Assistance Program: City of Phoenix Open Doors Homeownership Program Code: DAZPXODHP

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1 HOMEOWNERSHIP ASSISTANCE PROGRAM SUMMARY Product Description Allowable Origination Channel Program Name Program Approval Expiration Housing Authority Second mortgage loan program to be used in conjunction with: FHA Fixed Rate Fannie Mae Fixed 30 year Conforming Product (DU) Fannie Mae Housing Authority Product Fannie Mae HomeReady with Community Second VA Refer to Product Profile Retail and Wholesale Subject to Availability approval expires: 5/12/2017 City of Phoenix Housing Department (Lender) 251 West Washington Street, 4 th Floor Phoenix, AZ Contact: Sheree L. Bouchee Phone: (602) sheree.bouchee@phoenix.gov Chicanos Por La Causa (Administrator) 1402 S. Central Ave. Bldg. A Phoenix, AZ Phone: (602) Website: Community Housing Resources of Arizona (Adminisrator) 4020 N. 20 th Street, Suite 220 Phoenix, AZ Phone: (602) ext. 107 Website: Housing Authority EIN DPA Provider Classification Government Entity Secondary Financing Programs First Mortgage Maximum LTV First Mortgage Maximum CLTV FHA: 96.5% Refer to Product Profile Fannie Mae Housing Authority Product: Refer to Product Profile Fannie Mae Conforming Product: Refer to Product Profile Fannie Mae HomeReady with Community Second: Refer to Product Profile o Purchase only: o 1 unit: LTV >95-97% (NO first-time home-buyer (FTHB) requirement). o Purchase and Limited Cash Out (Rate/Term): o 1 unit: 95% FRM; 90% ARM VA: Refer to Product Profile FHA: May not exceed 100% Refer to Product Profile Fannie Mae Housing Authority Product: Refer to Product Profile Fannie Mae Conforming Product: Refer to Product Profile for CLTV requirements, may not exceed limits in product profile Fannie Mae HomeReady: 105%* Refer to Product Profile VA: Refer to Product Profile Page 1

2 Maximum Second Mortgage Loan Amount Interest Rate Minimum Borrower Down Payment The CLTV may not exceed 105% on HomeReady loans, unless further restricted by product profile. The sum of all financing may not exceed 105% of the cost to acquire the property plus any normal prepaid expenses. Up to $15,000 0% $1,000 of their own funds or meet lender requirements, whichever is greater. FHA: 3.5% of the purchase price as a down payment, which half must come from the borrower s own funds and cannot be a gift. Refer to Product Profile Fannie Mae Housing Authority Product: Refer to Product Profile Fannie Mae Conforming Product: Refer to Product Profile Fannie Mae HomeReady with Community Second: Refer to Product Profile VA: Refer to Product Profile NOTE: If first mortgage guidelines are higher than the Agency s for borrower s minimum investment, the first mortgage guidelines prevail. Second Mortgage Purpose Down Payment Closing Costs Repayment Terms This second mortgage loan is a zero interest no monthly payment 15-year loan with a 15-year affordability period. As long as the property remains the borrower s principal residence then on the 5 th anniversary date of the agreement 33.3% of the original principal balance will be forgiven. On each anniversary date thereafter 6.7% of the original principal balance will be automatically forgiven. Finally, on the 15 th anniversary date the entire original principal balance will be forgiven. Repayment is due in full upon sale, transfer, lease, refinancing, change of ownership or home no longer is occupied as primary residence. Loan proceeds may not be used to pay off other loans, advances or consumer debts. However, if any of the following repayment triggering events occur, the principal balance and any accrued interest shall be due and payable in full: Evidence of the act of fraud committed to falsely obtain assistance funds The property is sold Transferred title Refinancing with cash out A default on the first mortgage The borrower(s) ceases to occupy the property as their principal place of residence Upon the death of the last surviving applicant The filing of any bankruptcy by the applicants Upon divorce, unless one of the applicants continues residing in the property by the decree of divorce Loan may be pre-paid in full at anytime Loan is NOT assumable Types of Financing Purchase Money Mortgage o 15 year or 30 year fixed rate loan (No ARM, balloon payment or prepayment penalty) Occupancy Owner occupied primary residence only All co-borrowers must occupy Borrower(s) may not have an ownership interest in any other residential dwelling at the time of loan closing Geographic Location Properties must be located within the City of Phoenix, Arizona Page 2

