1. Welcome Compliance Processing and File Delivery Dial in number: (641) 715-3276 Participant Access Code: 297334#

2. Homeownership Staff Erik Nore, Director of Homeownership Anita Racicot, Homeownership Specialist Cynthia Marquez, Compliance Specialist Shawn Rasmussen, Lending Specialist Lisa Romero, Lending Specialist Barbara Tashkandy, Lending Coordinator Teri Baca, Homeownership Representative Eunice Duran, Homeownership Representative 2 7/21/2015

3. Reservation Process Reservation of Funds – Household Size  Even though the income may not be counted, loans must be reserved showing all household members so that the correct household size is referenced on the Mortgage Purchase/Funding Agreements 3 7/21/2015

4. Reservation Process All Programs Availability of On-Line Reservation System  The MFA On-Line Reservation System is available from 9:00 am – 5:00 pm Monday – Friday (excluding federal or bank holidays) MST  On-line reservation system will not accept reservations before or after the available time.  Be sure to submit and complete the reservation request prior to 5:00 pm 4 7/21/2015

5. Reservation Process All Programs Reservation period  Loan must be purchased by Master Servicer no later than 60 days from the loan reservation date  First mortgage loans that are not purchased within the applicable timeframe must be extended or cancelled by the Lender. No exceptions, for any reason will be made to the reservation policies. 5 7/21/2015

6. Reservation Process First Mortgage Loan Products Changes between loan programs are not permitted.  A loan reservation is for a specific loan program and is attached to the borrower  A loan reservation cannot be transferred between programs (i.e. $aver to Zero, Zero to Plus, Plus to HERO, etc.) 6 7/21/2015

7. Reservation Process All Programs Extension Fees  Lender can request either a 15 day or a 30 day extension for the loan delivery, for a fee:  15 day extension (0.1875% of the loan amount)  30 day extension (0.3750% of the loan amount)  Only ONE extension is allowed  Extension fee applies to first mortgage only 7 7/21/2015

8. Reservation Process All Programs Extension Fees  In the event that a loan is not purchased by the Master Servicer within 60 days of loan reservation, a 30 day extension will automatically be applied, unless the Lender requests a 15 day extension from MFA prior to the 60 day loan reservation expiration date.  The extension fee may be charged to the borrower 8 7/21/2015

9. 9 Reservation Process All Programs Extension Fees  If loan is not purchased within 75 (15 day extension) or 90 (30 day extension) days of the date of reservation (including extension), loan can still be delivered, but will be purchased from Mortgage Lender on a worst case, Mark-to-Market basis that is determined at the time of purchase.

10. 7/21/2015 10 Reservation Process Mortgage$aver Programs Targeted Areas  When reserving property in Targeted Area (Census Tract) the lender is required to contact MFA to obtain the lowest rate in the last 12 months from the reservations date and to receive Targeted Area acquisition cost and income limits.  Targeted Area Maps can be accessed at housingnm.org/targeted-area-census-tracts

11. 7/21/2015 11 Reservation Process Mortgage$aver Programs Section 184 Indian Housing Loan  When reserving property using a Section 184 loan on Federally Designated Tribal Land or Fee Simple Land the lender is required to contact MFA to receive Targeted Area acquisition cost and income limits.  If property is on Fee Simple Land, the borrower will receive the current applicable program interest rate.  If property is on Federally Designated Tribal Land ONLY, the lender is required to contact MFA to obtain the rate (0.50% below the applicable program interest rate).

12. 7/21/2015 12 MFA Guidelines Definition of “Household Income”  Income that is considered “Household Income” includes:  All forms of income from the mortgagor (Borrower) or co- mortgagor (Co-Borrower) will be considered as Household Income for the purposes of qualifying for the single-family loan program.  If the Borrower is taking title as sole and separate, all forms of income from the non-purchasing spouse is required as well.

13. 7/21/2015 13 MFA Guidelines Definition of “Household Income”  Income that is not considered “Household Income” includes:  All forms of income earned by a family member or household member that do not have ownership interest in the property and are not liable for the mortgage debt.

