CHFA JumpStart Clarification

There has been much confusion and rumors in the past few weeks regarding the CHFA JumpStart loan program and its compatibility with FHA insurance. This confusion arose when the FHA issued Mortgagee Letter 2009-15 on May 11, 2009, then recalled it on May 12, 2009.

Friday, May 29th, the FHA issued a new 2009-15 Mortgagee Letter clarifying its guidance on how the Federal First Time Tax Credit may assist eligible borrowers purchase a home.

The CHFA JumpStart Loan Program complies with the FHA guidelines and is eligible for FHA insurance.

However, there is a provision in the Mortgagee Letter that allows all FHA-approved mortgagees and FHA-approved non profit organizations, and local government agencies and instrumentalities to purchase the tax credit anticipated by the homeowner. To be clear, CHFA is not purchasing the borrower's anticipated tax credit. CHFA is providing a second mortgage to be used for downpayment and/or closing cost assistance. CHFA encourages the borrower to use the tax credit to repay the second mortgage while in a zero (0%) percent interest deferral period. If not repaid by June 30, 2010, the CHFA JumpStart second mortgage becomes an 8%, 10 year term loan with required monthly payments.

Because of this provision, CHFA will not approve any borrowers who have “sold” their tax credit to use the CHFA JumpStart Loan Program. These borrowers will be eligible for the CHFA HomeOpener program.

Please contact the Home Finance division with any questions.

303.297.7376 or 1.888.320.3688 Denver
970.241.2341 or 1.800.877.8450 Western Slope

Thank you,
CHFA Home Finance