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PROGRAM OUTLINE AND UNDERWRITING GUIDELINES
Title: Connecticut Housing Finance Authority Fannie Mae HFA Preferred™ Product
(Including U.S. Bank Credit Overlays for Servicing)
PURPOSE AND OVERVIEW:
The HFA Preferred loan program will provide CHFA first and second mortgage loan financing to
eligible first-time homebuyers in compliance with CHFA and FANNIE MAE (FNMA) eligibility
requirements following U.S. Bank’s parameters for delivery, purchase and pooling. Loans
originated under this program may be insured by Private Mortgage Insurance (PMI) and will also
be subject to the underwriting criteria of the PMI Company insuring the loan.
PARAMETER
Eligibility Requirements
LENDER ORIGINATION FEE
1%
CHFA ALLOWABLE FEES
Underwriting - $350
Processing - $350
Adverse Market Fee - .25 basis points
Note: The Adverse Market Fee is a closing cost and must be listed
on the GFE. At the Lender’s discretion the fee may be listed
separately or added to the Loan Origination Fee and disclosed as
1.25%.
As part of the closing costs the Adverse Market fee may be funded
by DAP for eligible borrowers’.
Additional allowable fees to the borrower include those fees that
are customary, reasonable and necessary to close the mortgage
loan.
CHFA INTEREST RATE
Same as the CHFA Regular Homebuyer Program interest
rate in effect at the time of reservation.
AMORTIZATION
30-Year Term, Fixed Rate Mortgage (FRM).
TARGET GEOGRAPHY
State of Connecticut
ELIGIBLE BORROWERS
First-time homebuyers (waived in targeted areas –
borrowers may not own any other property at the time of
loan closing).
ELIGIBLE PROPERTY TYPES
1 – 4 unit dwellings
Planned united developments
FNMA eligible condominiums
No manufactured housing or co-ops
ELIGIBLE OCCUPANCY
Owner occupied only (investment properties not allowed).
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ELIGIBLE PURPOSE
Purchases only (refinance not allowed).
DESKTOP UNDERWRITER®(DU®)
Desktop Underwriter (DU) is required with
recommendation of Approve/Eligible is required.
(See Qualifying Ratios)
MINIMUM CREDIT SCORE
U.S. Bank minimum credit score 640
(HFA Preferred™ loans will be purchased and serviced by U.S. Bank.
The minimum credit score for delivery to US Bank is 640. Qualified
borrower(s) with a credit score below 640 may be eligible for loan
approval – see Exhibit A for details.)
NON-TRADITIONAL CREDIT
Borrower(s) without credit scores are eligible
following FNMA underwriting guidelines for
submitting files with manual underwriting and non-
traditional credit
(Loans with non-traditional credit manual underwrites are eligible
for delivery to US Bank as long as the loan was underwritten
following FNMA guidelines. Loans submitted with non-traditional
credit are not eligible for CHFA DAP)
QUALIFYING RATIOS
Maximum DTI = 45% (U.S. Bank requirement)
Mortgage Insurer guidelines will also apply
MAXIMUM LTV/CLTV
One-unit: 97% / 105%
2-4 units: 95% / 105%
Mortgage Insurer CLTV limit will also apply and
may be lower
MINIMUM BORROWER CONTRIBUTION
One-unit: $0
2-4 units: 3% for all transactions
Mortgage Insurer guidelines will apply; LTV may impact
amount of required borrower contribution on one-unit
transactions.
Borrower(s) purchasing 2-4 unit properties that make
the minimum contribution of 3% from their own funds
will be eligible to apply for CHFA DAP for the remaining
2% of the down payment to meet the maximum LTV
requirement of 95% and closing costs (if needed)
provided they meet all CHFA DAP eligibility and
underwriting criteria.
SUBORDINATE FINANCING
FNMA Approved Community Seconds
CHFA DAP
Insurer guidelines for subordinate financing will
apply
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(The maximum LTV/CLTV Limit set by Fannie Mae [or as
determined by the MI Company insuring the loan] will apply. If
using a Financed Single Premium the maximum LTV may not be
increased above the FNMA established limit of 97%. )
INCOME REQUIREMENTS
CHFA Income Limits Apply
There are no exceptions for Income Limits in Targeted
Areas.
SALES PRICE LIMIT
FNMA conforming loan limits apply (LIMIT MUST ALSO BE
WITHIN THE CHFA SALES PRICE LIMIT FOR THE AREA):
1 unit = $ 417,000
2 unit = $ 533,850
3 unit = $ 645,300
4 unit = $ 801,950
(The Sales Price Limit cannot exceed the CHFA Sales Price Limit for
the city/town where the property is located and it must be within
the Fannie Mae Maximum Loan Limit for the property type.)
(In some instances the CHFA Sales Price Limit will be higher than
the Fannie Mae Maximum Loan Limit; in these instances, the
Fannie Mae Maximum Loan Limit will apply.)
