92 04/02 10107 3122437844 NTIC 20 HOW THE AFFORDABLE HOME OWNERSHIP PROGRAM CAN HELP YOU BUY A HOME Lower Interest Rates and Monthly Payments Under the Affordable Home Ownership Program (AHOP), you can qualify for low-interest loans funded by the Illinois Housing Development Authority (IHDA). Interest rates vary, but are all under 9%. This substantially lowers your monthly mortgage payment. Low or No Closing Costs Eligible low- and moderate-income families who spend at least 28% of gross income on housing costs, may also qualify for closing cost grants of 2 or 5% provided by the Federal Home Loan Bank of Chicago's Affordable Housing Program. Easier Qualifying Standards AHOP is designed to help low- and moderate-income families afford homes. You may qualify If you've saved as little as three percent for a downpayment. In addition, the program requires lower minimum incomes to qualify than either conventional or FHA loans. In other words, you need less money to buy the same home under the AHOP program than you would need if you got a conventional or FHA loan. The Affordable Home Ownership Program is sponsored by YOU MAY QUALIFY FOR AN AHOP LOAN IF YOU: have an eligible household income have saved at least 3% of the sale price for a downpayment buy a home in good condition have an acceptable record of timely bill payment buy a home in a targeted area of Chicago or the south suburbs complete an AHOP-certified homeownership training program FannieMae Community Home Buyer's Product description February 1990 Fannie Mae and GE Mortgage Insurance Companies (GEMICO) are working together Benefits ● Low- and moderate-income home buyers will need less income to qualify for a • Participation in the Community Home Buyer's Program helps lenders meet Maximum income The borrower'a income may not exceed 115 percent of the area median income as Eligible properties Properties must be one-family units that serve as the borrower's principal residence. Eligible mortgages Loans must be newly originated 15- or 30-year, level-payment FRMs. No temporary Loan-to-value ratios The maximum LTV is 95 percent, based on the lower of (1) acquisition plus Mortgage insurance All loans, regardless of LTV, must have mortgage insurance that reduces Fannie * No longer limited in size. Fannie Mae The USA's Housing Partner Subordinate financing The CHBP can be combined with local subsidized second mortgage programs. All subordinate financing programs and documents must be approved in advance by both Fannie Mae and GEMICO. Any secured subordinate financing that is fully deferred, fully forgivable, and requires no monthly payments should not be included in the borrower's housing expense-to-income ratio. Underwriting ● Housing expenses may not exceed 33 percent of the borrower's stable gross monthly income, and total obligations may not exceed 38 percent. ● Fannie Mae is waiving the requirement that borrowers have two months' payments in reserve after closing. ⚫ Borrowers who have not developed a credit history that is reflected in a credit report may demonstrate a good credit history through nontraditional means, including evidence of regular payments to utility companies and previous landlords. ● Borrowers must make at least a 5 percent down payment from their own reserves. Borrowers also should use their own funds to pay closing costs, including prepaid items. However, if the borrower's funds are insufficient to cover closing costs and prepaids, gifts from a family member or a nonprofit organization are acceptable. The borrower also may fund closing costs with unsecured loans from a nonprofit organization or public entity. Payments must be included as a monthly obligation in calculating income ratios. Home buyer education All borrowers must participate in a homeownership and personal finance counseling program offered by the lender or by a recognized community organization. The counseling must be documented in the loan file. Mortgage instruments All loans should be originated using current Fannie Mae/Freddie Mac uniform instruments. Commitment options Lenders may obtain commitments to deliver loans to Fannie Mae for cash or to pool mortgages for Fannie Mae Mortgage-Backed Securities (MBS). Lenders may obtain a commitment covering one or both options, and this commitment may, at the lender's option, become part of the lender's Master Agreement with Fannie Mae. Cash commitments Approved lenders may negotiate standby commitments to deliver whole loans to Fannie Mae for cash. Six-, nine-, and twelve-month commitments are available through the lender's lead Fannie Mae regional office. Fannie Mae's required net yield will be based on Fannie Mae's posted yields for FRMs with the same maturity and remittance type. There is no commitment fee. CHBP loans also are eligible for Fannie Mae's Premium and Discount Pricing Options and the Fee/Yield Tradeoff (a lower required net yield in exchange for an upfront fee). In requesting a standby or mandatory delivery commitment for the Community Home Buyer's Program, the lender must specify that it is a CHBP commitment. Loans may not be commingled in other types of commitments. The minimum servicing fee is 1/4 or 3/8 percent at the lender's option. Remittances may be made according to Fannie Mae's Actual/ Actual (A/A) or Scheduled/Actual (S/A) remittance schedules. MBS execution Approved lenders may negotiate optional delivery commitments for six, nine, or twelve months through their lead Fannie Mae regional office. The minimum single lender pool amount is $1 million. Community Home Buyer's loans also may be commingled in pools with other fixed-rate mortgages and may be included in Fannie Majors. If the lender delivers a pool containing only Community Home Buyer's loans, we will waive the pool contract fee. The lender must enter a Special Feature Code 061 for each CHBP loan on the Delivery Schedule (Form 2005). Loans may be serviced under Fannie Mae's Special Servicing Option (Fannie Mae assumes the risk of foreclosure losses) or Regular Servicing Option (lender assumes the risk of foreclosure losses). If the lender delivers the loans under terms of a Master Agreement or negotiated MBS contract with Fannie Mae, the guaranty fee will be that specified in the Master Agreement or contract. Otherwise, the guaranty fee will be that specified in the MBS Guide. In either case, the lender will retain a minimum monthly servicing fee of 1/4 percent. Remittances will be made according to Fannie Mae's Scheduled/Scheduled (S/S) remittance schedule. For More Information Previously approved lenders with GEMICO insurance commitments should contact their lead Fannie Mae regional office at the numbers listed below for a commitment. Other lenders interested in participating in this, or any other Fannie Mae lowand moderate-income housing initiative, should contact the low- and moderateincome housing coordinator in their lead Fannie Mae regional office at the numbers listed below. Bob Detjen Low- and Moderate-Income Housing Coordinator Fannie Mae Southeastern Regional Office Bill Tierney Low- and Moderate-Income Midwestern Regional Office Chicago, IL 60606-4667 |