HOME ADVANTAGE MANUAL - WSHFC

Updated 9/1/2021 HOME ADVANTAGE MANUAL

TABLE OF CONTENTS Click below to jump to a section or page. To search for specific terms, press CTRL+F.

1 - INTRODUCTION............................................................................................................................. 1 Washington State Housing Finance Commission .......................................................................... 1 Benefits of the Home Advantage Program...................................................................................... 1 Purpose and Scope............................................................................................................................2 Process Overview ..............................................................................................................................2 Manual Updates & Revisions ...........................................................................................................4 Contacts for Questions .....................................................................................................................4 Eligible Lenders ................................................................................................................................ 7 Eligible Loan Originators ................................................................................................................. 7

2 - TERMS AND CONDITIONS ..........................................................................................................8 Loan Types ........................................................................................................................................8 Loan Underwriting ...........................................................................................................................9 Loan Term for First Mortgage ....................................................................................................... 12 Loan Term for Second Mortgage ................................................................................................... 12 New Financing ................................................................................................................................ 12 Total Debt to Income (DTI) Ratio Restriction.............................................................................. 13 Credit Score ..................................................................................................................................... 13 Credit Report................................................................................................................................... 14 Tax Liens ......................................................................................................................................... 14 Document Verification ................................................................................................................... 14 IRS Form 4506-C............................................................................................................................ 14 Income/Employment Verification................................................................................................. 14 Tax Transcripts ............................................................................................................................... 14 Interest Rate.................................................................................................................................... 15 Buydowns (Temporary).................................................................................................................. 16 Property Flipping............................................................................................................................ 16 Homebuyer Education ................................................................................................................... 16 Allowable Fees................................................................................................................................. 16 Non Allowable Fees ........................................................................................................................ 17 Mortgage Insurance........................................................................................................................ 18 Title Insurance ................................................................................................................................ 18 Flood Insurance Policy ................................................................................................................... 18 Hazard Insurance Policy ................................................................................................................ 19 Power of Attorney ........................................................................................................................... 19

HOME ADVANTAGE MANUAL

Escrow Holdbacks/Repair Escrow ............................................................................................... 20 Interest Credits .............................................................................................................................. 20 Reserve/Escrow Accounts .............................................................................................................. 21 Prepayment Penalty........................................................................................................................ 21 Assumptions.................................................................................................................................... 21 Subordinate Financing ................................................................................................................... 21 Servicing .......................................................................................................................................... 21 Quality Control................................................................................................................................22 Repeat Program Users....................................................................................................................22

3 - ELIGIBLE BORROWERS.............................................................................................................23 Non Discrimination ........................................................................................................................23 Residency Type Requirements.......................................................................................................23 Occupancy Requirement ................................................................................................................25 First-Time Homebuyer Requirement............................................................................................25 Calculation of Credit Underwriting Income .................................................................................25 Maximum Total Annual Income....................................................................................................25 Co-Signer/Guarantor......................................................................................................................26

4 - PROPERTY REQUIREMENTS ....................................................................................................27 In General........................................................................................................................................27 Qualifying Single-Family Residences............................................................................................27 Appraisals ........................................................................................................................................ 27 Property(Home) Inspections ........................................................................................................ 28

5 ? THIS SECTION INTENTIONALLY LEFT BLANK ....................................................................29

6 - HOMEBUYER EDUCATION ...................................................................................................... 30 Policy .............................................................................................................................................. 30 Seminar Instructors....................................................................................................................... 30 Instructors Who No Longer Work for a Participating Lender .................................................... 31 Seminar Format .............................................................................................................................. 31 Seminar Curriculum ....................................................................................................................... 31 Interpreters .....................................................................................................................................32 Seminar Workbooks .......................................................................................................................32 Commission Provided Materials....................................................................................................32 Seminar Arrangements ..................................................................................................................33 Publicity ........................................................................................................................................... 34 Online Homebuyer Education Policy ............................................................................................34

HOME ADVANTAGE MANUAL

Disciplinary Action .........................................................................................................................35 Seminar Checklist ...........................................................................................................................35

