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Originating Agents Guide
February 1, 2024
Latest Revision: 05.29.2024
THDA Originating Agents Guide Page | i
Revised 02.01.2024
Table of Contents
SECTION I: THDA OVERVIEW ....................................................................................................................................... 1
GUIDE SUMMARY ..................................................................................................................................................... 1
HOURS OF OPERATION AND HOLIDAY SCHEDULE ................................................................................................ 1
SINGLE FAMILY PROGRAMS DIVISION STAFF DIRECTORY ..................................................................................... 1
CURRENT THDA LOAN PROGRAMS ........................................................................................................................ 3
1. Great Choice Mortgage Loan Program (Mortgage Revenue Bond) ....................................................... 3
2. Great Choice Plus Mortgage Program: Down Payment/Closing Cost Assistance Loan ......................... 4
3. Homeownership for Heroes Mortgage Loan Program ................................................................................ 5
4. Homeownership for Heroes Plus Mortgage Loan Program ......................................................................... 6
5. Freddie Mac HFA Advantage® Mortgage Loan Program (Mortgage Backed Securities) .................... 7
6. Freddie Mac HFA Advantage® Plus Mortgage Loan Program (Mortgage Backed Securities) ............. 8
SECTION II: ORIGINATING AGENTS ............................................................................................................................. 9
ORIGINATING AGENT WORKING AGREEMENT ...................................................................................................... 9
CORRESPONDENT RELATIONSHIPS .......................................................................................................................... 9
MAINTAINING ORIGINATING LENDER APPROVAL STATUS .................................................................................. 10
THDA QUALITY CONTROL AND RISK MANAGEMENT ........................................................................................... 11
Prefunding Quality Control Reviews ................................................................................................................ 11
Quality Control Reviews ................................................................................................................................... 11
Early Payment Default Reviews ....................................................................................................................... 12
Loan Level Defects/Findings ............................................................................................................................ 12
Exclusion Lists ..................................................................................................................................................... 12
Information Security Standards ........................................................................................................................ 13
LOAN REPURCHASE ............................................................................................................................................... 13
Repurchase Obligation .................................................................................................................................... 13
Repurchase Price .............................................................................................................................................. 14
Repurchase Procedure .................................................................................................................................... 14
FEES ORIGINATING AGENT MAY EARN ................................................................................................................. 14
SECTION III: QUALIFYING AN APPLICANT ................................................................................................................. 16
ELIGIBILITY OVERVIEW ............................................................................................................................................ 16
ACQUISITION COST LIMITS ..................................................................................................................................... 16
Defining Acquisition Cost ................................................................................................................................. 16
Acquisition Cost Inclusions ............................................................................................................................... 16
Acquisition Cost Exclusions ............................................................................................................................... 17
Current Acquisition Cost and Income Limits by County ............................................................................... 17
MORTGAGE REVENUE BONDS (MRB) INCOME LIMITS, IRS REV. RULING 86-124 ............................................... 17
Defining Household ........................................................................................................................................... 17
Defining MRB Income ....................................................................................................................................... 17
MRB Income Inclusions ..................................................................................................................................... 17
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Revised 02.01.2024
MRB Income Exclusions ..................................................................................................................................... 18
RESIDENCE REQUIREMENT ..................................................................................................................................... 19
THREE YEAR REQUIREMENT .................................................................................................................................... 19
Permitted Ownership Interests ......................................................................................................................... 20
Prohibited Ownership Interests ........................................................................................................................ 20
Veteran Exemption ........................................................................................................................................... 21
NEW MORTGAGE REQUIREMENT .......................................................................................................................... 21
TARGETED AREAS ................................................................................................................................................... 21
Census Tracts ..................................................................................................................................................... 21
CURRENT TARGETED AREAS .................................................................................................................................. 22
SECTION IV: OTHER THDA PROGRAM REQUIREMENTS ........................................................................................... 23
ELIGIBLE APPLICANTS ............................................................................................................................................. 23
PROPERTY ELIGIBILITY ............................................................................................................................................. 23
Eligible Property ................................................................................................................................................. 23
Appraisals ........................................................................................................................................................... 25
Acceptable Amount of Land .......................................................................................................................... 25
ELIGIBLE LOAN TYPES AND TERMS ......................................................................................................................... 26
Types of Loans ................................................................................................................................................... 26
Maximum Loan-To-Value Ratios ...................................................................................................................... 26
Maximum Loan Amount ................................................................................................................................... 26
Security ............................................................................................................................................................... 27
Loan Payment Terms ........................................................................................................................................ 27
Prepayment Penalty ......................................................................................................................................... 28
Late Charge ...................................................................................................................................................... 28
Origination Fee .................................................................................................................................................. 28
Assumptions ....................................................................................................................................................... 28
FEDERAL RECAPTURE ............................................................................................................................................. 28
FEDERAL RECAPTURE TAX REIMBURSEMENT ......................................................................................................... 28
SECTION V: PROCESSING AND CREDIT UNDERWRITING REQUIREMENTS .............................................................. 30
OVERVIEW .............................................................................................................................................................. 30
Rates and Rate Locks ....................................................................................................................................... 30
Disclosures .......................................................................................................................................................... 30
Credit Scores and Debt Ratio .......................................................................................................................... 30
Homebuyer Education ..................................................................................................................................... 31
Age of Credit Documents ................................................................................................................................ 32
Non-Purchasing Spouse.................................................................................................................................... 32
Co-signers .......................................................................................................................................................... 32
ASSETS ..................................................................................................................................................................... 32
Substantial Liquid Assets ................................................................................................................................... 32
Gift Letter ........................................................................................................................................................... 33
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VERIFICATIONS ....................................................................................................................................................... 33
Employment Verifications ................................................................................................................................ 33
Sole-Proprietorship Verifications ...................................................................................................................... 33
Partnership Verifications ................................................................................................................................... 33
Limited Partnership Verifications ...................................................................................................................... 33
Subchapter S Corporation Verifications ......................................................................................................... 33
Corporation Verifications ................................................................................................................................. 33
Deposit Verifications ......................................................................................................................................... 33
Veteran Status ................................................................................................................................................... 34
FHA 203(h) Proof of Destruction of Residence ............................................................................................... 34
DEBTS, OBLIGATIONS AND OTHER EXPENSES ....................................................................................................... 34
Remaining Debt Payments .............................................................................................................................. 34
Payday Loans or Undisclosed Debt ................................................................................................................ 34
Bankruptcy (Chapter 7 and Chapter 13) ....................................................................................................... 34
Previous Default................................................................................................................................................. 34
Child Support and Alimony Obligations ......................................................................................................... 35
Judgments ......................................................................................................................................................... 35
Federal or State Tax Liens, Tax Arrearages ..................................................................................................... 35
Collections ......................................................................................................................................................... 35
Co-Signed/Authorized User Debt .................................................................................................................... 35
Child Care Expense .......................................................................................................................................... 35
Establishing / Re-establishing Credit ................................................................................................................ 35
SECTION VI: SUBMITTING AN APPLICATION FILE TO THDA ...................................................................................... 36
OVERVIEW .............................................................................................................................................................. 36
REQUIRED DOCUMENTS ........................................................................................................................................ 36
Underwriting Submission Checklist ................................................................................................................... 36
Application Declaration ................................................................................................................................... 36
Veteran Exemption Application Declaration................................................................................................. 36
Seller Declaration .............................................................................................................................................. 36
Tax Returns ......................................................................................................................................................... 36
Notice to Applicants Federal Recapture Requirements ............................................................................... 37
Grants/Down Payment Assistance Approval Letters .................................................................................... 37
Transmittal Summary (Conventional and USDA/RD) ..................................................................................... 37
Agency Loan Approval .................................................................................................................................... 37
Loan Application and Addendums (URLA & 92900A) .................................................................................. 37
Supplemental Consumer Information Form (SCIF, FORM1103) .................................................................... 37
Positive Identification ........................................................................................................................................ 38
Credit Report ..................................................................................................................................................... 38
Final Divorce Decree/Marital Dissolution; Court Ordered Child Support; SSI or Other Assistance ........... 38
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Revised 02.01.2024
Verification of Employment; Most Recent Pay Stub; Form Evidencing Telephone Verification of Prior
Employment; Self-Employment ........................................................................................................................ 38
Documentation for Veteran Exemption ......................................................................................................... 38
Original Certificate of Title or Original Manufactured Certificate of Origin (Manufactured Home) ........ 38
Verification of Deposit or Bank Statements for Previous Two Months .......................................................... 39
Sales Contract ................................................................................................................................................... 39
FHA Conditional Commitment ........................................................................................................................ 39
Appraisal ............................................................................................................................................................ 39
Flood Notification .............................................................................................................................................. 39
Loan Estimate .................................................................................................................................................... 39
Title Commitment .............................................................................................................................................. 39
Hazard Insurance .............................................................................................................................................. 40
DOCUMENTING NEW CONSTRUCTION FOR CUSTOM BUILT HOMES ................................................................. 40
Documentation Required ................................................................................................................................ 40
Manufactured Housing .................................................................................................................................... 40
Borrower Obtains Construction Loan .............................................................................................................. 40
THDA UNDERWRITING DECISIONS ......................................................................................................................... 40
THDA Underwriting Results ................................................................................................................................ 40
Rejections ........................................................................................................................................................... 40
COMMITMENTS....................................................................................................................................................... 41
Application Approval ....................................................................................................................................... 41
Commitment Term ............................................................................................................................................ 41
Commitment Conditions .................................................................................................................................. 41
Satisfying THDA Commitment Conditions ....................................................................................................... 41
Update of Application or Commitment ......................................................................................................... 41
Loan Amount or Program Type Changes ....................................................................................................... 41
Commitment Delivery ....................................................................................................................................... 42
Void Commitments ........................................................................................................................................... 42
FUNDING THDA LOANS .......................................................................................................................................... 43
SCHEDULING LOAN CLOSINGS............................................................................................................................. 43
SECTION VII: CLOSING A THDA LOAN ..................................................................................................................... 44
OVERVIEW .............................................................................................................................................................. 44
Expedite Loan Documents ............................................................................................................................... 44
LOAN COMMITMENT ............................................................................................................................................. 44
REQUIRED LOAN DOCUMENTS ............................................................................................................................. 44
Loan Documents ............................................................................................................................................... 44
Due Dates .......................................................................................................................................................... 45
