Before completing the MSHDA docs, make sure to check these few things first.
- Buyer is bringing 1% of their own funds to the table. This can be the cash to close plus EMD, and can include things paid upfront (like the appraisal or possible the HOI policy) but ONLY if those funds are sourced to a bank statement approved by the underwriter.
- The buyer’s fee to the real estate agent is no more than $300, and is in section H (1300 section in encompass). This must also be labeled using the “Broker Fee” fee name.
- MAKE SURE THERE IS NO MERS # ENTERED FOR THE FILE (this is only for standard MSHDA Home Loan. This does not apply to Flex).
- Ensure that the file is actually balanced for the correct date. The MSHDA docs will require you to enter the closing date on almost every document, and the secondary financing amount on the Mortgage and Note. If you need to adjust the financing amount (for example, in order to get the borrower to bring 1% down) or the date changes, docs will have to be re-drawn.
- Can only charge a max of 1% origination fee, including points. UW fee of $500 is permissible, no processing fees of any kind can be charged.
- The MSHDA 10k program allows for excess DPA funds to be put towards increasing the borrowers down payment (This is the ONLY program that allows for this! The 7.5k program does NOT allow this!). If your borrower is meeting their 1% contribution and has not fully utilized the 10k, you may lower the loan amount and cover the difference with the DPA funds. PLEASE NOTE that any changes of this type need to be sent back to MSHDA to be reviewed, and therefore MUST be completed at least 48 hours before your scheduled closing date in order for closing to fully accommodate. We CANNOT make changes like this on the day of/before closing.
Once you’ve determined that the file is balanced and meets MSHDA requirements, you can draw the MSDHA docs. Go to https://mshdalenderaccess.cgi-bps.com/Bin/Display.exe/ShowSection and log in. The first thing you will want to do is go to Loan Status and look up the MSHDA reservation for your borrower.
Find your borrower and click View.
You will want to check to make sure all of the following information matches our encompass files: Borrower’s name, Loan Amount, Interest Rate, Property Address, Secondary financing amount, and MSHDA program. If there are any variances, contact the underwriter to have the reservation updated.
If everything checks out, at the top of the screen click on Program Documents.
Based on the program (Home Loan, Step Forward, or FLEX *NOTE: 99% of these will be Home Loan, step forward and flex are pretty rare, but just make sure you checked this in the previous step), choose the link to the closing documents.
Assuming this is a standard MI Home Loan, you will need to complete the following 7 Documents:
- Tax Exempt Financing Rider
- Assignment of Mortgage
- Final Application Affidavit
- Lender Warranty
- Notice of Recapture Tax
- DPA Mortgage
- DPA Note.
For most of the forms, you just open them and fill them in and then print a copy. The Lender Warranty Letter and Notice of Recapture tax take a little more work. The Lender Warranty has to be printed on a Goldstar letter head form with all the required information. We will send you a saved copy upon request, you can then replace the loan info on it with the loan you’re working on.
For the notice of recapture tax, you will need to use the target area chart (See Closing Department for a copy) and determine if the county/city your property is in falls into a target area or not. Once you have determined that, click on the 2020-Recapture Tax Income Charts link to open the recapture tax income chart. Find your subject property county on the list, and then find the income limit based on whether you determined it to be target or non-target.
Take that income limit and then click on 2020-Notice of Recapture Tax. Find the income limit that you determined from the previous step and click on it. This will give you the correct form to fill out.
Everything else is just filling in blanks. Please reference the MSHDA Second Review Checklist for a copy of completed MSHDA docs and all relevant fields that must be filled in.