Mortgage Credit Certificate Program Lender Application Package

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1 Thank You for Your Interest Mortgage Credit Certificate Program Lender Application Package Texas State Affordable Housing Corporation ( TSAHC ) is pleased to extend an invitation to its qualified lenders (each a Lender ) for participation in its Mortgage Credit Certificate Program (the MCC Program ) when originating Mortgage Loans for TSAHC Eligible Borrowers. The MCC Program will be subject to the terms set forth in the MCC Lender Participation Agreement and the MCC Program Guidelines attached to this MCC Lender Application Package. Additionally, each Lender will be responsible for working with TSAHC s Single Family Compliance staff to ensure Mortgage Loans are MCC Program compliant. An online reservation system will be made available to approved Lenders. Lender Eligibility TSAHC, in its sole discretion, will determine eligibility of each Lender for participation in the MCC Program. TSAHC will suspend or terminate any Lender from the MCC Program if, in TSAHC s opinion, such Lender is not satisfactorily originating Mortgage Loans per the MCC Program Guidelines or for other factors related to the Lender s performance. Each Lender must: 1. Be authorized to do business in Texas. 2. Have an audited net worth of at least $1,000,000; 3. If it is not a financial institution, have a warehouse line of not less than $3,000,000; 4. Have mortgage banking operations with personnel responsible for underwriting and funding loans; and 5. Maintain current Errors and Omissions and/or Fidelity Bond coverage of not less than $300,000 (maximum deductible of $50,000). Additionally, each Lender must satisfy at least one of the following: 6. Be a FHA approved mortgagee to originate FHA insured Mortgage Loans; 7. Be approved by Fannie Mae or Freddie Mac to originate conventional Mortgage Loans; 8. Be a VA approved mortgagee to originate VA guaranteed Mortgage Loans; or 9. Be a USDA RHS approved mortgagee to originate USDA RHS guaranteed Mortgage Loans. Page 1

2 Procedure Each Lender is required to submit to TSAHC the following items: 1) A $500 Annual Participation Fee. Checks should be made payable to the Texas State Affordable Housing Corporation; 2) A completed Lender Reservation Access Form (attached); and 3) Three (3) signed originals of the MCC Program Lender Participation Agreement. Please use the fillable forms provided electronically under the For Lenders section of the TSAHC website at to complete the MCC Lender Application Package. Then mail the required fee, the Lender Reservation Access Form, and three signed originals of the executed Lender Participation Agreement directly to: Upon Approval Texas State Affordable Housing Corporation Attn: Paige Omohundro 2200 East Martin Luther King Jr. Blvd. Austin, Texas Once all documentation has been submitted and reviewed, TSAHC will notify the Lender of its approval to participate in the MCC Program. It will be at that time that training and loan reservation information will be provided. We thank you for your interest in becoming a Lender under the MCC Program and look forward to working with you. Should you have any questions or need additional information regarding the approval process, please contact Paige Omohundro at (512) or pomohundro@tsahc.org. For additional information on TSAHC s programs and services, please visit Page 2

3 Summary of the MCC Program Specifics Eligible Loan Area State of Texas Benefits of a MCC A Mortgage Credit Certificate (a MCC ) is a federal income tax credit designed to assist homebuyers better afford individual homeownership. MCCs are issued directly to Eligible Borrowers who can then take a tax credit equal to a specified percentage (35%) of the interest paid on his or her mortgage each year. The maximum tax credit for any given year is $2,000; amounts in excess of the maximum can be carried forward to a future year. Eligible Borrowers must have a tax liability to benefit from the annual tax credit in any given year. Funding Availability The MCC Program will initially provide tax credits for approximately $80 million in principal amount of Mortgage Loans. Tax Credit Amount 35% of the interest paid on a homeowner s Mortgage Loan annually. Servicing Rights Loans originated with the MCC Program are not required to be sold to a third party, but may be retained or sold by the originating Lender in its discretion. All loan approvals, underwriting, and execution of required state and federal certificates or affidavits will be performed by the Lender. TSAHC, as the Program Administrator, will review the applicable certificates and affidavits with respect to borrower eligibility for the MCCs (e.g., profession, if applicable, first time home buyer status, income and purchase price limits). Program Administrator TSAHC, as the Program Administrator, will provide MCC Program Guidelines, on line reservation services, Lender training, posting Program materials and updates, and reviewing loan files for compliance with established eligibility criteria. Eligible Loans, Rates & The MCC Program does not restrict the type of Mortgage Loan with regard to Terms term, rate, or other parameters. Lenders charge Mortgagors market rates for Mortgage Loans. However, only first lien, fixed rate Mortgage Loans qualify for the MCC Program. Mortgages funded with a qualified mortgage bond or a qualified veteran's mortgage bond are not eligible. Can use with other DPA Programs. Eligible properties MCCs may be (but are not required to be) used with Mortgage Loans funded under TSAHC s Homeownership Programs that provide down payment and closing costs assistance. Additional subsidy programs approved by the Servicer and/or TSAHC may be used in conjunction with a MCC Program loan provided the program meets applicable FHA, VA, USDA RHS, GNMA and Servicer guidelines. Single family, owner occupied, 1 4 unit principal residences that are detached structures, or condominiums, town homes/puds or duplexes, subject to the applicable FHA, VA or RHS/RD guidelines. Manufactured homes are eligible provided they meet FHA guidelines. Page 3