Late Charges ..................................................................................................................................................... 45
TITLE POLICY ........................................................................................................................................................... 45
Warranty Deed .................................................................................................................................................. 45
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Termite Inspection/Treatment Certificate ...................................................................................................... 46
Hazard Insurance .............................................................................................................................................. 46
Flood Certification and Flood Insurance ........................................................................................................ 47
Escrow for Repairs or Completion of Construction ........................................................................................ 47
Properties Affected by a Disaster .................................................................................................................... 48
Documentation Requirements for Properties Affected by a Disaster ..................................................... 48
Closing Disclosure.............................................................................................................................................. 49
Verbal Verification of Employment (VVOE) ................................................................................................... 49
Name Affidavit .................................................................................................................................................. 49
Power of Attorney ............................................................................................................................................. 49
OTHER REQUIREMENTS ........................................................................................................................................... 49
Close In The Name Of ....................................................................................................................................... 49
Non- Purchasing Spouse................................................................................................................................... 49
Rescission ........................................................................................................................................................... 49
Net Funds “To Borrower” ................................................................................................................................... 49
Principal Reduction ........................................................................................................................................... 50
Original Certificate of Title or Original Manufactured Certificate (MCO) of Origin (Manufactured Home)
............................................................................................................................................................................ 50
Affidavit of Affixation (Manufactured Home) ................................................................................................ 50
Warranty Deed .................................................................................................................................................. 50
CLOSING COSTS .................................................................................................................................................... 50
Closing Costs and Fees a THDA Borrower May Pay ....................................................................................... 50
SECTION VIII: SHIPPING A CLOSED THDA LOAN ...................................................................................................... 52
ORIGINATION AGENT OBLIGATIONS .................................................................................................................... 52
SHIPPING ADDRESS ................................................................................................................................................ 52
DELIVERY DEADLINES ............................................................................................................................................. 52
FAILURE TO MEET DELIVERY DEADLINES ................................................................................................................ 53
REQUIRED DOCUMENTS FOR A COMPLETE CLOSED LOAN FILE ........................................................................ 53
Closed Loan Submission Checklist ................................................................................................................... 53
Original Note ..................................................................................................................................................... 54
Original Note Great Choice Plus Form ............................................................................................................ 54
Original Recorded Deed of Trust ..................................................................................................................... 54
Deed of Trust-Great Choice Plus ..................................................................................................................... 54
Affidavit of Affixation (Manufactured Home) ................................................................................................ 54
Title Insurance Policy/Endorsements ............................................................................................................... 54
Warranty Deed .................................................................................................................................................. 54
Closing Disclosure.............................................................................................................................................. 55
Great Choice Loan Allowable Fees ................................................................................................................ 55
Hazard Insurance .............................................................................................................................................. 55
Termite Inspection/Treatment Certificate (when applicable) ..................................................................... 55
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Flood Insurance (when applicable) ................................................................................................................ 55
Commitment Conditions .................................................................................................................................. 55
MIC/LGC; USDA/RD 3555-17, or As Applicable .............................................................................................. 55
Final Loan Application and 92900A (URLA) .................................................................................................... 56
SERVICING PROCEDURES ...................................................................................................................................... 56
Service Release Premium ................................................................................................................................. 56
Tax Service Fee .................................................................................................................................................. 56
Changing Fees/Compensation ....................................................................................................................... 56
Tax and Insurance Escrow ................................................................................................................................ 56
Volunteer Mortgage Loan Servicing Directory .............................................................................................. 56
Payments Received After Purchase ............................................................................................................... 57
Payments Received Prior to Purchase ............................................................................................................ 57
Service Transfer After First Payment Due Date ............................................................................................... 57
SECTION IX: THDA FORMS AND INSTRUCTIONS ........................................................................................................ 58
Application Declaration HO-0450 Veteran Exemption Application Declaration HO-0460 (If Applicable)
............................................................................................................................................................................ 58
Notice to Applicants Federal Recapture Requirements HO-0448 ............................................................... 59
Seller Declaration HO-0451 .............................................................................................................................. 59
Underwriting Submission Checklist HO-0549 ................................................................................................... 59
Affidavit of Affixation RV-F1322101 .................................................................................................................. 59
Legally Enforceable Obligation Letter HO-0476 ............................................................................................ 59
Closed Loan Submission Checklist HO-0541 ................................................................................................... 59
THDA Rider HO-0440 .......................................................................................................................................... 59
Request for Loan Purchase with Acknowledgement and Certification HO-0444 ...................................... 60
Great Choice Plus/HFA Advantage Plus Amortizing Subordinate Note (Payment) Form #3295 ............. 60
Great Choice Plus/HFA Advantage Plus With Deferred Subordinate Note (No Payment) Form #3296 .. 60
Great Choice Plus/HFA Advantage Plus Subordinate Deed of Trust Form #3800.43 ................................. 60
SECTION X: FREDDIE MAC HFA ADVANTAGE® CONVENTIONAL PROGRAM ...................................................... 61
OVERVIEW .............................................................................................................................................................. 61
HFA Advantage & HFA Advantage Plus ........................................................................................................ 61
ELIGIBLE BORROWER .............................................................................................................................................. 61
Ownership Interest ............................................................................................................................................ 61
ELIGIBLE PROPERTIES .............................................................................................................................................. 62
PURCHASE PRICE LIMIT .......................................................................................................................................... 62
QUALIFYING INCOME LIMIT ................................................................................................................................... 62
FIRST MORTGAGE LOAN TERMS AND GUIDELINES .............................................................................................. 62
Loan Types/Investor Feature Identifiers (IFIs) .................................................................................................. 62
Maximum LTV/CLTV .......................................................................................................................................... 62
Transaction Type ............................................................................................................................................... 63
Mortgage Loan Rates and Reservations ........................................................................................................ 63
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Revised 02.01.2024
Rate Locks and Extension Fee ......................................................................................................................... 63
UNDERWRITING ...................................................................................................................................................... 63
Freddie Mac HFA Advantage® ....................................................................................................................... 63
Freddie Mac Resources .................................................................................................................................... 63
Private Mortgage Insurance (PMI) .................................................................................................................. 64
Discount Points/Assumable/Escrow Waivers/Temporary Buydown ............................................................. 64
DOWN PAYMENT ASSISTANCE (HFA Advantage Plus) ....................................................................................... 64
Lender Advance ............................................................................................................................................... 65
Compliance Issues ............................................................................................................................................ 65
Limitations on Down Payment Assistance ...................................................................................................... 65
TRID ......................................................................................................................................................................... 66
Loan Estimate .................................................................................................................................................... 66
Closing Disclosure.............................................................................................................................................. 66
LENDER PROCESS ................................................................................................................................................... 66
Application and Reservation ........................................................................................................................... 66
Commitment Compliance Package .............................................................................................................. 66
Purchase Compliance Package ..................................................................................................................... 66
COMPENSATION AND FEES ................................................................................................................................... 67
Lender Compensation ..................................................................................................................................... 67
Allowable Fees .................................................................................................................................................. 67
Non Delivery Fee ............................................................................................................................................... 67
CLOSING/DELIVERY INFORMATION ...................................................................................................................... 67
Uniform Closing Dataset (UCD) ....................................................................................................................... 67
4506-C ................................................................................................................................................................ 67
Delivery of Mortgage Loans ............................................................................................................................. 67
Loan Quality Advisor ......................................................................................................................................... 68
Uniform Loan Delivery Dataset (ULDD) ........................................................................................................... 68
Original Mortgage Notes.................................................................................................................................. 68
Non-Delivery Fee ............................................................................................................................................... 69
Final Document Delivery .................................................................................................................................. 69
SERVICING .............................................................................................................................................................. 69
HAZARD & FLOOD INSURANCE ............................................................................................................................. 69
PROPERTIES AFFECTED BY A DISASTER .................................................................................................................. 69
HOMEBUYER EDUCATION ...................................................................................................................................... 69
SECTION XI THIRD PARTY ORIGINATION (TPO) CHANNEL ........................................................................................ 70
WHOLESALE LENDER RESPONSIBILITIES ................................................................................................................. 70
WHOLESALE LENDER REQUIREMENTS .................................................................................................................... 70
TERMINATION OF A TPO ........................................................................................................................................ 70
THDA Originating Agents Guide Page | 1
Revised 02.01.2024
SECTION I: THDA OVERVIEW
GUIDE SUMMARY
This Originating Agents Guide amends and replaces the Originating Agents Guide dated
January 2021 (the “Prior Guide”) and, together with all subsequent revisions, modifications or
updates (the “Guide”) provided by the Tennessee Housing Development Agency (“THDA”),
contains information about THDA loan programs and specific requirements for qualifying
applicants, submitting, closing, and delivering loans for THDA.
The Prior Guide shall apply to all THDA approved loans locked on or prior to January 31, 2024,
and this Guide shall apply to all THDA approved loans locked on or after February 1, 2024.
THDA may revise, modify or update this Guide from time to time and will notify Originating
Agents (“Lender”) of such changes. THDA may provide notice of changes by posting such
changes to its web site at www.thda.org
.
HOURS OF OPERATION AND HOLIDAY SCHEDULE
The Single Family Programs Division hours of operation are 7:00 a.m. until 4:30 p.m. Central Time,
Monday through Friday. Rate lock desk is available 9:00 a.m. until 5:30 p.m. Central Time on all
THDA business days. The Single Family Programs Division will be closed on official State holidays
which are as follows:
New Year’s Day
Martin Luther King Day
Presidents’ Day
Good Friday
Memorial Day
Juneteenth
Independence Day
Labor Day
Veteran’s Day
Thanksgiving Day and Friday After*
Christmas Day**
New Year’s Eve
*THDA will be closed on the Friday after Thanksgiving Day.
**Other holidays around Christmas may be announced later.
SINGLE FAMILY PROGRAMS DIVISION STAFF DIRECTORY
The Single Family Programs Division of THDA has day-to-day operational control of the
origination and closing of THDA mortgage loans. All correspondence should be directed to:
Single Family Programs Division
Tennessee Housing Development Agency
502 Deaderick Street, Third Floor
Nashville, TN 37243
THDA Toll-Free…………………………… 800-228-8432
Single Family Information Line ............ 615-815-2100
Single Family Ask Desk ......................... Email: sfask@thda.org
Volunteer Mortgage Loan Servicing .. 844-865-7378
Volunteer Mortgage Loan Servicing .. Email: custserv@volservicing.com
THDA Originating Agents Guide Page |2
Revised 07.01.2024
THDA STAFF PHONE EMAIL
Lindsay Hall, Chief Operating Officer of Single Family Programs 615-815-2080 [email protected]
Rhonda Ronnow, Director of Loan Operations, Single Family
Programs
615-815-2111 rronnow@thda.org
Jennifer Green, Assistant Director of Loan Operations, Single Family 615-815-2087 [email protected]rg
Sheila Gunsell, Underwriting Manager 615-815-2089 [email protected]g
Jayna Johnson, Homebuyer Education Manager 615-815-2019 [email protected]
Chuck Pickering, Mortgage Funding Manager 615-815-2086 [email protected]
Russell Catron, Program Development & Administration Coordinator 615-815-2186 rcatron@thda.org
Amber Holland, SFLO Administrative Coordinator 615-815-2094 aholland@thda.org
Rhonda Ellis, Mortgage Loan Specialist, Processing 615-815-2103 [email protected]
Bryan Yoshino, Senior Mortgage Loan Underwriter 615-815-2114 [email protected]
Joseph Uvanni, Senior Mortgage Loan Underwriter 615-815-2092 juv[email protected]g
Kay Leyhew, Senior Mortgage Loan Underwriter 615-815-2112 kleyhew@thda.org
Kelly Murph, Senior Mortgage Loan Underwriter 615-815-2099 kmurph@thda.org
Paulie Crone, Mortgage Loan Underwriter 615-815-3981 pcrone@thda.org
Samantha Thacker, Mortgage Loan Underwriter 615-815-3983 sthacker@thda.org
Shannon Ward, Mortgage Loan Coordinator, Closing 615-815-2084 sward@thda.org
Jennifer Carpenter, Senior Mortgage Loan Closer 615-815-3991 jcarpenter@thda.org
Olivia Rodriguez, Mortgage Loan Closer, Final Documents 615-815-3992 [email protected]
Stephen Chinique, Loan Specialist, Post-Closing 615-815-2107 schinique@thda.org
Wendee Luman, Mortgage Loan Specialist, Final Documents 615-815-2110 wluman@thda.org
Katina Brewer, Mortgage Loan Specialist, Final Documents 615-815-2083 kbrewer@thda.org
Sharayah Shattuck, Document Delivery and Shipping Coordinator
Mortgage Loan Specialist, Final Documents
615-815-2089 [email protected]g
Laura Medico, Mortgage Document Delivery/ Shipping Coordinator 615-815-3993 lmedico@thda.org
Mandy Garman, Housing Education Training Coordinator 615-815-2161 mgarman@thda.org
Yvonne Hall, Housing Education Grants Coordinator 615-815-2228 yhall@thda.org
Kendra Love, HUD Housing Education Counselor- West TN 615-815-2138 klov[email protected]rg
Montrice Brown-Miller, HUD Housing Education Counselor-Middle TN 615-815-2137 mbrown[email protected]
Angela Hall, HUD Housing Education Counselor- East TN 615-815-2088 ahall@thda.org
LiSandra McLaurine, Housing Education Resource Specialist 615-815-2085 [email protected]
Toumie Parrot, Customer Account Manager-Middle Tennessee 615-815-2122 tparrot@thda.org
Rebekah Bicknell, Customer Account Manager-East Tennessee 615-815-2121 r[email protected]
Juanita Hamilton, Customer Account Manager-West Tennessee 615-815-2190 jhhami[email protected]g
THDA Originating Agents Guide Page | 3
Revised 02.01.2024
CURRENT THDA LOAN PROGRAMS
THDA offers the following mortgage loan programs:
• Great Choice • Great Choice Plus
• Homeownership for Heroes • Homeownership for Heroes Plus
• Freddie Mac HFA Advantage® • Freddie Mac HFA Advantage Plus®
1. Great Choice Mortgage Loan Program (Mortgage Revenue Bond)
This loan is secured by a first mortgage with the option of down payment and closing cost
assistance. (See Great Choice Plus for details).
