Chenoa Fund Training For Loan Officers

1. CBCMA Training Series #1: For Loan Officers

2. Chenoa Fund by CBC Mortgage Agency: General Overview • The Chenoa Fund, as a whole, is subdivided into three different programs with one to two products apiece. • The Rate Advantage and DPA Edge Programs are issued in conjunction with FHA insured loans. • Our two conventional offerings are issued in conjunction with conventional loans. • Only the DPA Edge program includes a forgivable second option. • CBCMA offers the Rate Advantage Product to provide a lower interest rate for the borrower, and to provide a better YSP for the lender.

3. Chenoa Fund Overview Continued • The programs are allowed in all states except New York. • All programs offer 3.5% for the second mortgage. • Up-front fees are limited only by the 3% points and fees rule. • The first mortgage must be sold to CBC Mortgage Agency. • At the time you sell your first mortgage to CBC Mortgage Agency, the down payment funds you advanced are reimbursed. • Your underwriter underwrites the file. • Approved property types include SFR, PUD, Townhome, Condo, Attached, Detached, and Modular Homes. • No Manufactured Homes. • HPML (Rebuttable Presumption) is allowed, but no High Cost Mortgages.

4. Fannie Mae’s HomeReady®️ Program* AND Conventional Standard 97% LTV Loans*

5. Note: In order to offer conventional products, you must be FNMA approved. *Neither the Chenoa Fund, CBCMA nor any of their products are approved by or affiliated with Fannie Mae. It is the originating lender’s responsibility to ensure that the use of CBCMA second mortgages, the CBCMA first mortgage, and combination of the CBCMA first and second mortgages are compliant with Fannie Mae requirements. CBCMA’s correspondent guidelines include additional overlays to the HomeReady®️ program. HomeReady®️ is a registered trademark of Fannie Mae.

6. 1. No borrower investment required. 2. Single family only. 3. No income limits in low-income census tracts. 4. 100% of area median income (AMI) in all other census tracts. 5. Purchase Only. 6. All borrowers must have a minimum FICO score of 640. 7. 30-year Fixed Rate Mortgage. 8. Second lien is a 10-year Fixed Rate Mortgage with an interest rate 2% higher than the first mortgage. 9. MI Coverage 25%. 10. DU®️ Only – to 97. 11. Concurrent Homeownership Allowed. 12. Requires borrower to take Homebuyer Education class. DU®️ is a registered trademark of Fannie Mae. HomeReady®️

7. Conventional Standard 97% LTV Loans 1. No borrower investment required. 2. Single family only. 3. No income limits. 4. Purchase only. 5. All borrowers must have a minimum FICO score of 640. 6. 30-year Fixed Rate Mortgage. 7. Second lien is a 10-year Fixed Rate Mortgage with an interest rate 2% higher than the first mortgage. 8. MI Coverage 35%. 9. DU®️ Only – to 97. 10. Concurrent Homeownership Allowed, but at least one borrower must be first-time homebuyer. 11. No Homebuyer Education class required.

8. PRODUCT: Rate Advantage

9. • Qualifying Income: < or = 115% AMI • Requires monthly payment. • FICO Scores 640 minimum. • 10-Year term 8% Interest rate. • Non-occupant co-borrowers are not allowed. • No concurrent homeownership. • Max DTI 50% • Manual underwrites are not allowed. Note: Look to this one first to benefit you. Rate Advantage Program

10. PRODUCTS: DPA EDGE Soft Second Repayable Second

11. • Only Qualifying Income used for AMI calculations. • FICO Scores minimum of 620. • Non-occupant co-borrowers are allowed. • DTI per AUS or FHA manual underwriting guides. Advantages with the DPA Edge Program DPA Edge FHA Overlays • Only offered for single-family and two unit properties. • Three to four unit properties not allowed.

12. • Qualifying Income: < or = 115% AMI. • No monthly payment. • FICO Scores 620 minimum. • 0% Interest Rate and 30-year Term. • Forgiven after 36 consecutive on-time payments on FHA 1st Mortgage. 1. No Payment 2. 0% Interest Rate and 30-year Term 3. Forgiven after 36 consecutive on-time payments on FHA 1st Mortgage 4. Qualifying Income <= 115% AMI 5. FICO Scores down to 620 6. Section H of 1003 must indicate down payment borrowed 7. Requires Funding Obligation Letter Issued prior to closing-only CBCMA signature Chenoa Fund Soft SecondDPA Edge: Soft Second

