Colorado Housing and Finance Authority (CHFA) FirstStep Plus

• CHFA FirstStep Plus may be subject to Recapture Tax if ALL 3 factors apply:
  • Property is sold within the first 9 years AND.
  • Household income exceeds the income limit for that county AND.
  • Borrower has a gain on the sale of the property.
  • CHFA will reimburse borrower if Recapture Tax is triggered.

• CHFA Second mortgage: Due upon maturity, sale, refinance or if property is no longer owner occupied.
• CHFA will not re-subordinate

With the new self-service features in HomeConnection, lenders can lock a loan for a past or current CHFA borrower. However, please keep in mind:

• A borrower may only have one active CHFA mortgage loan at a time.
• Any previous CHFA mortgage loans must be paid in full otherwise CHFA will not purchase the new loan.

CHFA accepts electronic signatures for initial disclosures, the Initial Applicant Affidavit (CHFA Form 401), initial loan applications, letters of explanation, purchase contracts, and the Condo Project Approval Certification, Affordable Housing Restrictions and Approval Certification. All other Mortgage Loan documents must be wet-signed, and if applicable sent in hard copy form.

1st:
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No LLPAs.

2nd:
CHFA Second Mortgage: 0%.

• 620 Minimum
• Borrowers with no credit score not permitted.

DACA status applicants are eligible to apply for FHA financing. The following FHA requirements include:

• The property will be the borrower’s principal residence.
• The borrower has a valid Social Security Number (SSN), except for those employed by the World Bank, a foreign embassy, or equivalent employer identified by HUD.
• The borrower is eligible to work in the U.S., as evidenced by the Employment Authorization Document issued by the USCIS; AND
• The borrower satisfies the same requirements, terms, and conditions as those for U.S. Citizens.

All other requirements per FHA’s 4000.1

Single family, one-unit condominium, PUDs, townhomes, manufactured homes. ADUs are acceptable  if:

• Must be zoned for Single Family occupancy.
• Cannot be zoned 2-4 units.
• Must meet investor guidelines and city/county zoning ordinances.
• May not be income-producing and must be for personal use only.

Loan limit: Lower of conforming limit of $766,550 or the limit shown on FHA Mortgage Limit by County.
Loan limit includes MI/MIP.

Sales price limit: No purchase price limits except for FirstStep, where lower of Program Matrix Loan Limit or FHA Mortgage Limits apply.

Impound accounts are required.

• MWF’s doc prep fee for DPA or Grant may not be charged.
• Home buying on-line counseling fee: $99 for first borrower, $49 for additional borrowers. Classroom course is no charge.
• $175 Form 1004D Appraisal Update and/or Completion Report if applicable

• Closing fee charged by Title: TBD.
• Recording Fee: TBD.

CHFA Locks in “Reserved” status will automatically be canceled and a possible fee assessed unless one of the following actions has taken place prior to the Lock’s Expiration Date:

• If the Lock is no longer required, please cancel the Lock to avoid a cancellation fee of $100.
• If the Lock is still required and you will meet the expiration deadline, submit required documentation immediately.

• If a Mortgage Loan is in reserved status and additional time is needed, the Participating Lender may manually extend the Lock for 10 days, provided the extension is submitted by or on the Lock Expiration date. A 10-Day Lock Extension Fee of 0.125 percent of the Original Principal Balance of the First Mortgage Loan will be assessed. Please use HomeConnection to manually extend the Lock.

The second mortgage program must be selected and registered concurrently to properly issue disclosures. The 1st and 2nd will require a separate loan number.
CHFA does not always require tax returns; read important reminders below for details.

When tax returns are required, CHFA will require a 2021 tax return for loans locked on or after April 18, 2022. A full transcript or a copy of the filed tax return including all pages, is acceptable.
CHFA does not always require tax returns; read important reminders below for details.

When tax returns are required, CHFA will require a 2021 tax return for loans locked on or after April 18, 2022. A full transcript or a copy of the filed tax return including all pages, is acceptable.

CHFA requires a loan estimate for their silent second mortgage.

• HPML is acceptable
• CHFA will purchase an FHA HPML assuming that:
  • The loan meets all other CHFA criteria; and
  • The loan complies in all respects to Reg Z requirements for HPML’s including underwriting and consumer protection requirements.

• DU App/Eligible, LPA Accept.
• No LPA with manufactured housing. DU only.

• FHA: Manual underwriting is allowed with a maximum DTI of 50%.
• Manual underwriting is not permitted with Manufactured Housing.

• UW will input the Document Date under 'Investor Approval' on the General screen in MLM.
• This will place the loan in the UWA's queue.
• The UWA will input the Ordered Date and upload file to investor.
• When the investor response is received, the UWA will input the Received date, associate to the condition and notify the UW.

Identify CHFA as the secondary financing source in FHA Connection. Select ‘Government’ from the Source of Funds drop down memo in the Secondary Financing Section in FHA Connection. In addition, Lenders need to identify CHFA by the HUD Lender ID, which is ‘05366’, and not the EIN.

The Underwriter is to review and validate the Computation Worksheet completed by the Loan Processor. If the Underwriter makes any changes or corrections to the computation worksheet, he/she must re-run then DU.

CHFA will provide the DPA Award Letter after CHFA’s review and approval.

To obtain CHFA approval, Underwriter will provide the following to the branch. The branch will deliver the items to CHFA:

• If Conventional financing, CHFA needs: 1008, AUS findings, MI Approval.
• If FHA financing: 1008, Underwriting Transmittal.

Grant carries no lien position.

• 1st is to be registered in MERS with both ORG IDs: CHFA’s MERS Org ID number is 1008017. DMI (sub-servicer) Org ID is 1001484
• CHFA 2nds are not closed in MERS.
• The Transfer of Servicer (TOS)/Transfer of Beneficiary (TOB) must be completed within the MERS system using a transfer date within five (5) days of CHFA’s loan purchase.

A request for loan documents for the 2^nd TD MUST be sent to your Closer.

• CHFA requires a LE on the 2nd.
• The LE and CD are pulled from LQB.
• The 2nd Note and DOT, are to be completed in HomeConnection.
• The 1^st mortgage MERS # is not typed on the 2^nd deed of trust.

Effective today, Monday, February 6, 2023, CHFA will no longer require lenders to mail original copies of a CHFA Second Mortgage Deed of Trust or the title insurance policy on the CHFA First Mortgage Loan to CHFA.

Lenders are still required to record the original Second Mortgage Deed of Trust with the appropriate county.

Important Change: Recorded Deed of Trusts should be returned to the lender. Complete the Deed of Trust recording information by entering your company’s mailing information in the upper left corner.

After recording, the lender will upload the original Second Mortgage Deed of Trust through HomeConnection to create an electronic version. Lenders may retain the original at their discretion. Again, do not mail the original Second Mortgage Deed of Trust to CHFA.

Please upload documents to the appropriate line item in HomeConnection:

• CHFA Second Mortgage Deed of Trust = Security Instrument Recorded
• Title Policy for CHFA First Mortgage Loan = Title Policy Insurance

This new policy provides efficiencies and gets us a step closer to a fully electronic transaction.

• CHFA must have evidence a Mortgage Loan is insured. A Mortgage Insurance Certificate (MIC) or Private Mortgage Insurance (PMI) Fee of $150 will be assessed on day 31 if the MIC or PMI required documentation has not been received. Thereafter, a fee of $150 will be assessed every 31 days until the condition has been cleared.