Great Choice Mortgage Loan Program
Eligible Borrower/First Time
Homebuyer Rule
Borrower must not have an interest in their primary residence within 36
months of application unless the property to be financed with the loan is
in a targeted area (See THDA website for targeted areas.)
Assumable
Subject to Qualifying
Interest Rate
Posted on THDA Website
Loan Term
30 years
Loan Types
FHA, VA, USDA/RD,(Agency) and Uninsured Conventional Portfolio
Max Loan Amount
Varies
Down Payment As Required by Loan Type
Max MRB Income
Varies by County
Max Acquisition Cost $400,000
Eligible Properties
Single Family 1-4 unit (1 must be owner occupied), condos, PUD,
townhomes, HUD approved manufactured homes
Homebuyer Education
Required
AUS Requirements
DU, LPA, or GUS
Manual Underwriting
Allowed; See THDA Guidelines
Min. Credit Score
640
Max Debt-to-Income Ratio
45%
Max LTV
Subject to FHA, VA, & USDA/RD (Agency) guidelines. Conventional loans
78% LTV or less (uninsured portfolio)
Min. Investment/Required Reserves
As Required by Loan Type
Mortgage Insurance
As Required by Loan Type
Occupancy
Owner Occupied within 60 days of Closing
Additional Documentation/Forms
Seller Declaration, Application Declaration, Recapture Disclosure
Pre-Payment Penalty
No Penalty
Subject to Recapture
Yes; Eligible for Recapture Reimbursement Program
Escrows
Required; Waivers not Permitted
Allowable Fees to be charged
Reasonable and customary fees up to $1400. Origination fee based
on rate sheet and product offering at the time the loan is locked;
rate lock extension fees charged to the lender by THDA can be
charged.
Lender Compensation
Based on rate sheet and product offering at the time the loan is locked.
THDA Originating Agents Guide Page | 4
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2. Great Choice Plus Mortgage Program: Down Payment/Closing Cost Assistance Loan
This MRB loan offers a choice for down payment and closing cost assistance, one offering has
deferred payments and the other has a low interest rate with monthly payments. Both are
secured by a second deed of trust and only available with the THDA Great Choice first
mortgage loan. The Great Choice Plus Loan Payment is at an interest rate the same as the first
mortgage, monthly payments amortized over a 30 year term, and the loan amount is up to 5%
of the sales price (maximum loan amount of $15,000). The Great Choice Plus Loan-Deferred
(no payment) is a flat up to $6,000 at a 0% interest rate, 30 year term, and must be repaid if
the home is refinanced or sold.
Great Choice Plus Mortgage Loan Program (DPA) Options
Eligible Borrower/First Time
Homebuyer Rule
Must Qualify and Obtain THDA Great Choice Loan
Assumable
Interest Rate
Loan Term
Loan Types
Max Loan Amount
Down Payment
Max MRB Income
Max Acquisition Cost
Eligible Properties
Homebuyer Education
AUS Requirements
Manual Underwriting
Min. Credit Score
Max Debt-to-Income Ratio
Max CLTV
Min. Investment/Required Reserves
Mortgage Insurance
Occupancy
Additional Documentation/Forms
THDA provided Note and Deed of Trust
Pre-Payment Penalty
Subject to Recapture
Escrows
Allowable Fees to be charged
Recording fee, prepaid interest, mortgage tax fee
Lender Compensation
THDA Originating Agents Guide Page | 5
Revised 02.01.2024
3. Homeownership for Heroes Mortgage Loan Program
This loan program is offered to qualified members of the United States Military, National Guard,
Veterans, eligible spouses of Veterans, State and Local Law Enforcement Officers, EMTs and
Paramedics, and Firefighters. A 50 basis point rate reduction will apply to the Great Choice
loan, based on the current rate at time of loan rate lock. The loan is secured by a first mortgage
with the option of down payment and closing cost assistance (see Homeownership for Heroes
Plus for more details).
Homeownership for Heroes Mortgage Loan Program
Eligible Borrower/First Time
Homebuyer Rule
Same as Great Choice or the borrower meets the Veteran’s exemption for
first time homebuyer requirement (See THDA OA Guide for Veteran
Exemption). Must be currently employed in TN or military/Veteran. Must
have license/certifications in profession listed above or military LES/DD214.
Assumable
Subject to Qualifying
Interest Rate
Posted on THDA Website
Loan Term
30 years
Loan Types
FHA, VA, USDA/RD (Agency), and Uninsured Conventional Portfolio
Max Loan Amount
Varies
Down Payment
As Required by Loan Type
Max MRB Income Varies by County
Max Acquisition Cost
$400,000
Eligible Properties
Single Family 1-4 unit (1 must be owner occupied), condos, PUD,
townhomes, HUD approved manufactured homes
Homebuyer Ed
Required
AUS Requirements
DU, LPA, or GUS
Manual Underwriting
Allowed; See THDA Guidelines
Min. Credit Score
640
Max Debt-to-Income Ratio
45%
Max LTV
Subject to FHA, VA, & USDA/RD (Agency) Guidelines. Conventional Loans
78% LTV or less
Min. Investment/Required
Reserves
As Required by Loan Type
Mortgage Insurance
As Required by Loan Type
Occupancy
Owner Occupied within 60 days of Closing
Additional Documentation/Forms
Seller Declaration, Application Declaration, Recapture Disclosure, License or
Certification, DD-214 or DD- 4
Pre-Payment Penalty
No Penalty
Subject to Recapture
Yes; Eligible for Recapture Reimbursement Program
Escrows Required; Waivers not Permitted
Allowable Fees to be charged Reasonable and customary fees up to $1400. Origination fee
based on rate
sheet and product offering at the time the loan is locked;
rate lock extension
fees charged to the lender by THDA can be charged.
Lender Compensation
Based upon the rate sheet and
product offering at the time the loan is
locked.
THDA Originating Agents Guide Page | 6
Revised 02.01.2024
4. Homeownership for Heroes Plus Mortgage Loan Program
This MRB loan offers a choice for down payment and closing cost assistance, one offering
has deferred payments and the other has a low interest rate with monthly payments. Both
are secured by a second deed of trust. Loan options are available only with the
Homeownership for Heroes first mortgage loan. Heroes Plus Loan with payment is at an
interest rate the same as the first mortgage, up to 5% of the sales price (maximum loan
amount of $15,000), and monthly payments amortized over a 30 year term. Heroes Plus
Loan-deferred (no payment) is a flat up to $6,000 at a 0% interest rate, 30 year term, and
must be repaid if the home is refinanced or sold.
Homeownership for Heroes Plus Mortgage Loan Program
(DPA) Options
Eligible Borrower/First Time
Homebuyer Rule
Must Qualify and Obtain THDA Homeownership for Heroes Loan
Assumable
Not Allowed
Interest Rate
Same as First Mortgage for Payment Option: 0% for Deferred Option
Loan Term
30 years for all DPA Options
Loan Types
Conventional
Max Loan Amount
Up to 5% of sales price for payment option, maximum $15,000 loan
amount: up to $6,000 for deferred option
Down Payment
N/A
Max MRB Income
Varies by County
Max Acquisition Cost
$400,000
Eligible Properties
Same as First Mortgage
Homebuyer Ed
Required
AUS Requirements
DU, LPA, or GUS
Manual Underwriting
Allowed; See THDA Guidelines
Min. Credit Score
640
Max Debt-to-Income Ratio
45%
Max CLTV
Subject to FHA, VA, & USDA/RD (Agency) Guidelines
Min.
Investment/Required
Reserves
No
Mortgage Insurance
N/A
Occupancy
Owner Occupied within 60 days of Closing
Additional
Documentation/Forms
THDA provides Mortgage Note and Deed of Trust
Pre-Payment Penalty
Balance due in full upon first mortgage payoff, assumption, or refinance
Subject to Recapture
No
Escrows
Required; Waivers not Permitted
Allowable Fees to be charged
Recording fee, prepaid interest, mortgage tax fee
, settlement fee of up
to $200
Lender Compensation
Not Paid on Second Mortgage
THDA Originating Agents Guide Page | 7
Revised 05.22.2024
5. Freddie Mac HFA Advantage® Mortgage Loan Program (Mortgage Backed Securities)
This MBS program is designed for low and moderate income borrowers. HFA Advantage
offers an insured conventional mortgage loan secured by a first mortgage with the option
of down payment and closing cost assistance (see HFA Advantage Plus for more details).
Maximum CLTV limit of 105%. See Section X
.
Freddie Mac HFA Advantage® Mortgage Loan Program
Eligible Borrower/First Time
Homebuyer Rule
First Time Homebuyer Not Required
Assumable
Per Freddie Mac Guidelines
Interest Rate
Posted on THDA Website
Loan Term 30 years
Loan Types
Freddie Mac HFA Advantage
Max Loan Amount
Varies
Down Payment
3%
Max MRB Income
Varies by County
Max Acquisition Cost
$400,000
Eligible Properties
See Eligible Properties
Homebuyer Ed
Required
AUS Requirements
LPA Only
Manual Underwriting
Not Allowed
Min. Credit Score
Per Freddie Mac Guidelines
Max Debt-to-Income Ratio
Per Freddie Mac Guidelines
Max LTV 97%
Min. Investment/Required
Reserves
Per Freddie Mac Guidelines
Mortgage
Insurance
<80% AMI
18% coverage greater than 95%-97%
16% coverage greater than 90%-95%
12% coverage greater than 85%-90%6% coverage greater than 80%-
85%
>80% AMI
Per Freddie Mac Guidelines
Occupancy
Owner Occupied within 60 Days of Closing
Pre-Payment Penalty
No Penalty
Subject to Recapture
No
Escrows
Required; Waivers not Permitted
Allowable Fees to be charged
Reasonable and customary fees up to $1400. Origination fee based
on rate sheet and product offering at the time of the rate lock; rate
lock extension fees charged to the lender by THDA can be charged.
Lender Compensation
Based on the rate sheet and product offering at the time
of the rate lock.
THDA Originating Agents Guide Page | 8
Revised 05.22.2024
6. Freddie Mac HFA Advantage® Plus Mortgage Loan Program (Mortgage Backed
Securities)
This MBS loan offers a choice for down payment and closing cost assistance, one offering
has deferred payments and the other has a low interest rate with monthly payments. Both
are secured by a second deed of trust. This loan is available only with the HFA Advantage
first mortgage loan. The HFA Advantage Plus with Payment is at an interest rate the same
as the first mortgage, monthly payments amortized over a 30 year term, and up to 5% of
the sales price (maximum $15,000 loan amount). The HFA Advantage Plus with No
Payment is up to $6,000 at a 0% interest rate, 30 year term, and must be repaid if the
home is refinanced or sold.