14. 7/21/2015 14 MFA Guidelines Definition of “Ownership Interest” for the 3-year Requirement  For purposes of documenting the 3-year requirement (i.e. no ownership interest in a principle residence at any time during the 3 year period prior to the date the mortgage is executed)

15. 7/21/2015 15 MFA Guidelines Definition of “Ownership Interest” for the 3-year Requirement  “Ownership Interest” is defined as including the following:  A fee simple interest  A joint tenancy, a tenancy in common or tenancy by the entirety  The interest of a tenant-shareholder in a cooperative

16. 7/21/2015 16 MFA Guidelines Definition of “Ownership Interest” for the 3-year Requirement  “Ownership Interest” is defined as including the following:  A life estate  A land contract (i.e. a contract pursuant to which possession and the benefits/burdens of ownership are transferred, although legal title is not transferred until some later time) and  An interest held in trust for the mortgagor, whether or not it was created by the mortgagor

17. 7/21/2015 17 MFA Guidelines Definition of “Ownership Interest” for the 3-year Requirement  Prior “Ownership Interest” by the spouse of the borrower is considered prior “Ownership Interest” of the borrower, regardless of when the borrower and spouse were married

18. 7/21/2015 18 MFA Guidelines Single Family Residence  Home must have ONE kitchen and no rental units (i.e. mother-in-law quarters, converted garages, etc.)  Any business use of the property must be less than or equal to 15% of the home.  MFA will review the borrower’s previous two years tax returns per self-employed guidelines and also ensure that the borrower(s) did not claim more than 15% on their previous year’s federal tax returns

19. 7/21/2015 19 MFA Guidelines Electronic/Digital Signature Policy  MFA now accepts electronic/digital signatures on all documents except for the following:  Compliance Review Addendum  Any Borrower explanation letter  Lender certification/letter of explanation  YTD Profit and Loss for self-employed borrowers  Rental verification letters from Landlords  Original Note  Original Mortgage  Signature Affidavit

20. 7/21/2015 20 MFA Guidelines  Tax Returns (For ALL Borrowers on the loan and if applicable Non-Purchasing Spouse)  Three (3) years Tax Returns are not required if borrower has at least one creditor with a three year credit history on their credit report  Two (2) years Tax Returns are required for all Self- Employed borrowers, only, unless they do not have a three year credit history, then three years of Tax Returns are required

21. 7/21/2015 21 MFA Guidelines Minimum Credit Score of 620  Except for manual underwrite with HFA Preferred Product which has a minimum of 660

22. 7/21/2015 22 MFA Guidelines Minimum borrower cash contribution  MFA requires a minimum borrower cash contribution of $500.00, regardless of program type. HERO Program requires a $1,000.00 contribution.  Funds must be from the borrower and cannot be derived from any type of gift, grant, pro-rated taxes or down payment.

23. 7/21/2015 23 MFA Guidelines Minimum borrower cash contribution  MFA requires the lender to provide proof of borrower’s funds on the Final First Mortgage Application in Section VII and on the Final HUD 1  If the borrower contributes more than the required funds to the transaction (i.e. Earnest Money, POC Appraisal Fee) the borrower can get those funds back at closing

24. 7/21/2015 24 MFA Guidelines Use of Mortgage Booster Funds  May only be used for minimum down payment and allowable closing costs  MFA will allow a principal reduction of up to $100 if the final Mortgage Booster loan is too high. The principal reduction must be applied to the first mortgage

25. 7/21/2015 25 MFA Guidelines Mandatory Homebuyer Counseling  All MFA Borrowers are required to take pre-purchase homebuyer counseling regardless of program type.  HERO Program only if the borrower is a first-time homebuyer Counseling Certificates cannot be older than One (1) Year

26. 7/21/2015 26 MFA Guidelines Mandatory Homebuyer Counseling  The pre-purchase homebuyer counseling will be either:  Face to Face pre-purchase housing counseling provided in either a classroom or one-on-one setting by an MFA approved housing counseling agency  Face to Face counseling must be used for the Payment$aver and Helping Hand Programs (the on-line counseling is not acceptable for these two programs  Borrowers preferring to go to a counselor instead of taking the eHomeAmerica class on-line is also acceptable for the Mortgage$aver, HERO and Mortgage Booster Programs

27. 7/21/2015 27 MFA Guidelines Mandatory Homebuyer Counseling  Pre-purchase homebuyer counseling  eHomeAmerica on-line Housing counseling  Borrowers may take the course married, unmarried or jointly for one fee of $45 paid at the time of registration. When registering type both names so that the certificate of completion will print correctly.  The $45 fee can be reimbursed at closing and included with the closing costs included in the second mortgage loan

28. 7/21/2015 28 MFA Guidelines Mandatory Homebuyer Counseling  Pre-purchase homebuyer counseling  Link to the eHomeAmerica site is on the MFA Home Page  Be sure to refer all borrowers to the MFA Home Page to ensure MFA is chosen as their administrator.