4 Property Purchase Price Limits Eligible Borrowers First time Homebuyers Credit Score Maximum Family Income Limits Homebuyer Education Lender Compensation Program Fees Purchase Price limits for a related Residence vary by county. Please refer to the income and purchase price limits chart on page 6 of this document. Such limits are also available at and the Lender Portal at online.org. Borrower Specifics An Eligible Borrower must be a Texas resident and must be one of the following: Home Sweet Texas: A household whose annual income does not exceed 80% of the Applicable Median Family Income. Professional Educator: A full time Texas public: classroom teacher, teacher s aide, school librarian, school nurse, school counselor; or an allied health or nursing faculty member. Homes for Texas Heroes: A full time paid Texas fire fighter, peace officer, employee of the Texas Department of Criminal Justice and Texas Juvenile Justice Department receiving hazardous duty pay, county jailer, EMS personnel, or public security officer. An Eligible Borrower must be a first time homebuyer (i.e., has not owned and lived in a home in the past three years as his or her Principal Residence) unless purchasing a home in a Targeted Area or a Qualified Veteran as defined in the MCC Program Guidelines. All Eligible Borrowers must have a minimum 640 FICO score. Maximum Family Income limits vary by county. Please refer to the income and purchase price limits chart on page 6 of this document. Limits are also available at and the Lender Portal at online.org. Such limits are subject to change. All Eligible Borrowers must complete a homebuyer education course prior to Mortgage Loan Closing. TSAHC encourages courses conducted by HUDapproved housing counselors, as well as those certified as a Texas Statewide Homebuyer Education Provider. Only specific online courses are acceptable. Please visit to find a provider in your area. Lender Specifics Reasonable and customary fees and closing costs are allowed, as long as such fees and costs are fully disclosed to the borrower in accordance with federal, state and local laws and regulations. The following fees shall be charged to the MCC Borrower and shall be paid to TSAHC: $200 Compliance Fee. (In instances of the Borrower utilizing both the MCC and TSAHC Homeownership Programs, only one $200 compliance fee will be charge. This fee will be deducted from the Mortgage Loan Purchase Price in such cases.) 1% Issuance Fee (1% of the principal amount of the Mortgage Loan). Reservations Lender qualifies the Borrower per the MCC Guidelines and reserves MCC funds in the Lender Portal. Reservations are valid for 120 days. Lender will deliver the Pre Closing Compliance Package to the Program Administrator via the Lender Portal at least 10 days prior to loan Closing. The Program Administrator issues the Commitment Letter to the Lender and the Lender closes the Mortgage Loan. Lenders must submit the Post Closing Compliance Package to the Program Administrator within thirty (30) calendar days following closing of the related Mortgage Loan, but in no event after the Commitment Page 4

5 Representations and Warranties Expiration Date. The Program Administrator approves the Mortgage Loan and the MCC is issued and mailed directly to the Mortgagor. Failure by a Lender to perform its obligations under the Lender Participation Agreement (including the MCC Program Guidelines) may result in the suspension or termination of the Lender s participation in the MCC Program. Each Lender is required to represent and warrant that the Mortgagor is qualified based on applicable MCC Program requirements. Page 5

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7 Lender Reservation Access Form Each Lender is required to designate a corporate office (and a "main branch" if different from the corporate office) and a contact person at that corporate office or branch who will be responsible for granting and setting up access to TSAHC s online loan reservation and compliance system for their loan officers, as well as all correspondence. Representatives from each branch are encouraged to complete TSAHC s reservation and compliance training before submitting MCC reservations. If additional space is needed to list other branches, please use extra copies of this form. Corporate Office: Company Name Fax: Main Branch: (If different from Corporate Office.) Company Name Fax: Branch 1: (If there are more than two branches, please use additional copies of this form.) Branch 2: Page 7