Freddie Mac HFA Advantage® Mortgage Loan Program
(DPA) Options
Eligible Borrower/First Time
Homebuyer Rule
Must Qualify and Obtain Freddie Mac HFA Advantage® Loan
through
THDA
Assumable
Not Allowed
Interest Rate
Same as First Mortgage for Payment Option: 0% for Deferred Option
Loan Term
30 years for all DPA Options
Loan Types
Conventional
Max Loan Amount
Up to 5% of sales price for payment option, maximum $15,000 loan
amount: up to $6,000 for deferred option
Down Payment
N/A
Max MRB Income
Varies by County
Max Acquisition Cost
$400,000
Eligible Properties
See Eligible Properties
Homebuyer Ed
Required
AUS Requirements
LPA only
Manual Underwriting
Not Allowed
Min. Credit Score
Per Freddie Mac Guidelines
Max Debt-to-Income Ratio
Per Freddie Mac Guidelines
Max LTV
105% max CLTV
Min.
Investment/Required
Reserves
No
Mortgage Insurance
N/A
Occupancy
Owner Occupied within 60 days of Closing
Additional Documentation/Forms
FNMA/FHLMC Multi-state Note and Deed of Trust in the name of
the Originating Agent
Pre-Payment Penalty
Balance due in full upon first mortgage payoff, assumption, or refinance
Subject to Recapture
No
Escrows
Required; Waivers not Permitted
Allowable Fees to be charged
Recording fee, prepaid interest, mortgage tax fee
, settlement fee up to
$200
Lender Compensation Not Paid on Second Mortgage
THDA Originating Agents Guide Page | 9
Revised 02.01.2024
SECTION II: ORIGINATING AGENTS
To be approved as a Tennessee Housing Development Originating Agent, the lender
must meet the qualifications as listed on our website.
THDA uses an online data portal through Comergence by Optimal Blue
to process new
lender applications. Lenders should visit the THDA website to review the application
process. No documents should be overnighted or emailed to THDA unless requested.
Approved Originating Agent’s staff must complete required THDA training prior to being
authorized to originate loans. Training includes all aspects of the loan origination process.
ORIGINATING AGENT WORKING AGREEMENT
The written agreement between an Originating Agent and THDA, which must be
executed before any loan applications will be accepted by THDA for processing (the
“Working Agreement”), contains the basic contractual agreements between the
Originating Agent and THDA. The Working Agreement sets forth general terms under
which the Originating Agent is authorized to act on behalf of THDA.
The Working Agreement also incorporates the contents of this Guide, prior guides, and
other written instructions that may be issued by THDA to provide instruction and direction
in the daily operation of THDA’s programs. THDA has separate working agreements for
the MRB program and the MBS program.
CORRESPONDENT RELATIONSHIPS
Each Originating Agent is responsible for originating, processing, underwriting, closing,
post-closing, submitting the documents to THDA, and insuring all THDA loans are in
accordance with the guidelines and procedures stated in the Originating Agents Guide,
the appropriate Agency requirements, and all regulatory requirements of the following:
• Real Estate Settlement Procedures Act (RESPA);
• Regulation X;
• Equal Credit Opportunity Act (ECOA);
• Regulation B;
• Fair Credit Reporting Act (FCRA);
• Regulation V;
• Truth in Lending Act (TILA);
• Regulation Z;
• Fair Housing Act;
• Homeowners Protection Act of 1998;
• Flood Act;
• Consumer Financial Protection Bureau (CFPB);
• Any other applicable federal and state laws and regulations.
Applications that are originated by a third party and/or brokered applications, are
eligible to be submitted to THDA upon written approval of THDA.
Applications originated by one Originating Agent that are transferred to another
Originating Agent for submission to THDA must be re-verified in the receiving Originating
Agent’s name prior to submission to THDA.
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Revised 02.01.2024
The Originating Agent who originated, processed, closed, insured, and delivered a
particular loan to THDA must directly assign the Deed of Trust securing the loan to THDA.
Insurance or guaranty certificates may not contain the name of any entity other than the
Originating Agent or THDA as the beneficiary of the insurance or guaranty.
MAINTAINING ORIGINATING LENDER APPROVAL STATUS
After initial approval, each Originating Agent will be required to meet the following
specified requirements to maintain their status as an approved THDA Originating Agent.
A. Insurance and Net Worth Requirements – Maintain required fidelity bond, errors
and omissions insurance and net worth requirements.
B. Audited Financial Statements – Must provide THDA with financial recertification
documentation, as required by HUD. Financial statement shall include a balance
sheet, an income statement, and a statement of retained earnings, all related
notes and the opinion of an independent Certified Public Accountant as to the
correctness of those statements.
C. Information Security – Lender must provide current information security policy.
Written notice must also be provided to document any information security
incident or breaches that have taken place in the past three years.
D. Minimum Origination Volume – Originate no fewer than 6 first mortgage loans
which are purchased by THDA during the first twelve months and each full
calendar year thereafter, unless otherwise approved by THDA. Consideration of
lesser volume will be given in underserved or rural areas. Lenders deactivated due
to minimum origination volume not being met will be considered for renewal
during the following renewal period.
E. Notification of Organizational Changes – Provide written notice to THDA of any
major organizational changes contemplated, including but not limited to:
• Resignation or replacement of senior management personnel.
• Resignation or replacement of designated THDA delegated staff.
• Mergers, acquisitions or corporate name change.
• Change in savings and loan association charter to become banking
association.
• Change in financial position.
• Any reorganization, which centralizes or decentralizes a primary function
(i.e. underwriting, closing or post-closing).
• Opening or closing of offices originating THDA loans (include address,
phone number and branch manager's name).
F. Compliance with THDA Requirements – Maintain compliance with THDA policies,
procedures, rules, and regulations as stated in this Origination Agent Guide and
subsequent notifications. Comply with terms and conditions contained in the
Purchase Agreement.
G. Acceptable Loan Performance – Originate loans resulting in a delinquency rate
determined to represent an acceptable risk to THDA.
THDA Originating Agents Guide Page | 11
Revised 05.29.2024
H. Lender Performance – If a lender’s performance or that of an employee of the
lender is identified as presenting a significant risk to THDA, THDA reserves the right
to impose any of the following restrictions:
• Lender or individual placed on probationary status,
• Suspension of loan locking privileges for up to 12 months,
• Retention of lender compensation,
• Debarment from the THDA program for up to 3 years.
Appeal for suspension or debarment can be made in writing to the Director of
Single Family Loan Operations or Chief Operating Officer. In addition to the written
request, supporting documentation should be provided.
I. Early Loan Payoff – THDA will monitor the early loan payoff reports and reserves the
right to impose fees or reimbursements for excessive early payoffs.
J. Fees – Pay applicable renewal fee.
K. Quality Control Plan – Originating Agents must have a QC Plan that meets FHA,
VA, USDA, and Freddie Mac (“Agency Loans”) requirements. The Originating
Agent must maintain and update its QC Plan as needed to ensure it is fully
compliant with all applicable requirements at all times. Provide copies of any
notification forwarded to an insure/guarantor for violations of law or regulations,
false statements or program abuses by the Originating Agent, its employees or any
other party to the transaction as required under the respective Quality Control
plan submitted to THDA. An updated QC Plan will be requested as part of the
recertification process
L. Reconsideration of Value- Originating Agents must have policies and procedures
implemented that meet Agency requirements. The Originating Agent must
maintain and update as needed to ensure it is always fully compliant with all
applicable requirements. A copy of the policy or an attestation may be requested
as part of the recertification process.
THDA QUALITY CONTROL AND RISK MANAGEMENT
Prefunding Quality Control Reviews
THDA is implementing a preclosing quality control review process. When an Originating
Agent’s file is selected for preclosing review, the following condition will be reflected on
the file “This loan has been selected for a prefunding QC review. Additional conditions
may apply.” Any additional conditions required by the QC review must be submitted by
the OA to THDA. The loan cannot close until the time the OA is provided with a
commitment from THDA.
Quality Control Reviews
THDA will perform a monthly Quality Control review of no less than 10% of loans purchased
by THDA. The selection will include random and discretionary loans. The OA will be
notified of any defects at the loan level. The defects are a balance between THDA’s risk
management, insure/guarantor’s risk management, and best practices of quality
assurance business processes. The Originating Agent will submit any loan level
documentation requested by THDA to clear necessary defects.
THDA Originating Agents Guide Page | 12
Revised 02.01.2024
Early Payment Default Reviews
THDA considers Early Payment Defaults (EPD) as any mortgage that becomes delinquent
within the first year. THDA requires Originating Agents review all EPD on a monthly basis.
In addition to the Originating Agent using Neighborhood Watch to assist with identifying
FHA EPD, THDA will provide to the Originating Agent’s contact on record the EPD loans
identified monthly by THDA’s Servicing Department. Loans identified as EPD must be
reviewed immediately to prevent loan(s) from becoming 60 days delinquent in the first 6
months or 90 days delinquent in the first 12 months.
With the exclusion of first payment defaults, THDA will require a quality control performed
on all EPD loans with a delinquency status of 60 days in the first 6 months or 90 days in the
first 12 months. EPD within the first 6 months will be the OA’s responsibility to conduct a
Quality Control review which meets the standards as outlined in the OA’s Quality Control
Plan. OA must complete the initial Findings report within 60 days of the date notified by
THDA and provide THDA a summary of the report. OA will have 30 days from the initial
findings report to mitigate any findings and provide final finding report to THDA, if
necessary. THDA will conduct a quality control for all EPD loans 90 days delinquent in the
first 12 months. First payment defaults are subject to be repurchased.
An OA who fails to respond within the above timeline for EPD may be suspended from
reserving and/or submitting new loan applications to THDA.
Loan Level Defects/Findings
THDA will notify OA of any loan level defect(s) identified during any QC review performed
by THDA.
THDA will request a response and remedy for the defect(s). Potential remedies:
• Mitigating Documentation
Defects may be mitigated with the OA’s submission of additional documentation
which adequately addresses the defect/finding.
• Indemnification
When all alternatives have been exhausted and the loan is not in violation of any
items listed in the loan repurchase obligation, OA may resolve defects and findings
by indemnifying THDA against the risk of financial losses by signing a 5 year or Life
of Loan Indemnification agreement. With the execution of an indemnification, OA
is expected to comply with all terms of the agreement, which includes returning
all loan level Service Release Premium to THDA and paying an administrative fee
of $1,500.
The OA must report any Findings of fraud or material misrepresentation to THDA
immediately. An OA who fails to respond within a reasonable time to THDA inquiries or
requests for documentation may be suspended from reserving and/or submitting new
loan applications to THDA.
Exclusion Lists
THDA requires all parties involved in the loan process to be screened against the
appropriate exclusion lists. This includes employment listed in the QC plan for hiring
procedures and all parties involved in the loan process to meet Exclusion List guidelines
as set by the Agency. Exclusion lists include, but are not limited to: The Limited Denial of
Participation (LDP) list, General Services Administration (GSA), Freddie Mac Exclusionary
List (FMEL) and The Office of Foreign Assets Control (OFAC).
THDA Originating Agents Guide Page | 13
Revised 02.01.2024
THDA will maintain a list for any debarred or suspended lenders or individuals from THDA’s
mortgage loan program.
Information Security Standards
With the ever increasing focus on cyber security and the risk it poses to organizations that
house and use Personal Identifiable Information in the course of their normal business,
THDA requires that Originating Agents meet certain Information Security Standards.
THDA’s Information Technology Department will assess the Originating Agent’s
Information Security Policies for industry best practices on protecting against
cybersecurity threats and protecting customer data.
These requirements / best practices include:
1.
The Originating Agent is a US-based company with no offshore IP.
2.
The Originating Agent maintains a policy against password sharing.
3.
The Originating Agent maintains a clean desk policy.
4.
The Originating Agent maintains appropriate controls and disciplinary action for
policy violations or mishandling of customer data.
5.
The Originating Agent facilitates a cybersecurity training program for its employees,
minimally, on an annual basis.
6.
The Originating Agent employs data encryption practices for confidential data in
transit and at rest. This includes encryption practices for confidential information sent
via email, portals, SFTP sites, etc.