29. 7/21/2015 29 HFA Preferred Loan Program Special Housing Finance Agency Conventional Loan Product Definition of “Ownership Interest” for the HFA Preferred Loan Program  An ownership interest is defined as a borrower whose name appears on the deed to any residential property. Residential properties include single family detached, townhomes, condos, manufactured homes, investment properties and vacation homes.  MFA requires the borrower to be a first-time homebuyer.

30. 7/21/2015 30 HFA Preferred Loan Program Special Housing Finance Agency Conventional Loan Product Eligible Occupancy for the HFA Preferred Loan Program  The property must be owner-occupied and the borrower may not have an ownership interest in any other residential dwelling at the time of loan closing.

31. 7/21/2015 31 HFA Preferred Loan Program Special Housing Finance Agency Conventional Loan Product Term Sheet  Posted on the MFA website

32. 7/21/2015 32 Compliance Guidelines Questions?

33. 7/21/2015 33 MFA Guidelines HERO Program Eligible Borrower(s)  The borrower does not have to be a first-time homebuyer (FTHB) under the HERO Program Homebuyer Counseling  Required for first-time Homebuyers (FTHB) only

34. 7/21/2015 34 MFA Guidelines HERO Program Owning Property  Definition: The HERO program may only be used to purchase a primary residence and the borrower must occupy the property within 60 days of closing Documentation submitted for Compliance Approval regarding ownership of property  Definition: Verification that the property financed will be the borrower’s primary residence

35. 7/21/2015 35 MFA Guidelines HERO Program Eligible Program Type:  FHA ONLY Eligible Property Type:  Must be owner-occupied single family residence

36. 7/21/2015 36 Compliance Guidelines Questions?

37. 7/21/2015 37 Mortgage Booster Use with Mortgage$aver OR Mortgage$aver Zero with FHA, Conv, RHS, or HUD Section 184 (not allowed with VA) Maximum loan amount of $8,000 (must follow loan guidelines for CLTV)  Use of funds are limited to cover the minimum down payment and allowable closing costs 30 year amortization, 6.00%

38. 7/21/2015 38 Second Mortgage RESPA Lender must provide a Truth in Lending (TIL) Statement and Good Faith Estimate (GFE) to the borrower for the Mortgage Booster Program per RESPA Guidelines  Lender must re-disclose for MFA if the loan amount increases

39. Second Mortgage Allowable Fees 39 7/21/2015 Lender may charge an Origination Fee for Mortgage Booster only of: $100.00 Recording Fee (DPA Mortgages)Actual Cost Daily Interest ChargesActual Cost

40. 7/21/2015 40 Compliance Guidelines Questions?

41. 7/21/2015 41 Compliance Guidelines Completing the FHA Loan Underwriting and Transmittal Summary when there is a second mortgage  MFA’s EIN# must be completed – 85-0252748  Check the Government box  Enter 2 nd mortgage loan amount  2 nd mortgage is not a gift  If using CHUMS ID # as ZFHA make sure DU Findings are attached  If not using ZFHA then underwriter must sign

42. 7/21/2015 42 Compliance Guidelines Completing the FHA Loan Underwriting and Transmittal Summary when there is premium pricing (Mortgage$aver Plus or HERO)  MFA’s EIN# must be completed in the Gift section – 85-0252748  Check the Government box  Enter total “Gift” amount including the cents  If using CHUMS ID # as ZFHA make sure DU Findings are attached  If not using ZFHA then underwriter must sign

43. 7/21/2015 43 Compliance Guidelines Income Calculation  ALL Household income is considered  Example: John Doe is purchasing a home and is married. John Doe is taking title as his Sole & Separate property because his wife has bad credit. The wife’s income must be counted toward household income according to MFA Guidelines.