13. • Qualifying Income: > 115% AMI. • Requires monthly payment. • FICO Scores 620 minimum. • 10-Year term 0% interest rate. • 30-Year term 5% interest rate. DPA Edge: Repayable Second

14. Rate Advantage a.) CBCMA offers 3.5% to cover down payment. b.) 2nd mortgage repayable. c.) 8% with 10 year term. d.) 640 minimum FICO score. e.) Qualifying Income less than or equal to 115% AMI. f.) Max DTI 50%. g.) Homebuyer education not required. h.) Please see HUD handbook 4000.1 for current upfront MIP rates. DPA Edge: Repayable Second a.) CBCMA offers 3.5% to cover down payment. b.) 2nd mortgage repayable. c.) 0% interest with 10 year term or 5% interest with 30 year term. d.) 620 minimum FICO score. e.) Qualifying Income greater than 115% AMI. f.) DTI restrictions per AUS guidelines. g.) Homebuyer education required for borrowers with credit scores between 620- 639. h.) Please see HUD handbook 4000.1 for current upfront MIP rates. DPA Edge: Soft Second a.) CBCMA offers 3.5% to cover down payment. b.) 2nd mortgage forgivable. c.) Forgivable after 36 consecutive on-time payments on the 1st mortgage. d.) 620 minimum FICO score. e.) Qualifying Income less than or equal to 115% AMI. f.) DTI restrictions per AUS guidelines. g.) Homebuyer education required for borrowers with credit scores between 620- 639. h.) Please see HUD handbook 4000.1 for current upfront MIP rates. HomeReady®️ a.) CBCMA offers 3% to cover down payment, 0.5% to cover closing costs. b.) 2nd mortgage repayable. c.) 10 year term, with an interest rate 2% higher than the first mortgage. d.) 640 minimum FICO score. e.) No income limits. f.) DTI restrictions per AUS guidelines. g.) Homebuyer education not required. h.) MI Coverage 35%. Conventional Standard 97% LTV Loans a.) CBCMA offers 3% to cover down payment, 0.5% to cover closing costs. b.) 2nd mortgage repayable. c.) 10 year term, with an interest rate 2% higher than the first mortgage. d.) 640 minimum FICO score. e.) No income limits in low- income census tracts; 100% AMI in all other income tracts. f.) DTI restrictions per AUS guidelines. g.) Homebuyer education required. h.) MI Coverage 25%. Quick Comparison Matrix: All Products

15. Did you know… …if you go to chenoafund.org and click on the Program Guidelines link at the top of the page, you will be taken to a more detailed version of the Product Matrix, as well as a more complete version of our programs?

16. • Go to the HUD Area Median Income Site. https://www.huduser.gov/po rtal/datasets/il.html • Select the most recent fiscal year. • Then “Click Here for FY [most recent year] IL Documentation” Calculating Area Median Income

17. • Select the state. • Select the county. • Click “View County Calculations.” Note: This is a third party site. CBCMA State Restrictions still apply, even if you see the option here. Calculating Area Median Income

18. Calculating Area Median Income: Primary Method • For families with a size of 1-4, you’ll want to pull the number from the “Median Family Income” column. This is outlined in red. • You determine the AMI by multiplying the Median Family Income by 115%. Example: $69,100 x 115% = $79,465

19. Calculating Area Median Income: Alternative Method There is an alternative calculation method allowed within the UW comments on the 1008. For families with a size greater than 4 (5 and up), use this method. • First, locate the appropriate family size underneath the “Persons in Family” column, in the “Very Low (50%) Income Limits” row. • Find the appropriate income limit, and then multiply that number by two. • Then, multiply that number by 115%. Example, using a family of 6: $40,100 x 2 = $80,200 X 115% = $92,230

20. Pre-Registration: The 1003

21. Both the First and Second Mortgage require a full set of TRID compliant disclosures, which should include the: • 1003 • LE • Initial CD • Final CD For a comprehensive list of all the documents we require the borrower to sign, please refer to our Program Guidelines, which can be found at ChenoaFund.org. 1003: Important To Remember

22. Image: List secondary financing as follows on the 1003. Secondary Financing on 1003 (1st Mortgage)

23. Image: Where to disclose the DPA. Declarations Page of 1003 (1st Mortgage)

24. Reflecting Secondary Financing in DU®️ (1st Mortgage) Page 2-Types, Terms, & Property Page 7-Transaction Details

25. Reflecting Secondary Financing in DU®️ (1st Mortgage) Please use Special Feature Code 118 when running your conventional loans through Desktop Underwriter. This can be found under the Additional Data Screen in DU®️. ®️.