LOAN REPURCHASE
Repurchase Obligation
THDA, in its sole discretion, may refuse to purchase any loan, and may require an
Originating Agent to repurchase any loan(s) when any of the following exist:
1. Commitment conditions are not satisfied or loan did not close in accordance to
terms of the Commitment; or
2. The Originating Agent fails to deliver any documents required by the Guide or
pursuant to any condition of purchase by THDA, all in form and substance as
required by THDA or by State and Federal statutes and regulations, and
satisfactory to THDA in its sole discretion, within the period provided in the Guide;
or
3. It is determined, at any time, that any representation made by the Originating
Agent with respect to the Mortgage Loan was untrue when made or any warranty
or term in the Mortgage Purchase Agreement Working Agreement or in the Guide
has been breached; or
4. It is discovered during EPD review the borrower did not make the first payment to
the Servicer ("first payment default"); or
5. The Originating Agent fails to deliver to THDA any FHA, VA, HUD, RD-USDA, or
private mortgage insurance Mortgage Insurance Certificate or Guaranty
Certificate with respect to any First Mortgage Loan sold and delivered to THDA
within the period provided in the Guide or an entity other than THDA or the
Originating Agent is named on the MIC, LGC, USDA/RD guarantee (3555-11, 3555-
17 or 3555-18) or PMI Certificate;
THDA Originating Agents Guide Page | 14
Revised 02.01.2024
6. The Originating Agent, if at any time whether prior to or after purchase by THDA
enters into an indemnification agreement with an Agency, whereby the
Mortgage Loan does not fully meet the requirements of THDA’s Guide or the
Mortgage Purchase Agreement.; or
7. THDA is required to repurchase a Mortgage Loan for underwriting or compliance
deficiencies, fraud, or misrepresentation related to the origination of the
Mortgage Loan; or
8. It is determined that property is not in compliance with any and all Agency
guidelines for minimum property standards and loan insurance, including
Manufactured Homes de-titled within 90 days of closing; or
9. It is determined, at any time, through THDA’s quality assurance review process or
otherwise that there are material underwriting or compliance deficiencies that
could not be cured, or that the Mortgage Loan was originated based on fraud or
misrepresentation.
An Originating Agent who fails to repurchase loans upon demand may be suspended
from reserving and/or submitting new loan applications to THDA, and THDA may pursue
other remedies as specified in the Working Agreement.
Repurchase Price
The amount necessary to repurchase a loan is:
1. The sum of the outstanding principal and interest on the Great Choice loan and
the Great Choice Plus loan, if applicable
.
2.
Monthly escrow adjustment.
3.
Service release premium, if applicable.
4.
Lender Compensation if Repurchase is within 12 months of loan purchase.
Repurchase Procedure
In the event THDA demands repurchase of a loan, the following procedures all apply:
1. THDA will provide instructions for obtaining the repurchase price by a certain
deadline.
2. The Originating Agent must prepare an Assignment from THDA to the Originating
Agent and submit it to the THDA Servicer, who will forward the Assignment to THDA
for execution.
3. The Originating Agent must wire the required repurchase price to the THDA
Servicer according to instructions provided by the THDA Servicer.
4. Upon receipt of the repurchase price, THDA will sign and notarize the Assignment
and return it to the Originating Agent with the loan file.
5. After repurchase, THDA will reimburse Originating Agent for all principal and
interest received by THDA after the repurchase date.
Loans declared ineligible for purchase by THDA and loans repurchased from THDA are
not eligible for subsequent purchase by THDA.
FEES ORIGINATING AGENT MAY EARN
Originating Agents may earn the following fees in connection with THDA loans:
THDA Originating Agents Guide Page | 15
Revised 02.01.2024
1. Origination Fee - charged by the lender is based on the rate sheet and product
offering at the time the loan is locked. THDA will pay lender compensation at the
time of loan purchase based on the rate sheet and product offering. Normal and
Customary Fees – including, without limitations, appropriate application fee.
Either Applicant or Seller may pay fees. Loan Estimate and Closing Disclosure
should not list any fees payable to THDA. However, section A, page 2 of the loan
estimate/closing disclosure cannot exceed $1,400 for all charges payable to the
lender.
2. Service Release Premium (SRP) – Upon loan completion, THDA will pay SRP based
on the rate sheet and product offering at the time the loan is locked. (See Section
VIII, Servicing Procedures
)
3. Interest - an Originating Agent may retain per diem interest at the note rate for the
number of days Originating Agent holds the loan prior to purchase by THD
THDA Originating Agents Guide Page | 16
Revised 02.01.2024
SECTION III: QUALIFYING AN APPLICANT
ELIGIBILITY OVERVIEW
THDA program eligibility requires the following determinations:
1. Determine whether the property is within the applicable Acquisition Cost Limit
.
2. Determine whether the Applicant’s Income is within the Applicable Income Limits
as outlined in IRS Rev. Ruling 86-124.
3. Determine whether the Applicant meets the Residence Requirement
.
4. Determine whether the Applicant meets the Three Year Requirement.
5. Determine whether the Applicant meets the New Mortgage Requirement.
6. Determine whether the Applicant is creditworthy according to the appropriate
Agency guidelines.
If all of these requirements are not met, do not submit the application file to THDA.
ACQUISITION COST LIMITS
Defining Acquisition Cost
Property to be financed with a THDA loan cannot be purchased for an amount that
exceeds the applicable Acquisition Cost Limit. Generally, the Acquisition Cost is the total
cost of acquiring the property as a completed residential unit.
Acquisition Cost Inclusions
Include the following items in determining Acquisition Cost:
1. The price indicated in an executed sales contract for a proposed, new or existing
house and lot that will be conveyed to the Applicant when the THDA loan is closed
(“house” includes a manufactured home on a permanent foundation);
2. The price or total cost to construct a house on a lot owned by the Applicant;
3. The amount paid by the Applicant for an unimproved lot less than two years
before the date of loan application upon which a residence will be (or has
recently been) built;
4. The cost of necessary repairs to the residence that are not included in the sales
contract;
5. The cost for fixtures that are not included in the sales contract;
6. The cost of all materials and labor needed to complete or renovate the residence
that are not included in the sales contract;
7. Any other cash or in-kind contributions paid by or on behalf of the Applicant to or
for the seller;
8. Any other cash or in-kind contributions paid by or on behalf of the seller to or for
Applicant;
9. The portion of settlement and financing costs that exceed usual and reasonable
amounts.
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Revised 02.01.2024
Acquisition Cost Exclusions
Do not include the following items in determining Acquisition Cost:
1. The amount paid by the Applicant for an unimproved lot more than two years
before the date of application upon which the subject residence will be (or has
recently been) built;
2. The cost for personal property that is not included in the contract for sale;
3. The imputed cost (sweat equity) of Applicant's labor and/or the labor of the
Applicant's immediate family members;
4. Loan points paid by the seller;
5. Usual and reasonable settlement and financing costs.
Current Acquisition Cost and Income Limits by County
See THDA website
for current acquisition cost and income limits.
MORTGAGE REVENUE BONDS (MRB) INCOME LIMITS, IRS REV. RULING 86-124
Defining Household
1. Accuracy of Household Composition - Although not a critical issue in other sources
of financing, the accuracy of household composition must be determined for
purposes of establishing maximum income limit of Applicant. Example 1-2 person
household or more than 3. If the Originating Agent becomes aware, at or prior to
closing, that the household composition may differ from the composition first
proposed, documentation must be corrected and submitted to THDA.
2.
Separated Applicant - A separated spouse who will not occupy the property must
furnish verification of their current residence to ensure accuracy of Household
Composition.
3.
Expected Childbirth - Do not include an unborn child for purposes of determining
the number of persons in the household.
Defining MRB Income
The Applicant cannot have, at the time of application or at closing, an MRB Income
greater than the applicable MRB Income Limit. Income reasonably expected over the
next 12 months based on past income should be considered.
MRB Income is the total annual gross income, earned and unearned, from all sources,
before taxes or other deductions, received by the Applicant(s).
Determining MRB Income, as described in this section, is essential for determining eligibility
for THDA loan programs. This determination of MRB Income is an initial step that is
separate and different from subsequent credit underwriting for compliance with Agency
regulations.
MRB Income Inclusions
The income to be taken into account in determining the gross monthly income is the
income of the Applicant(s) and any other person who is expected both to live in the
residence being financed and to be secondarily liable on the mortgage:
THDA Originating Agents Guide Page | 18
Revised 02.01.2024
1. Wages, whether salary or hourly; including vacation, sick, and holiday pay;
2. Overtime earnings, fees, tips, bonus, shift differential and other compensation for
personal services if the borrower has received this income for the past two years
and it is reasonably likely to continue. Periods of Overtime, Bonus, or Tip Income
less than two years may be considered if the Mortgagee documents that the
Overtime, Bonus, or Tip Income has been consistently earned over a period of not
less than one year and is reasonable likely to continue (per Agency guideline). If
used for qualifying purpose, it must be used for MRB Income purpose;
3. Commissions;
4. Social Security payments;
5. Interest, dividends and other net income of any kind from real or personal
property; (any withdrawal of cash or assets from an investment will be included as
income, except to the extent the withdrawal is reimbursement of cash or assets
invested by the Applicant(s)); also, the greater of actual earnings or imputed
earnings from liquid assets in excess of $5,000.00.
6. Alimony, child support and other recurring maintenance payments that have
been consistently received;
7. Payments from annuities, insurance policies, pensions, retirement funds, royalties,
sick pay, trust income, disability, death benefits or other type of payments that are
not considered temporary, nonrecurring or sporadic;
8. Armed Forces pay, including regular pay, special pay and allowances (excluding
special pay for exposure to hostile fire);
9. Welfare assistance;
10. Relocation payments made pursuant to Title II of the Uniform Relocation
Assistance and Real Property Acquisition Act of 1970;
11. Benefit and other non-earned income;
12. Any other source of income, except as noted in “Exclusions from Household
Income”.
13. Annual net income from rental (net rental income is calculated at 75% of gross
rent).
14. Total annual net income from operating a business or profession, including
expenditures for business expansion or capital indebtedness, and withdrawal of
cash or assets except to the extent the withdrawal is for reimbursement of cash or
assets invested in the operation by a household member; an allowance for
deduction of straight line depreciation of assets used in the operation is allowed.
MRB Income Exclusions
When calculating Household Income DO NOT include
1. Income for any household member that is not secondarily liable for the mortgage.
2. Payments received for care of foster children or foster adults. Unless payments are
used for mortgage loan qualification purpose according to Agency’s guidelines;
3. Adoption assistance payments;
THDA Originating Agents Guide Page | 19
Revised 02.01.2024
4. Amounts that are specifically for, or in reimbursement of, the cost of medical
expenses for a household member;
5. Income of a live-in aide;
6. Student financial assistance (educational grants, scholarships, educational
entitlements, work-study programs and financial aid packages) paid directly to
the student or to the educational institution;
7. Armed Forces special pay for exposure to hostile fire;
8. Earned Income Tax Credits;
9. Amounts received that are incident to a training program funded by HUD,
including compensation that is a component of a state or local employment
training program with clearly defined goals and objectives, the duration of which
is for a limited period, determined in advance;
10. Amounts received by a disabled person that are disregarded for a limited time for
purposes of Supplemental Security Income (SSI) eligibility and benefits because
they are set aside for use under a Plan to Attain Self-Sufficiency (PASS);
11. Amounts received by a participant in a publicly assisted program which are
specifically for or in reimbursement of out-of-pocket expenses (such as special
equipment, special clothing, transportation, child care, etc.) and which are made
solely to allow participation in a specific program, such as the Community Work
Experience Program, or the Employment Search Program; this exemption also
includes volunteer fire-fighters;
12. Temporary, sporadic or nonrecurring income, including gifts;
13. The value of Food Stamps;
14. Lump sum additions to assets, such as inheritance, insurance payments (including
health and accident insurance and worker's compensation payments), capital
gains, settlement for personal or property loss, and deferred periodic payments
received in a lump sum from Supplemental Security Income (SSI) and Social
Security benefits;
15. Repatriation payments made by foreign governments pursuant to claims filed
under the laws of that government by persons who were persecuted during the
Nazi era (initial determination or reexamination must have been made on or after
April 13, 1993).