44. 7/21/2015 44 Compliance Guidelines Income Calculation  Common mistake with the current pay stub  The date that MUST be within 30 days of submitting the package is the pay period paid through date NOT the check date or the pay date.

45. Compliance Guidelines Verification of Employment Income 45 7/21/2015 Monthly gross income includes, but is not limited to: Monthly gross pay (wages, salary, tips, etc.) Interest and dividends OvertimeSSI Part-timeDisability Income BonusesChild Support Business IncomeAlimony VA CompensationRental Income Other Income

46. 7/21/2015 46 Compliance Guidelines Compliance File Documentation Requirements  MFA has revised and simplified the documentation requirements  One year, most recent Verification of Rent (VOR)  One month most recent bank statement from each bank account (No VODs). However, two months of bank statements (No VODs) are required for the Payment$aver and Helping Hand programs.  Compliance Review Addendum to be signed by lender.

47. 7/21/2015 47 Compliance Guidelines Loan Break Down Form  Preliminary Loan Break Down Form to be completed at the time of submitting the Compliance Package (This is an estimate of the down payment and closing costs)

48. 7/21/2015 48 Compliance File Delivery Checklists redesigned and simplified.  Descriptions of the required items relocated to the Compliance Manual Checklists available when using the On-Line Reservations/Document Imaging System on a loan by loan basis Files are delivered Electronically to MFA via the On-Line Reservations/Document Imaging System

49. 7/21/2015 49 Compliance Guidelines Review of Compliance Checklist

50. 7/21/2015 50 Compliance File Review Compliance review time is:  Three (3) business days after receipt of file Clearing suspense conditions:  Please send all suspense conditions at once – this will speed up the process.  Policy for clearing conditions on loans with less than 5 conditions 1 (business) day after receipt. Files with 5 or more conditions 2 (business) days after receipt.

51. 7/21/2015 51 Compliance Guidelines Questions?

52. 7/21/2015 52 DPA Funding Process Per HUD’s Directive, MFA must fund DPA directly to the title company  DPA must be Compliance Approved prior to MFA sending the wire to the title company

53. 7/21/2015 53 DPA Funding Process Lender must provide to MFA 24 hours prior to closing  Wire Request Form (Current form from MFA website)  Wire Instructions to the Title Company  Copy of the FINAL pre-close HUD 1  Need two (2) HUDs, if borrower obtaining a Mortgage Booster, Payment$aver, Helping Hand along with the MFA First Mortgage Loan

54. 7/21/2015 54 DPA Funding Process  Copy of unsigned documents for funds being wired to title company  Note and  Mortgage  E-mail Wire Request and Attachments to funding@housingnm.org

55. 7/21/2015 55 DPA Funding Process MFA prepares wire requests once a day  Cut off time to receive wire requests/corrections is 10:00 am for wire to be sent out same day  Wires will be sent out by 3:00 pm to arrive at the title company by 5:00 pm same day  If property is a HUD or Bank owned property the funds need to be at title at the time of signing, be sure to request the funds to be sent to title the day before closing.

56. 7/21/2015 56 DPA Funding Process Mortgage$aver Plus DPA  MFA will wire 3.50% of final loan amount (must be entire 3.50% including cents) HERO DPA  MFA will wire 3.00% of final loan amount (must be entire 3.00% including cents)

57. Contact Information Homeownership Staff Anita Racicot, Homeownership Specialist  505-767-2230; aracicot@housingnm.org Cynthia Marquez, Compliance Specialist  505-767-2238; cmarquez@housingnm.org Shawn Rasmussen, Lending Specialist  505-767-2259; srasmussen@housingnm.org Lisa Romero, Lending Specialist  505-767-2208; lromero@housingnm.org Barbara Tashkandy, Lending Coordinator  505-767-2261; btashkandy@housingnm.org 57 7/21/2015

58. Contact Information Homeownership Staff Teri Baca, Homeownership Representative  505-238-7375; tbaca@housingnm.org Eunice Duran, Homeownership Representative  505-239-1301; eduran@housingnm.org 58 7/21/2015

59. 59 Compliance Guidelines Thank you from all of us at the MFA for your participation in our programs