7 - RESERVATION PROCESS ........................................................................................................... 37 In General........................................................................................................................................37 Making a Reservation ..................................................................................................................... 37 Mandatory Delivery Dates.............................................................................................................. 37 Extensions to Reservations ........................................................................................................... 38 Changes to a Reservation .............................................................................................................. 38 Expired Reservations and Changes in Property ...........................................................................39 Cancelled Reservations...................................................................................................................39 Reservation Transfer ......................................................................................................................39 Status of Loans............................................................................................................................... 40 On-Line Reservation System ........................................................................................................ 40

8 - LOAN ORIGINATION & PROCESSING .....................................................................................43 Documents Submitted for a Home Advantage Loan....................................................................43 Processing a Home Advantage Loan .............................................................................................43

9 - PRE-CLOSING COMPLIANCE REVIEW & APPROVAL...........................................................45 Purpose of Pre-Closing Compliance Review .................................................................................45 Submission of Loan File .................................................................................................................45 Where to Submit Files ....................................................................................................................46 Review Procedure ...........................................................................................................................46 Checking Mortgage Loan Status ....................................................................................................46

10 - LOAN CLOSING......................................................................................................................... 48 Compliance Approval .................................................................................................................... 48 Closing Documents ........................................................................................................................ 48 Closing Documents (Commission Second Mortgages) ................................................................52 Rate Lock Extension Fees ..............................................................................................................52

11 - POST CLOSING COMPLIANCE REVIEW & APPROVAL ........................................................53 Submission of Mortgage Loan File ................................................................................................53 Items Needed at Post Closing Compliance ...................................................................................53 Where to Submit Files ....................................................................................................................54 Review Procedure ...........................................................................................................................54 Checking Mortgage Loan Status ....................................................................................................54

12 - LOAN PURCHASE & DELIVERY...............................................................................................56

HOME ADVANTAGE MANUAL

In General........................................................................................................................................56 Amortized Loan Balance ................................................................................................................56 Timing and Delivery of Closed Loans............................................................................................56 Penalties Withheld From Funding ................................................................................................ 57 Delivery Address ............................................................................................................................. 57 Wire/ACH Transfer Instructions...................................................................................................58 Loan Purchase Schedule/Funding.................................................................................................59 Purchase Prices ...............................................................................................................................59 Loan Suspensions (Curatives) ...................................................................................................... 60 First Payment/Notice of Assignment ........................................................................................... 60 Hazard Insurance Premium........................................................................................................... 61 Flood Insurance .............................................................................................................................. 61 FHA Monthly Insurance Premium ................................................................................................ 61 Conventional Mortgage Insurance Premiums .............................................................................. 61 Post-Closing Details of Origination Charges: Items Payable in Connection with Loan ...........62 Final Documents.............................................................................................................................62 Common Exceptions that Delay Purchase ....................................................................................63

13 - DOWNPAYMENT PROGRAMS .................................................................................................64 Downpayment Assistance Programs .............................................................................................64 Program Description ......................................................................................................................64 Maximum Income Limit, Loan Amount & Mortgage Details ......................................................64 Program Eligibility..........................................................................................................................65 Combined Loan to Value (CLTV) and Total Loan to Value (TLTV) ............................................65 Reserves (Not Applicable to the Home Advantage DPA Program at 0% Interest) ....................65 Buydowns ........................................................................................................................................66 Reservations ....................................................................................................................................66 Income Calculation.........................................................................................................................66 Calculating Downpayment Assistance Loan Amount ..................................................................67 Needs Assessment Form (Not Applicable to Home Advantage Downpayment Assistance Program at 0% Interest).................................................................................................................67 Eligible Uses of Downpayment Assistance Funds ....................................................................... 68 Cash Back ........................................................................................................................................69 Closing and Delivering the Loan....................................................................................................70 HUD Commitment Letter for FHA Loans.....................................................................................70 FHA Insurance Award Letter......................................................................................................... 71 Insurance Requirements ................................................................................................................ 71 Payment Statement......................................................................................................................... 71

HOME ADVANTAGE MANUAL

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