RESIDENCE REQUIREMENT
The Applicant(s) must occupy the property as their permanent, principal residence within
60 days after the THDA loan is closed. The Applicant(s) must use the property as their
permanent, principal residence for the life of the THDA loan.
THREE YEAR REQUIREMENT
Applicant(s) who have had an ownership interest in their principal residence within the
three years (a full 36 calendar months) prior to the date of application are not eligible for
a THDA loan. When an applicant is married, both spouses must meet the three year, first-
time homebuyer requirement. A divorced Applicant that did not have an ownership
interest in their principal residence per the Final Divorce Decree is eligible for a THDA loan.
The three year requirement does not apply if the property to be acquired with the THDA
THDA Originating Agents Guide Page | 20
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loan is located within a Targeted Area or under certain circumstances if the applicant is
a veteran.
Permitted Ownership Interests
An Applicant may have the following ownership interests in their principal residence
within the last three years and be eligible for a THDA loan:
1. An ordinary lease, with or without an option to buy;
2. The interest of a buyer under a standard residential purchase contract;
3. A mere expectancy to inherit property at a later date;
4. A remainder interest;
5. A manufactured home without ownership of the land on which it is located;
6. Any of the prohibited ownership interests if the property is in a Targeted Area;
7. Any other interest that is not a prohibited interest, as determined by THDA.
An Applicant may also have the following ownership interests within the last three years
and be eligible for a THDA loan:
1. An ownership interest in a vacation home or rental property;
2. A financial interest in a residence in which the Applicant has not resided at any
time within the last three years
Prohibited Ownership Interests
Determine whether the property is in a Targeted Area
. If the property is in a Targeted
Area, this requirement does not apply.
Applicants who have had any of the following ownership interests in their principal
residence within the three years (a full 36 calendar months) before the date of the THDA
loan application are not eligible for a THDA loan to acquire property located within a
non-Targeted Area:
1. A fee simple interest;
2. A joint tenancy;
3. A tenancy in common;
4. A tenancy by the entirety;
5. The interest of a tenant-shareholder in a cooperative;
6. A life estate;
7. A land contract;
8. Ownership of a manufactured home and the land on which it was located, if the
manufactured home was titled and assessed as real property;
9. An interest in an Applicant's principal residence created by the existence of an
inheritance, whether title is vested in the Applicant or not
10. Any of the above interests held in a trust (whether or not created by the Applicant)
that would constitute an ownership interest if held directly by the Applicant.
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11. Interest arising because, within the last three years, the Applicant's name was
included on a deed to a residence which the Applicant occupied as their
principal residence.
12. Interest arising because the Applicant is currently married to a person who has one
of the prohibited ownership interests in a residence which Applicant occupies as
their principal residence within the last three years.
13. Any other interest that constitutes an ownership interest, as determined by THDA.
Veteran Exemption
Veterans and their spouses do not have to meet the three year requirement (i.e. be a
first-time homebuyer) under certain circumstances to be eligible for THDA’s mortgage
programs. “Veterans” as defined in 38 U.S.C. Section 101, so long as the Veteran did not
previously receive a bond finance mortgage under this exception and, generally,
includes anyone (a) who has served in the military and has been released under
conditions other than dishonorable or (b) who has re-enlisted, but could have been
discharged or released under conditions other than dishonorable.
NEW MORTGAGE REQUIREMENT
A THDA loan cannot be used to refinance an existing loan. A THDA loan may replace a
temporary construction or bridge loan if acceptable documentation is provided to THDA
that such a loan has a non-renewable term of twenty-four (24) months or less,
documented with a copy of the construction or bridge loan note and recorded Deed of
Trust. A THDA loan cannot close with a three-day Right of Rescission. All THDA loans must
be amortized for a term of 30 years, unless a different term is specifically stated in this
Guide.
TARGETED AREAS
A Targeted Area is a qualified census tract or an area of chronic economic distress as
designated by the IRS. A Targeted Area may be an entire county or may be a particular
census tract within a county. The Targeted Area designation is important for two reasons:
1. The Three Year Requirement does not apply in Targeted Areas; and
2. THDA is required to use or set aside a portion of the proceeds from each bond
issue for loans in Targeted Areas.
Documentation in each application file submitted to THDA must correctly identify
whether the property is or is not located within a Targeted Area. The Appraisal must
identify the relevant census tract. If a discrepancy occurs in the census tract information
reported on the appraisal versus the census tract shown on the Flood Hazard
Determination, the Originating Agent must clarify and provide correct census tract
information to THDA.
Census Tracts
The US Census Bureau divides the United States into many small geographic areas, and
identifies each with a unique series of numerals separated by decimals. These numbers
indicate the property's state, county, tract, and sub-tract.
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CURRENT TARGETED AREAS
1. Targeted Counties
Campbell
Franklin
Houston
Monroe
Union
Cannon
Gibson
Jackson
Morgan
Van Buren
Carroll
Grainger
Jefferson
Overton
White
Claiborne
Greene
Johnson
Pickett
Cocke
Grundy
Lake
Polk
Crockett
Hancock
Lauderdale
Rhea
Dekalb
Hardeman
Lawrence
Scott
Dyer
Hawkins
Lincoln
Stewart
Fayette
Haywood
Macon
Tipton
Fentress
Henderson
Meigs
Trousdale
2. Targeted Census Tracts
County Census Tracts
Anderson
0207.00
Blount
0108.00
Bradley
0102.01
104.00
107.00
108.00
Carter
0704.00
Davidson
0104.03
0109.04
0136.00
0139.00
0148.00
0158.05
0160.00
0191.08
0193.00
Hamblen
1001.00
1003.00
Hamilton
4.00
16.00
19.00
23.00
24.00
25.00
122.00
Hardin
9204.02
Henry
9693.00
Knox
14.00
19.00
20.00
24.00
26.00
28.00
29.00
32.00
67.00
68.00
70.00
Madison
4.00
5.00
7.00
9.00
10.00
11.00
Maury
107.00
McMinn
9702.01
9702.02
Montgomery
1008.00
1009.00
Putnam
0003.04
Robertson
0803.02
Rutherford
0404.05
0421.01
Shelby
2.00
3.00
6.00
7.00
8.00
12.00
13.00
14.00
20.00
24.00
28.00
37.00
45.00
50.00
53.00
55.00
56.00
57.00
59.00
65.00
67.00
68.00
69.00
70.00
78.10
80.00
81.10
82.00
88.00
89.00
91.00
99.01
99.02
100.01
100.02
101.20
101.21
103.00
105.00
106.01
106.20
106.30
111.00
112.00
115.00
116.00
117.00
205.21
205.23
205.42
205.43
205.44
211.11
217.10
217.21
217.25
217.31
217.55
220.25
220.26
222.10
222.20
223.10
227.00
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Sullivan
0402.00
0405.00
0427.03
Warren
9305.00
Washington
0609.01
0609.02
SECTION IV: OTHER THDA PROGRAM REQUIREMENTS
ELIGIBLE APPLICANTS
An Eligible Applicant must meet ALL of the following criteria:
1. Possess and demonstrate the legal capacity to incur the THDA debt (not be
judged incompetent, and be age 18 or older or have minority removed by judicial
process);
2. Meet credit underwriting standards of THDA, the relevant Agency program as
evidenced by the approval of a Direct Endorsement underwriter and accepted
underwriting software, i.e. Loan Product Advisor, Desktop Underwriter;
3. Be, or become, within 60 days after the THDA loan closing, a resident of the State
of Tennessee and intend to occupy the property as their principal residence;
4. Have gross assets of such amounts as to be considered a person of low or
moderate income, as THDA may determine from the documentation contained
in the application file;
5. Agree to occupy the property as their principal residence and agree not to rent
the property during the term of the THDA loan, as sworn to in the Application
Declaration and as precluded by the THDA Rider.
6. Must complete homebuyer education from a THDA approved provider prior to
closing from a THDA approved provider.
PROPERTY ELIGIBILITY
Eligible Property
Eligible property must meet all of the following requirements including being acceptable
in the Agency Handbooks:
1. Be one of the following:
a) A one unit single family home;
b) A row-house, townhouse, condominium or be part of a planned unit
development. For a property located in a condominium development,
including developments less than 100% complete, the condominium
development must have approval by either FHA, VA, USDA/RD, FHLMC or
FNMA per loan type;
c) A 2-4 unit residence, one unit of which must be occupied by Applicant as
his/her principal residence;
d) Any of the above types of residences, existing, new or proposed:
1. built on site, or
2. a modular home permanently attached to a foundation (in
compliance with HUD guidelines, or
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e) a HUD approved double-wide manufactured home permanently attached
to a foundation (in compliance with HUD Guide 4930.3G, “Permanent
Foundations Guide for Manufactured Housing”),. If any portion of a residence
includes a manufactured home, the residence is classified as a
manufactured home for THDA’s purposes. A structural engineer’s report is
required stating that the home is permanently attached to a foundation in
compliance with HUD guideline
f) Evidence property has been de-titled by the state of Tennessee or proper de-
titling information provided to THDA.
2. Any property consisting of more than one unit as described above and the
property is not zoned appropriately, will not be eligible for THDA funding.
3. Accessory unit/mother-in-law suite is acceptable if documentation provided
the unit is not used in a trade or business. If the unit is to be rented, then it is
subject to the not greater than 15% trade or business rule and the unit has to
be at least 5 years old under the tax code.
4. Not to be used in a trade or business or as an investment property, vacation
home or seasonal home. Individuals claiming a business deduction on their
Federal Income Tax Returns is acceptable as long as the square footage used
for a business deduction is 15% or less. In most cases this is a small portion of the
home used as an office and the tax return must show the percentage of
square footage used for the business deduction..
5. Be in good condition, meet state and local codes, and comply with local
zoning in its present use.
6. Be in complete compliance with any and all loan program Agency guidelines
for minimum property standards and loan insurance. Any closed loan
subsequently found ineligible for insurance for a property related issue, as
determined by the relevant Agency, is ineligible for THDA funding and
immediately subject to repurchase by the Originating Agent, without
exception.
7. In order for a HUD owned property to be considered an eligible property for
THDA funding, it must be listed for sale as:
“Insurable”, meaning that FHA’s MPR has been met at the time of
the appraisal, and no repairs are required regardless of program
type (FHA, VA, USDA/RD, or Conventional):
or
“Insurable With Conditions” and all conditions have been satisfied to
fully meet FHA’s MPR or HUD is providing escrow funds to cover the
costs of required repairs regardless of program type (FHA, VA,
USDA/RD, or Conventional).
The HUD Appraisal must include the estimated cost of any required repairs and must
state that the utilities were on. THDA will allow HUD escrow for repairs to be included
in the loan amount. THDA will also allow borrower funded escrow for required
repairs. The appraiser must specify the cost of any and all required repairs. An actual
bid from a licensed contractor stating the total cost of the required repairs may be
required by THDA. The Originating Agent must be responsible to insure that
adequate funds are available to complete the required repairs and at a minimum,
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follow HUD’s guidelines for the cost of the repairs that must be held in escrow. The
required repairs must be completed within 60 days of the date of loan closing and
a clear, final inspection by the appraiser or Originating Agent is required. An escrow
agreement signed by the Originating Agent and the borrower must be provided to
THDA. THDA reserves the right to reject any request for escrows.
