CBCMA

Training Series #2:

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

 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.
 PRODUCT:
Rate Advantage
Rate Advantage Program
• 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.
 PRODUCTS:
DPA EDGE
Soft Second Repayable Second
Advantages with the DPA Edge Program
• 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.

DPA Edge FHA Overlays

• Only offered for single-family and two unit properties.
• Three to four unit properties not allowed.
Chenoa Fund
DPA Edge: Soft
Soft Second
Second
1. No Payment
• Qualifying Income: < or = 115% AMI.
•2.No0% Interest Rate and 30-year Term
monthly payment.
3. Forgiven after 36 consecutive on-time
• FICO Scores 620 minimum.
payments on FHA 1st Mortgage
• 0% Interest Rate and 30-year Term.
4. Qualifying Income <= 115% AMI
• Forgiven after 36 consecutive on-time
5.payments
FICO Scores
on FHAdown to 620
1st Mortgage.
6. Section H of 1003 must indicate down
payment borrowed
7. Requires Funding Obligation Letter
Issued prior to closing-only CBCMA
signature
DPA Edge: Repayable Second

• Qualifying Income: > 115% AMI.

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

• 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: 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
 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
Pre-Registration:
The 1003
1003: Important To Remember
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.
Secondary Financing on 1003 (1st Mortgage)

Image: List secondary financing as

follows on the 1003.
Declarations Page of 1003 (1st Mortgage)

Image: Where to disclose the DPA.

Reflecting Secondary Financing in DU®️ (1st Mortgage)

Page 2-Types, Terms, &

Property

Page 7-Transaction Details

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®️.

®️.
Secondary Financing LP (1st Mortgage)

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

Image: The DPA must be listed as “CBC Mortgage Agency 2nd Lien”
under section L04 or under Other Credits.
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.
Underwriting
Underwriting must follow …
• Agency guidelines.
• FHA
• Fannie Mae
• TRID compliance.
• Industry standards.
• Secondary Financing closes in the name
of your company.
• Secondary Financing is transferred to
CBC Mortgage Agency after close.
• 2nds are required to be registered with
MERS.
• You will need to provide a MERS number
for the 2nd mortgage deed and note.
Your FHA First Mortgage will NOT BE INSURABLE if you do not have a Secondary
Financing MERS transfer to CBCMA BEFORE you request a MIC.

Or, if it applies, BEFORE you have an executed assignment of the Second Mortgage to CBC
Mortgage Agency.

Under the terms of the funding obligation letter, your company extends funds at the
closing table on behalf of CBC Mortgage Agency for the borrower’s down
payment. These funds are reimbursed by CBC Mortgage Agency at the time the first
mortgage is purchased. FHA requires that the secondary financing be in the name of
the government agency prior to insuring, so it is EXTREMELY important that all second
mortgage MINS are registered with MERS as soon as possible after closing and the
TOS/TOB be executed immediately.

The second has to be transferred to CBC Mortgage Agency as soon as the

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