Changes to Conventionally Insured Loans

Due to recent market conditions with our participating mortgage insurance companies, CHFA is no longer accepting 100% loan-to-value (LTV) conventionally insured Mortgage Loans. CHFA will still accept up to 103% combined loan-to-value (CLTV) if approved by a CHFA approved mortgage insurance company. This CHFA policy is effective as of Friday, April 18th , 11:59 pm (MST) for all new Reservations in all CHFA Programs. Please be aware that a Reservation in CHFA’s HomeConnection does not constitute a commitment from a mortgage insurance company. For Mortgage Loans currently reserved with an LTV above 97%, CHFA urges Participating Lenders to obtain the mortgage insurance certificate before Friday April 18, 2008, 11:59 pm MST. A complete, underwritten file is required to obtain a mortgage insurance certificate.

Please be aware that the Participating Lender will be responsible for adhering to all underwriting guidelines of the insuring entity.

As a reminder:

• All conventionally insured Mortgage Loans require the following minimum mortgage insurance coverage:
  

  35% for a loan-to-value of 95.01 and above
  30% for a loan-to-value of 90.01 to 95.00%
  25% for a loan-to-value of 85.01 to 90.00%
  20% for a loan-to-value of 80.01 to 85.00%

• If the applicable mortgage insurance company’s coverage requirement differs from CHFA’s requirement, the higher coverage requirement shall apply. If the AUS findings allow a lower coverage amount, the Participating Lender must re-run the AUS with the correct minimum coverage amount to ensure the Borrower qualifies for the Mortgage Loan with the required mortgage insurance coverage rate. There is no change to the maximum 103% CLTV.
  
  
• This mortgage insurance requirement will result in a nominal payment increase to the borrower, but does need to be reflected in the housing payment and ratios.
  
  
• Please contact your preferred mortgage insurance company if you are unclear about how to order the correct level of coverage, have questions about FICO requirements, declining markets, etc. Also remember that CHFA has special mortgage insurance rates from some mortgage insurance companies; and some have additional discounts for borrowers who take face-to-face homebuyer education.
  
  
• It is the sole responsibility of the Participating Lender to ensure that the proper level of coverage is in place before the underwriting is complete and the closing transpires.
  
  If the proper level of coverage is not used for underwriting and closing, CHFA will suspend and potentially decline the Mortgage Loan.
  
  Participating Lenders will be required to re-underwrite the Mortgage Loan with the correct mortgage insurance payment, make the proper adjustments and disclosures to the Borrower, and resubmit to CHFA. If the Borrower does not qualify for the corrected Mortgage Loan, CHFA will decline to Purchase it.
  
  To prevent this potential delay or decline of Purchase, CHFA requires Participating Lenders obtain the mortgage insurance certificate or written commitment prior to submitting the Mortgage Loan for Compliance Review and include it in the Compliance package.



• This change will not affect interest rates, nor will it result in any loan level price adjustments.