3 Eligible Properties Acquisition Limit: Existing & New Construction: $180,000 Properties shall be sited on a permanent foundation, with a permanent utility hook-up, and may include: Single family - detached, attached Condominiums or Townhomes or Planned Urban Development -detached, attached (Condo conversions are not eligible) Must be currently occupied by the owner, vacant or occupied by the homebuyer The property must pass a Housing Quality Standards (HQS) Inspection and Environmental Impact Assessment provided by the City of Phoenix. A copy of the home inspection will need to be provided to the City of Phoenix prior to loan closing. All repairs called for by inspection MUST be completed prior to closing. Underwriting Refer to product profile for additional property eligibility requirements, not all property types are allowed on all products. Lender to pre-approve all borrowers for the first mortgage product. Standard FHA, Fannie Mae Conforming Product, Fannie Mae HomeReady, VA, except as described herein: The Loan Officer/Broker will refer the borrower to Chicanos Por La Causa or Community Housing Resources of Arizona for eligibility review. Upon qualification of the underwriting, the homebuyer will be issued a preapproval letter indicating the amount of assistance. Upon approval, a copy of DPA Approval Letter MUST be in each file. Eligible Borrowers Borrower(s) must qualify for the first mortgage selected. Borrower does not have a to be a first time homebuyer, however, they cannot own any home at time of application. Borrower must be a U.S. Citizens or have a Permanent Resident status. Ratios cannot exceed maximum 33% front (utilities and maintenance items are not included in front end ratios) and 43% back (total housing payment, plus homeowner s association fees, if any, AND other recurring debts such as credit card payments, car payments, student loans, etc.). Obtain a three year home warranty contract, not to exceed $500 per year Assets Borrower must have required amount of their own funds in the transaction for type of first mortgage financing selected. Applicant cannot have liquid assets exceeding $10,000 after closing. Income Limits 80% AMI HUD Effective March 1, Person 2 Persons 3 Persons 4 Persons 5 Persons 6 Persons 7 Persons 8 Persons $32,250 $40,250 $45,300 $50,300 $54,350 $58,350 $62,400 $66,400 NOTE: If first mortgage guidelines are more restrictive than the Agency s for borrower s income limit, the first mortgage guidelines prevail. MI Coverage FHA: Standard UFMIP and monthly if applicable Fannie Mae Housing Authority Product: Refer to Product Profile Fannie Mae Conforming Product Refer to Product Profile Fannie Mae HomeReady and Conforming (DU) Products: Standard mortgage insurance requirements must be met, if applicable, as described in Product Profile VA: Refer to Product Profile Page 3

4 Special Provisions Homeownership Counseling: Refer to product profile for specific product requirements Borrowers must successfully complete a face to face 8-hour homebuyer education class provided by Chicanos Por La Causa or Community Housing Resources of Arizona a HUD approved counseling agency: Borrower s Certification of Completion of Homeownership Counseling is required Fannie Mae HomeReady Only: Borrowers must successfully complete a homebuyer education class provided through Framework, on line program approved by Fannie Mae. Special borrower consideration can be made for borrowers with the presence of a disability, lack of internet access, or other issues. Framework has a toll-free customer service line for direction. In lieu of Framework course, Fannie Mae will allow lenders to accept a certificate of prepurchase education/counseling from a HUD approved counseling agency dated within the previous six months before loan application date and before April 1, Landlord education required for 2-4 units only. This education is not available through Framework. All: May be funded by a municipality, state, county or local housing finance agency, non-profit organization, a regional Federal Home Loan Bank or an employer May be used to fund all or part of the down payment or closing costs The more restrictive down payment requirement between the product and the second mortgage will apply No reporting requirements permitted DPA Processing Fee Costs incurred for down payment assistance secondary financing program may only be included in the amount of the second lien. The fee cannot be included in the first mortgage transaction or appear on the HUD-1. Special Feature Code N/A Underwriting Requirements Receipt of borrower s approval from DPA provider Receipt of DPA Funds (at closing) No cash back at closing (at closing) Copy of DPA s Executed Note, Loan Agreement and Subordinate Deed of Trust (at closing) First Mortgage Loan Documents Loan documents and security instruments must conform to Agency requirements ( Fannie Mae as applicable by loan type) Documents Loan documents and security instruments must conform to Agency requirements ( Fannie Mae as applicable by loan type) Page 4

5 DPA Program Restrictions That Are Not Permitted Special Requirements: PRMG The may not Restrict the transfer of servicing rights of the first Mortgage Require prior notification or approval from the sponsoring authority in the event of the transfer of the first mortgage servicing rights. If there is any evidence of this verbiage in the subordinate documents, the program will no longer be eligible. The First Mortgage may not be subject to a bond program loan documents and security instruments must conform to Agency requirements (FHA, Fannie Mae as applicable by loan type) This Fact Sheet form and any attachments MUST be placed in each loan file at the time of submission. Additional Comments: Approved with Closing Instructions for Closing the DPA Mortgage must be recorded in 2nd lien position. APPROVAL ELIGIBLE INELIGIBLE The DPA IS eligible for use with the programs below The DPA IS NOT eligible for use with the programs below CONV (DU) FHA VA USDA CONV FHA VA USDA X X X X PRMG Approved by: PRMG DPA Review Department 5/12/2016 Name / Title Date Page 5