030CH
Soft 2nd : 4030CHZ
Fully Amortized 30 year 5% rate:
4030CHFR
Full amortized 10 year 0% rate:
403CHZR

6. Chenoa Fund FHA Overlays
Lends in CA, Nevada, Utah, Idaho, Florida, Texas (all states where Essex is lending)
1-2 unit property only (no 3-4 units) (FHA loan limits for the 2nd unit okay.)
SFR, PUD, Townhome, Condo, Attached, Detached
No Manufactured Homes
FICO Score 620 or higher – see price hits on rate sheet

7. Chenoa Fund Soft Second
No Payment
0% Interest Rate and 30-year Term
Forgiven after 36 consecutive on-time payments on FHA 1st Mortgage
Section H of 1003 must indicate down payment borrowed
Qualifying Income <= 115% AMI

8. Chenoa Fund amortized Second
Qualifying Income > 115% AMI
10-Year term 0% interest rate; or
30-Year term 5% interest rate
Requires monthly payment
Payment must be included in housing ratio
Borrower must indicate down payment borrowed in declarations section of 1003 (question H)

9. Secondary Financing on 1003

10. Declarations page of 1003

11. Secondary Financing –DO/DU
Page 2-Types, Terms, & Property
Page 7-Transaction Details

12. Secondary Financing LP

13. Calculating Area Median Income
Go to the HUD Area Median Income Site. This can be found online at:
Select the MOST RECENT fiscal year

14. Select the state, select the county, click the button “View County Calculations”

15. The generic median income number is located on the left-hand side of the results screen under the column heading ‘Median Income’. This result multiplied by 115% is what should be used in most cases.
66,200 X 115% = 76,130 IMPORTANT! FAMILY SIZE TAKEN FROM The minimum starts at 4 persons family, ie., family of 2 can use 4 family income.

16. 38,400 X 2 = 76,800 X 115% = 88,320 for family of 6

17. Next Steps…
Process your loan file as usual (upload 1st& 2nd – 2 loan numbers)
1st: FHA guidelines (okay to use FHA submission sheet); submit complete file.
2nd : Submit 1003 with loan amount of 2nd – and submission sheet (nothing else)
Advise of both loan numbers when uploaded.
We approve – We fund!

18. Underwriting… FHA Guidelines TRID compliance
Industry Standards (example 4506-T (W-2 only ok)
LOE for Employment Gaps 30 Days or More

19. CD disclosing must follow TRID
Closing Disclosure
CD disclosing must follow TRID
Initial CD must be issued 3 days prior to funding just like the first mortgage and is sent with the final CD and closing documents