Appraisals
The Originating Agent is responsible for selecting appraisers and reviewing the quality of
their work. THDA does not maintain a list of approved appraisers; however, THDA reserves
the right to refuse appraisals from specific appraisers or appraisal firms. THDA also reserves
the right to require a new appraisal prepared by a different appraiser or to require
additional information, including additional comparable sales.
As an element of THDA’s quality control process, appraisal desk reviews and field reviews
may be ordered by THDA. Reviews indicating that the original appraisal contained
unrealistic valuation methods or conclusions, or reviews that reveal patterns of
inappropriate valuations, may result in the suspension of the appraiser from THDA’s
programs, or other appropriate action.
All application files submitted for THDA underwriting must include a Uniform Residential
Appraisal Report (URAR), completed by an appraiser who is licensed by the State of
Tennessee, and who has no financial interest in the transaction.
If an appraiser observes conditions that require further investigation, the appraiser must
make the appraisal “subject to” an inspection by an appropriately licensed professional
or another person trained in the particular field of concern, following the appropriate
Agency’s guidelines. Existing properties with minor needed repairs or deficiencies or
deferred maintenance should also follow the appropriate Agency’s guidelines. For
THDA’s uninsured portfolio product, THDA will follow FHLMC selling guide Chapter 5605:
Appraisal Requirements.
The Appraisal must indicate an appraised value acceptable to THDA. An application
may be rejected by THDA if:
1. The appraised value of the property exceeds the applicable Acquisition Cost Limit
by more than 20%; or
2. The Appraisal indicates a land value in excess of 40% of the total appraised value
of the property, unless otherwise approved by THDA in its sole discretion; or
3. The Appraisal indicates the property values for the neighborhood in which the
property is located are declining and the Applicant is seeking a THDA mortgage
loan for maximum financing.
Acceptable Amount of Land
Property purchased using a THDA loan program can include one subdivision lot of up to
five acres in size, as shown on a recorded subdivision plat, without express THDA approval.
More than one recorded subdivision lot may be acceptable at THDA’s discretion, if the
lots are located in an older subdivision containing narrow lots, and if one lot does not
contain the minimum size required under local regulation to permit construction of a
residence. Lots of any size not shown on a recorded subdivision plat require express
approval by THDA, at THDA’s sole discretion. Land relating to a residence shall be
considered as part of the residence only if such land reasonably maintains the basic
livability of the residence and does not provide a source of income to the mortgagor.
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ELIGIBLE LOAN TYPES AND TERMS
Types of Loans
Each THDA loan must be one of the following:
1. Insured or guaranteed by one of the following Agencies:
a. the Department of Veterans Affairs (VA), as evidenced by a Loan Guaranty
Certificate (LGC); or
b. the Federal Housing Administration (FHA), as evidenced by a Mortgage
Insurance Certificate (MIC) in FHA connection; or
c. the United States Department of Agriculture, Rural Development, as
evidenced by USDA/RD Form 3555-17.
2. Conventional loans must have a loan-to-value ratio of 78% or less based on the
loan amount divided by the lesser of appraisal or contract sales price. In the case
of a self-built new construction, the ratio is based on the lesser of appraised value
or actual total cost. See Section X – Freddie Mac HFA Advantage® for higher loan-
to-value program requirements.
Maximum Loan-To-Value Ratios
As permitted by Agency, or THDA uninsured conventional portfolio loans, subject to any
restrictions contained in this Guide.
Maximum Loan Amount
1. Uninsured Conventional Portfolio Loans (uninsured 78% LTV and below)*
a. All Conventional loans must be underwritten using FNMA and FHLMC
guidelines. Automated Underwriting Systems (AUS), FNMA’s (DU) or FHLMC’s
(LPA) must be used for the underwriting decision.
b. Loans at 78% or less LTV may be manually underwritten if the borrower/s
have no credit score. *See HFA Advantage program guidelines for higher
LTV options.
2. FHA, VA or USDA/RD Loans
The Base Loan Amount cannot exceed THDA’s Acquisition Cost limit for the county
in which the property is located. The Total Loan Amount may exceed the
maximum Acquisition Cost limit by no more than the amount of financed MIP,
funding fee or guaranty fee.
3. FHA 203(h) Mortgage Insurance for Disaster Victims
THDA will accept applications under FHA's Section 203(h) Mortgage Insurance for
disaster victims, provided they were a tenant who lost the use of their rental
primary residence due to a natural disaster located within a Presidentially
declared area.
4. Gift of Equity
A Gift of Equity may be considered by THDA on a case-by-case basis on an existing
home or new construction under certain circumstances. The terms of the Gift of
Equity must be stated in the sales contract and must be from an immediate family
member. Immediate family member is defined as parents, siblings and
grandparents. If the home is proposed or under construction, the maximum loan
cannot exceed the borrower’s actual cost of construction plus the borrower’s
THDA Originating Agents Guide Page | 27
Revised 02.01.2024
actual cost of the lot, both of which must be verified. THDA reserves the right to
ask for or require additional documentation on any loan with a Gift of Equity.
5. Estate Sales Transaction
For transactions involving estate sales wherein the Applicant is an heir, the
maximum loan amount must be calculated after deducting the Applicant/heir’s
anticipated share of the sale proceeds.
Security
All THDA loans must be secured by a first lien on the property. In addition, at the option
of the borrower, a Great Choice Plus loan for DPA/closing costs assistance may be
provided. All Great Choice Plus loans must be secured by a second lien on the property.
Loan Payment Terms
1. Great Choice and Homeownership for Heroes
Great Choice and Homeownership for Heroes loans must be fully amortized, with
level payments, and must be for a term of 30 years. If a 30 year loan term exceeds
the economic life of the property, as provided in the appraisal report, THDA will
not approve the loan.
2. Great Choice Plus and Homeownership for Heroes Plus
THDA will be offering two second mortgage loan program options available across
the entire state, regardless of the sales price, as long as it meets THDA’s acquisition
limits.
3. Great Choice Plus-Deferred and HFA Advantage Plus-Deferred (No Payment)
terms:
• Loan Amount is up to $6,000
• 0% interest rate
• 30 year term, due on sale or refinance
• Deferred payments, therefore no payment for qualifying purposes
• Second mortgage loan will be locked simultaneously with the first
mortgage, key words in program description for a successful lock “No
Payment
”
4. Great Choice Plus with Payment and HFA Advantage Plus with Payment terms:
• Loan Amount is 5% of the sales price (or appraised value if less than sales
price), not to exceed $15,000
• 30 year amortizing
• Interest rate is the same as the first mortgage
• Monthly payment must be considered in the debt ratio
• Second mortgage loan will be locked simultaneously with the first
mortgage, key word in program description for a successful lock
“Payment”.
The deferred option listed above does meet 12 CFR § 1026.3 for partial exemption as long
as a settlement fee is not charged.
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Prepayment Penalty
Prepayment penalties are not permitted on THDA loans.
Late Charge
Late charges, if any, must be reflected in the Deed of Trust and Note and must be in
compliance with program Agency’s guidelines. Great Choice Plus secondary mortgage
loan must reflect in the Deed of Trust and Note a late charge of 5% of the overdue
payment of principal and interest if the monthly payment is not made by the end of 15
calendar days after the date it is due.
Origination Fee
Based on the rate sheet and product offering at the time the loan is locked.
Assumptions
THDA first mortgage loans are assumable only if the person assuming the THDA loan meets
all THDA program requirements applicable to new THDA loans, and the assumption
application is approved by THDA. Assumption applications are processed by THDA or the
THDA Servicer of the loan to be assumed.
THDA second mortgage loans are not assumable with the exception of a VA assumption.
FEDERAL RECAPTURE
All THDA mortgage revenue bond loans are subject to the federal recapture tax. The
recapture tax is designed to recapture a portion of the subsidy associated with THDA
loans. Recapture tax liability must be determined at the time the property is sold, if the
sale occurs within nine years from the closing of the THDA loan. Refinancing a THDA loan
does not trigger recapture tax liability, however, if the property is sold after the date of
refinancing but before the ninth anniversary of the THDA loan closing, recapture tax
liability must be determined at the time of sale. THDA Originating Agents notify the
Applicant about recapture tax at the time a THDA loan application is made by securing
their signature on the Notice to Applicants Federal Recapture Requirements.
Whether the recapture tax results in an actual payment to the federal government
depends on a number of factors, including changes in family income, gain on the sale
of the property, the number of years the THDA loan is outstanding, and the original THDA
loan amount. The exact amount to be paid, if any, cannot be determined until the
property is sold.
For further information regarding the federal recapture tax, advise Applicants or
Borrowers to contact their tax professional. Written information is available by ordering
IRS Form 8828 “Recapture of Federal Mortgage Subsidy” and its accompanying
instructions from any IRS office or through the IRS website at www.irs.gov
FEDERAL RECAPTURE TAX REIMBURSEMENT
THDA will reimburse any THDA homebuyer who purchases their home on or after May 1,
2021, the amount of recapture tax the homebuyer pays to the IRS in connection with the
sale of the home. THDA will not calculate the recapture amount. Upon sale or disposition
of the residence, the borrower(s) must calculate the recapture or consult a tax advisor
or the IRS. IRS Form 8828 must be filed for the year in which the home was sold or otherwise
disposed of.
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In order to request a recapture tax reimbursement from THDA, the borrower is responsible
for the following items:
• Originally signed IRS Form 4506-C
• Copy of signed and filed tax return, including completed IRS Form 8828
• Proof federal taxes were paid
• Copy of Final Closing Disclosure issued in connection with the disposition of the
home
• Completed Request for Recapture Tax Reimbursement Form
THDA will process the request for reimbursement when copies of the borrower(s) tax
returns are received from the IRS. THDA will only reimburse the recapture amount actually
paid, but will not reimburse fees, interest, expenses or penalties incurred.
Be advised that THDA will issue an IRS Form 1099 so the amount of any recapture tax that
THDA reimburses to the borrower will be reported to the IRS as income.
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SECTION V: PROCESSING AND CREDIT UNDERWRITING REQUIREMENTS
OVERVIEW
Rates and Rate Locks
Current interest rates are listed on our website at www.thda.org on the Lenders page
.
THDA also utilizes Optimal Blue. Rates are subject to change. Rates can be locked at any
time, however, rate lock timeline must be taken into consideration to be in effect for
closed loan delivery. Property address or lot# and subdivision name (new construction)
is required for all rate locks. Loans must be locked at the time the completed loan file is
submitted to THDA for approval. For mortgage loan programs described in Section I and
existing construction, rates will be locked for 60 days; new/proposed construction will be
locked for 120 days. One 30 day extension may be allowed at a cost of 25 bps. Contact
THDA for re-pricing for additional extension,
SFask@thda.org . All closed loan packages
as outlined on the Closing Submission Checklist must be delivered to THDA in purchasable
condition prior to rate lock expiring. Meaning, all loans must be purchased by THDA prior
to rate lock expiration. Loans not purchased by day 100 for existing construction and 150
for new construction are subject to cancellation or repricing.
Rate locks are available 9 a.m. to 5:30 p.m. Central Time. If additional assistance is
needed for rate locks, it is only available during THDA’s business hours. Rate locks cannot
be cancelled and relocked when interest rates decrease, rates are always based on
worst day pricing. Re-locks are available 60 days after rate lock expiration or cancellation
date if rates decrease from original rate lock. If a loan is cancelled and the borrower
changes properties, a new lock can be obtained. If Program changes, THDA will take
original lock date and new lock request into consideration and provide lock confirmation
reflecting worst day pricing. THDA reserves the right to request a Change of
Circumstance from the Originating Agent.
Disclosures
1. Great Choice and Homeownership for Heroes
Originating agents are required to provide all disclosures that comply with all federal
and state laws and/or regulations. These include, without limitation, signed and
dated copies of loan estimate, Tennessee Residential Property Condition Disclosure
and transfer of servicing disclosures. All Originating Agents are expected to adhere to
all timing guidelines as outlined in 12 CFR § 1026.19(e) (1) (iii) (A) for the Loan Estimate.