RESERVES
As required by DU and/or the MI Company insuring the
loan
INTERESTED PARTY CONTRIBUTIONS
3% max for LTV greater than 90%
6% max for LTV less than or equal to 90%
HOMEBUYER EDUCATION
Required for at least one borrower / co-borrower
ELIGIBLE MORTGAGE INSURERS
Genworth Mortgage Insurance Company (GE)
Mortgage Guaranty Insurance Corporation (MGIC)
Radian
United Guaranty (UGI)
MORTGAGE INSURANCE COVERAGE
18% for LTVs > 95% and <= 97%
16% for LTVs > 90% and <= 95%
12% for LTVs > 85% and <= 90%
6% for LTVs > 80% and <= 85%
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Exhibit A
Connecticut Housing Finance Authority (CHFA)
Minimum Credit Score Guidelines
The Connecticut Housing Finance Authority (CHFA), Single Family Residential Mortgage
Programs, is committed to fulfilling our mission of helping to alleviate the shortage of
affordable housing for low-and-moderate income families and persons in Connecticut by
helping to make homeownership opportunities available for all CHFA eligible and qualified
first-time homebuyers in the State.
To help achieve this goal, CHFA Homebuyer Mortgage Loan Programs do not have a set
minimum credit score requirement; however, Lenders are required to follow the
guidelines of the loan Guarantor or Insurer, i.e. FHA, VA, RD, or PMI as applicable.
On June 10, 2013, CHFA notified Service Released Lenders that U.S. Bank, the Master
Servicer for CHFA Government Guaranteed Loans (FHA, VA, and RD), would no longer
purchase CHFA loans originated with credit scores below 640. This change was effective
with loan reservations dated on or after June 1, 2013.
In response to this change in U.S. Bank policy beginning with reservations dated on or
after June 1, 2013 CHFA will assign the Master Servicer based on the application credit
score. For Service Released Lenders loans, qualified eligible borrowers with credit
scores below 640 will automatically be assigned to BOGMAN, INC. as the Master Servicer;
loans for qualified eligible borrowers with credit scores of 640 or higher will
automatically be assigned to U.S. Bank as the Master Servicer.
Service Retained Lenders will continue to service CHFA loans in compliance with the
terms of CHFA Servicing Agreement Contract.
The designated loan servicer will be reflected on the CHFA Commitment to Purchase Letter
sent to lenders for all approved loans. Lenders will deliver loans to the designated Master
Servicer following the procedures described in the CHFA Homebuyer Mortgage Program
Operating Manual Section 7 – Loan Purchase.
Lenders are requested to continue originating mortgage loans for eligible, qualified CHFA
borrowers without interruption.
HFA PREFERRED™ APPLICATIONS
HFA Preferred™ loans must be insured by Private Mortgage Insurance (PMI). Generally, the
minimum credit score for PMI approval will be higher than the 640 credit score set by U.S.
Bank and loans will be eligible for purchase and delivery by U.S. Bank. Manual underwrites
are allowed for borrowers without credit scores when underwritten in compliance with
FNMA Non-Traditional underwriting guidelines and are also eligible for purchase and
delivery.
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Exhibit B
CHFA HFA PREFERRED™ MORTGAGE INSURANCE ELIGIBILITY MATRIX
(This chart shows requirements for DU Approve/Eligible 1 unit transactions only; Refer to MI Company guidelines for multi-unit transactions)
Fannie Mae
Mortgage Insurance
Guaranty Corp
(MGIC)
(5/1/13)
Radian
(7/26/13)
United Guaranty (UGI)
(7/13/2013)
Maximum
LTV / CLTV
97%/105%
97%/103%
97%/100%
97%/100%
Minimum Credit
Score (FICO)
Per DU / DO
If manual underwrite
follow eligibility matrix
680 / 700 based on DTI
of less than 36% or 45%
97% - 680
95% - 660
97% - 680
95% - 620
97% - 680
95% - 660
Maximum DTI
Per DU / DO
If manual underwrite
follow eligibility matrix
45%
Per DU / DO
41%
DU Eligibility
___
Approve Eligible
with FICO & DTI
overlays
Approve Eligible with
FICO & DTI overlays
Approve Eligible with FICO &
DTI overlays
Borrower Cash
No minimum from
borrower own funds
3% from borrower
own funds
Lesser of $1,000 or
1% with credit score
≥ 700; DTI ≤41% and
2 months reserves
3% from borrower
own funds
Lesser of $1,000 or 1%
Gifts/grants can apply
toward the $1,000 or 1%
when the loan meets all of
the following:
Minimum 740 credit
score
Loan does not have
subordinate financing
Reserves
Per DU / DO
If manual underwrite
follow eligibility matrix
2 months PITI
As per DU/DO
2 months PITIA