26. Image: You will see this screen if you are using Secondary Financing LP system. Secondary Financing LP (1st Mortgage)

27. Image: The DPA must be listed as “CBC Mortgage Agency 2nd Lien” under section L04 or under Other Credits. 1st Lien Closing Disclosure (1st Mortgage)

28. Important Reminder • You must deliver disclosures to borrower following the TRID guidelines. • The LE must be mail stamped or signed by borrower within 3 days of the 1003. • Digital signatures are acceptable.

29. Make sure you upload these commonly missed files to avoid added conditions. Credit Package • Soft pull credit report within 10 days of close. • Case Query from FHA Connection to show UFMIP is paid. • Appraisal logging. • Both the 1st and 2nd Mortgage 1003s. Closing Package • MRI FOL. • First Note and Deed of Trust/Mortgage. • Second Note and Deed of Trust/Mortgage. Commonly Missed Documents

30. Features a) DTI based on AUS findings (no overlay cap). b) No first-time homebuyer requirement (above 640 FICO). c) Any city, any state (NY excluded). d) Market rate 1st mortgage e) Stable, continuous, non-bond funding. f) SRP/YSP flexibility. Benefits a) Increased purchasing power. b) Simplicity. c) Purchasing where the customer desires. d) Lower payment e) A knowledge that funding will always be available. f) Profit flexibility. • No matter your current relationship with DPA, now is the time to increase loan volume, qualify more customers, and experience fewer dropped loans. Chenoa Fund is provided by CBC Mortgage Agency, an FHA approved Government Title II Lender. HUD statute allows government entities to provide down payment assistance. • Chenoa Fund is the premier DPA that offers simplicity, ease, and options that can help you and your customers accomplish great things in home ownership. • All industry guidelines apply. These marketing ideas can generate interest and phone calls from consumers and real estate agents. Lending Guidelines CBC Mortgage Agency is a government entity powering the Chenoa Fund, a tool designed to help increase home ownership. This is accomplished by offering qualified borrowers down payment assistance in the form 2nd mortgages, resulting in zero down payments. “… Renters looking to buy a home in the near future cited the following barrier … saving enough for a down payment.” -Forbes Features and Benefits: Conventional

31. Features a) FICO down to 620. b) DTI based on AUS findings (no overlay cap). c) No first-time homebuyer requirement (above 640 FICO). d) Any city, any state (NY excluded). e) Co-borrower assistance with a non-occupant coborrower. f) No income limits. g) Market rate 1st mortgage h) Stable, continuous, non-bond funding. i) SRP/YSP flexibility. Benefits a) Easy for borrowers to qualify. b) Increased purchasing power. c) Simplicity. d) Purchasing where the customer desires. e) Qualifying options with the family. f) Streamlined process. g) Lower payment h) A knowledge that funding will always be available. i) Profit flexibility. • No matter your current relationship with DPA, now is the time to increase loan volume, qualify more customers, and experience fewer dropped loans. Chenoa Fund is provided by CBC Mortgage Agency, an FHA approved Government Title II Lender. HUD statute allows government entities to provide down payment assistance. • Chenoa Fund is the premier DPA that offers simplicity, ease, and options that can help you and your customers accomplish great things in home ownership. • All industry guidelines apply. These marketing ideas can generate interest and phone calls from consumers and real estate agents. Lending Guidelines CBC Mortgage Agency is a government entity powering the Chenoa Fund, a tool designed to help increase home ownership. This is accomplished by offering qualified borrowers down payment assistance in the form 2nd mortgages, resulting in zero down payments. “… Renters looking to buy a home in the near future cited the following barrier … saving enough for a down payment.” -Forbes Features and Benefits: FHA Product a) DPA Edge b) DPA Edge c) DPA Edge/Rate Advantage d) DPA Edge/Rate Advantage e) DPA Edge f) DPA Edge g) DPA Edge/Rate Advantage h) DPA Edge/Rate Advantage i) DPA Edge/Rate Advantage

32. Important CBC Mortgage Agency Contacts Information and questions info@chenoafund.org Portal Questions submissions@chenoafund.org Underwriting Questions scenariodesk@chenoafund.org Purchase Clearing Please contact the Purchase Clearing specialist for the specific loan you’re working on. Collateral/Shipping finaldocs@chenoafund.org Servicing servicing@chenoafund.org

33. Conclusion

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