Last week there were some news alerts stating the tax credit had been extended but until the President signed off on HR 5623 it was not officially extended.  Now that Obama has signed off on the bill, the extension is in effect.

Some believe this extends the tax credit to new buyers going under contract.  This is not the case.  All this extension does is extend the closing deadline of those buyers already under contract.

• Income limits are now based on two buckets (1-2 Person Household & 3+ Person Household)
• Higher income limits in targeted areas
• First time homebuyer restriction removed for targeted areas for all CHFA programs

Two Income Limit Buckets

Previous to this recent change, CHFA had three income buckets.  The buckets were for 1, 2 or 3+ person households.  They have eliminated the bucket for 1 person households which are now part of the 2 person bucket now labeled 1-2 person household.  Here are the new income limits in Denver Metro for First Step, First Step Plus and MCC with CHFA:

Previously, the income limits for a 1 person household size was much lower (a bit over $60,000).

Targeted Area Income Limits

The income limits have been increased and are also put into two buckets as mentioned above.  Here are the revised targeted area income limits for Denver Metro:

Visit CHFA’s website for a full list of target areas.

Non-First Time Homebuyers Now Allowed

Here is a direct quote from CHFA about this change:

CHFA has removed the First Time Homebuyer restriction for the CHFA FirstStep, CHFA FirstStep Plus, and CHFA MCC programs for all loans made or CHFA MCCs issued on properties located in a Targeted Area.

As most everyone is aware the tax credit deadline stated you must be under contract prior to May 1, 2010.  The other part of the deadline stated that anyone under contract by that date must close on or before June 30, 2010.  There is an amendment to a current bill to extend the closing deadline to September 30, 2010.

Mortgage News Daily explains it:

The June 30 closing deadline has not been extended…but it was accepted as an amendment to the Tax Extenders Bill. Under the amendment, borrowers who signed purchase contracts by April 30 would be given three extra months to close their loan and still qualify for the homebuyer tax credit. The new deadline would be September 30, 2010.

Check out the full story from Mortgage News Daily

CHFA issued a notice to all CHFA registered MCC lenders today which states:

As a result of the popularity of the CHFA MCC Program, availability of reservations for the CHFA MCC program is temporarily limited to loans in designated set-asides. Those set-asides include loans in which the Property is located in a Targeted Area, Property located in Grand or Routt County, and loans for Eligible Veterans (defined in the Sellers Guide as “a person who served in the active military, naval, or air service of the United States, and who was discharged or released therefrom under conditions other than dishonorable, as defined in 38 USC subsection 101″).

The silver lining in this notice was:

CHFA is also pleased to announce that the CHFA Statewide MCC program is now available to non-first time homebuyers who are purchasing a property located in a Targeted Area or if they are an Eligible Veteran.

Based on these changes we need to know what a “Targeted Area” is.  CHFA has listed the “Target Areas” in their Seller Guide in Chapter 11 or page 125.

Although we are normally one of the first to know about these great programs we are also normally the first to let you know when they are no longer available.  Both are valuable when trying to get deals closed.  Providing extra benefits through these programs can save deals where other lenders can’t get them done while knowing when they are no longer available can save time, money and energy into a transaction that wouldn’t have worked without such a program.  We keep you updated with this news at it happens!

The Changes from December 7

Here is a brief excerpt “From the Desk of David H. Stevens” which bullet points the main changes to Condos effective Dec. 7, 2009:

Modified the 50% owner occupancy requirement to allow the exclusion of vacant and tenant-occupied REOs from the calculation

Reduced the pre-sale requirement from 50% to 30% of the total units

Increased the FHA concentration limit from 30% to 50%

Relating to site condos, condominium project approval is not required

For the full details check out the mortgagee letters (2009-46A & 2009-46B) issued by HUD.

The Waiver

Due to mortgage lenders concerns surrounding the implementation of one of the changes mandated in the mortgagee letters mentioned above HUD has issued a waiver.  Here is what the waiver concerning Condominium Unit Insurance Requirements for HO-6 Coverage states:

The requirement for HO-6 insurance coverage for condominium units under ML 2009-46 B is hereby waiver for a period of one year from today’s date, as established by the above determinations and conditions.

This waiver was issued April 29, 2010 and will therefore expire April 28, 2011.

What is HO-6 Insurance?

Per HUD:

HO-6 coverage is a “walls in” policy that protects the interior improvements and betterments in the event of perils such as bad weather, fire, explosion, and theft.

The Impact of this Waiver

Each individual investor makes determination to abide by HUD waivers or not.  Some investors make the decision to not allow for temporary waivers in the expectation that the waiver will eventually be lifted.  To avoid complications many investors choose to follow the rule issued on December 7 and ignore this waiver.

The mortgage industry has changed and we are now in the “Era of Overlays“.  Overlays are the individual investors rules above and beyond the restrictions of the actual loan program (FHA, VA, Conventional).  Each mortgage investor has a different set of rules mortgage loan officers must follow.  To be sure you meet the overlays set by each investor you must work with a knowledgeable mortgage loan officer who understands these overlays and can find the best loan within the rules of the loan AND the investor.