2. Great Choice Plus and Homeownership for Heroes Plus
Originating agents will provide all disclosures that comply with all federal and state
laws and/or regulations. These include Loan Estimate and Closing Disclosure. All
Originating Agents are expected to adhere to all timing guidelines as outline in 12
CFR § 1026.19(e) (1) (iii) (A) for the Loan Estimate as well as all timing guidelines as
outlined in 12 CFR § 1026.19(f) (1) (ii) for Closing Disclosures. Underwriting Guidelines,
Debt Ratios, Credit Scores, Compensating Factors
Credit Scores and Debt Ratio
Eligible applicants must meet credit underwriting standards of THDA and the relevant
Agency. All loan submissions with a borrower(s) credit score (middle score or lowest score
if only two scores) below 640 will not be eligible for THDA funding. THDA will accept insured
loans with the following decision responses which shall meet the following THDA
requirements:
THDA Originating Agents Guide Page | 31
Revised 02.01.2024
1. Approve/Eligible: Maximum debt ratio of 45% and a minimum credit score of 640.
2. Refer/Eligible—due to “no score” only: Loans must be manually underwritten using
non-traditional credit guidelines in accordance with FHA or guarantor’s
guidelines, maximum debt ratio of 41%.
• Two months PITI in reserves. This cannot be a gift.
3. Refer/Eligible: Loans must be manually underwritten, maximum debt ratio of 43%,
minimum credit score of 640, one month PITI in reserves (this cannot be a gift) and
must meet one of the two THDA overlays listed below. Loan must meet Agency’s
guidelines for a manually underwritten file.
• The borrower must have a verified rental history. Verification of rental (VOR)
is acceptable if borrower is renting from a commercial management
company; or 12 months canceled checks/bank verification if borrower is
renting from a private landlord.
• A two year job history with a minimum of 12 months at current employer.
4. Approve/Ineligible: As it refers to the HUD REO $100.00 down payment program or
VA mortgage loan with DPA, maximum debt ratio of 45% and minimum credit
score of 640.
All THDA loan application packages will be required to include a copy of the completed
FHA Loan Underwriting and Transmittal Summary or Loan Analysis signed by an authorized
program endorsed underwriter of the Originating Agent, or correspondent underwriting
agent.
Any closed loan subsequently determined to be ineligible for program insurance due to
non-compliance with that program’s credit underwriting guidelines will be ineligible for
THDA funding and subject to repurchase without exception
Homebuyer Education
Borrowers are required to obtain pre-purchase
homebuyer education provided by a
THDA approved Homebuyer Education (HBE) Provider at one of the approved agencies
listed
on THDA’s website at www.thda.org or a HUD approved counseling agency. Each
person on the loan is required to obtain homebuyer education. The following formats are
available for Homebuyer Education:
1. Instructor Led Workshop
• A minimum of six hours of classroom education
• A minimum of four hours of instructor led workshop, one-on-one one hour follow-
up session
2. Online Education
• A minimum of a one hour one-on-one follow-up session paired with THDA's
approved eHomeAmerica online homeownership education course
o The borrower may access the course via THDA's website or by contacting the
approved Provider agency directly.
o The borrower will select an HBE Provider and pay a fee during the online
registration process.
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o Upon completion of the course, the borrower will be contacted by the HBE
Provider and required to participate in a one hour follow-up session. The
session provides a review of the test questions and additional education or
guidance regarding the customer's budget and responsibilities as a
homeowner.
After the Homebuyer Education course is completed, the HBE Provider will provide the
borrower with their THDA Certificate of Completion. The certificate will be in effect for 12
months after which course must be retaken.
Age of Credit Documents
All credit documents must be current when submitted to THDA for underwriting. Loan
must close by the earliest date, date listed on AUS findings or rate expiration date. For
new/proposed
construction loans, income documents more than 120 days old must be updated and
resubmitted for THDA review and approval when construction is complete.
All updates and requests for extension of the Commitment must be submitted with
updated documents for THDA approval prior to the Commitment expiration date.
Non-Purchasing Spouse
1. Cannot have owned principal residence in the past three years unless present
property being purchased is in a targeted area.
2. Items required as documentation on the non-purchasing spouse:
a. Signature on an original Application Declaration (can be on the same
Declaration as borrower or on a separate Declaration).
b. May sign the Deed of Trust if named on the sales contract, title commitment
or required by the settlement company.
Co-signers
THDA will not approve any loan that includes the use of a co-signer.
See Section X
Freddie Mac HFA Advantage® for program requirements.
ASSETS
Substantial Liquid Assets
If an Applicant has recurring deposits or large deposits as outlined in the
insurer/guarantor’s guidelines/AUS results, the Applicant must explain the source and
circumstances of such deposits. THDA will make a case-by-case determination of the
acceptable level of liquid assets and/or recurring income based on the information and
documentation provided in the application file.
Sale of Assets
Funds to close the THDA loan that are obtained from the sale of an asset must be
documented according to Agency guidelines. Include a copy of the bill of sale and any
other additional information required. If the source of funds to close are from the sale of
commercial property, manufactured home (chattel) or non-owner occupant residential
real estate, documentation must be provided to show that the property was sold and
not retained for rental income. If there is financing income or rental income, it must be
included in Household Income (See Section III
).
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Gift Letter
A gift letter must be properly documented and verified in accordance with Agency
guidelines and/or AUS Feedback results. Gift provided at closing must be verified at
submission to THDA and listed on the Closing Disclosure.
VERIFICATIONS
Employment Verifications
Full documentation is required for THDA. All current full-time and part-time employment
or self-employment covering a period of at least the last two years must be verified in
writing. Telephone verification is acceptable on previous employment. For current
employment not verified with a standard VOE form, answers to all questions contained
on the standard VOE must be provided by the employer on employer letterhead.
Verifications must indicate bonuses, next pay increase, overtime and scheduled number
of work hours if paid by the hour. In addition, a copy of each Applicant’s most recent
pay stub is required (no more than 30 days old).
For additional information see Section VI, Verifications
.
Sole-Proprietorship Verifications
Year-to-date P&L, Plus 1040’s with Schedule C for a minimum of two tax years, and
24 months in business.
Partnership Verifications
Year-to-date P&L, Plus 1065’s with Schedule K-1 and Schedule E, part II; Partnership returns
with all schedules. Minimum two tax returns and 24 months in business.
Limited Partnership Verifications
1065, Schedule K-1 and Schedule E, part II; Partnership Return with schedules. Minimum
two tax returns and 24 months in business.
Subchapter S Corporation Verifications
1120/1120S, Schedule K-1, Schedule E, part II, W-2 for Applicant. Minimum two tax returns
and 24 months in business.
Corporation Verifications
Provide if Applicant owns or controls 25% or more of the stock. Corporation Return, Form
1120 and Schedule L (if applicable); W-2 for Applicant. Minimum two tax returns and 24
months in business.
Deposit Verifications
Verification of Deposit (VOD) and Applicant’s most recent statement or alternative
documentation, Applicant’s bank statements for the previous two months. When non-
traditional credit is used (no credit score), two months PITI in reserves is required. When
manually underwritten with a score of 640 or higher, one month PITI in reserves is required.
When a debt or obligation is not listed on the mortgage application and/or credit
report and is listed on a bank statement such as debt to a pay day loan company,
the OA is responsible for verifying the debt. This includes providing information in the
submission package for the total amount owed and the actual monthly payment.
Debt ratio should reflect this debt if it is amortizing.
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Veteran Status
Veterans applying for the exemption to the three year requirement must provide a copy
of VA Form DD-214 or VA Form DD-4 (Enlistment/Re-enlistment Document).FHA 203(h)
Proof of Permanent Residence
FHA 203(h) Proof of Destruction of Residence
The victim/applicant's previous permanent rental residence must have been in the
disaster area and must have been destroyed or damaged to such an extent that
reconstruction or replacement is necessary. The victim/applicant must provide proof of
destruction with one of the following:
• Valid Driver's License
• Voter Registration Card
• Utility Bills
• An Insurance Report
• An Inspection Report by an Independent Fee Inspector or Government Agency
(FEMA)
• Conclusive Photographic Evidence Showing the Destruction or Damage
DEBTS, OBLIGATIONS AND OTHER EXPENSES
Remaining Debt Payments
Although most program insurer underwriting guidelines allow a certain number of
remaining scheduled debt payments to be disregarded for purposes of loan qualifying,
the impact of existing debt payments on Applicant’s budget at the time of the first
scheduled THDA loan payment may be evaluated in THDA’s sole discretion. Any debt
being paid off at closing must have acceptable funds sourced. THDA second mortgage
loans cannot be used to pay off debt.
Payday Loans or Undisclosed Debt
See Deposit Verification
Bankruptcy (Chapter 7 and Chapter 13)
An Applicant’s Chapter 7 bankruptcy must be discharged for a minimum of two years
and acceptable credit must be re-established to be eligible for a THDA loan.
An Applicant’s Chapter 13 bankruptcy must be discharged for a minimum of one year,
with all payments on the plan made as agreed, and acceptable credit re-established or
maintained during this time.
Applicants currently in bankruptcy are not eligible for THDA loan programs.
THDA considers re-established credit, tradelines either traditional or non-traditional that
have been active for 12 consecutive months.
Previous Default
Applicants with prior foreclosures or deeds-in-lieu are not eligible for THDA loan programs
for a period of three years from the date of the foreclosure sale. If the foreclosure or a
short sale was on a THDA funded loan, the applicants are eligible for another THDA loan
7 years after the date that the Applicant transferred ownership of the Property to the
foreclosing entity/designee or date of Deed in Lieu.
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Child Support and Alimony Obligations
Include a copy of the final order, signed by the court. Payments must be current as
outlined in the most recent court order. Payments will be considered current with an
amended order to address any delinquency.
Judgments
Judgments must be handled in accordance with the Agency guidelines.
Federal or State Tax Liens, Tax Arrearages
All tax liens must be paid in full. Include an acceptable explanation from the Applicant.
Any and all arrearages/obligations should have an established payment plan in place
which includes timely payments made that meets the Agency’s guidelines. Excessive tax
arrearages/obligations are subject to THDA’s approval.
Collections
Collection accounts must be handled in accordance with Agency guidelines.
Co-Signed/Authorized User Debt
Any and all co-signed accounts or authorized user accounts, must be documented in
accordance with Agency guidelines.
Child Care Expense
Child care expenses must be handled in accordance with Agency guidelines.
Creditworthiness
Applicant(s) must show credit worthiness to obtain financing with THDA. A creditworthy
individual is a person whose credit background reflects no delinquent accounts or
collections, reflects no legal actions that would impair their credit, such as a foreclosure
action, judgment, lien or bankruptcy; or reflects legal actions that have been adequately
resolved, and/or delinquent accounts or collections that have been adequately
resolved or that have an acceptable explanation.
The Lender’s underwriter must determine the creditworthiness of the Borrower, which
includes analyzing the Borrower’s overall pattern of credit behavior and the credit report.
Compensating factors cannot be used to compensate for any derogatory credit,
however is encouraged if needed to evidence creditworthiness.
Establishing / Re-establishing Credit
If establishing or re-establishing credit, 3 non-traditional trade lines with 12 month good
payment history must be provided, the combination of traditional and non-traditional
trade lines can be provided, refer to HUD handbook 4000.1 Sufficiency of Credit
References for a list of acceptable credit references. Additional information may be
required or accepted at the discretion of THDA.
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SECTION VI: SUBMITTING AN APPLICATION FILE TO THDA
OVERVIEW
Originating Agents must present accurate and complete information with each
application file. Information withheld or misrepresented may void a Commitment or if
discovered subsequent to loan closing, could result in a requirement for repurchase of
the loan. Should the Originating Agent become aware prior to closing that either the
household composition first proposed, and/or the MRB income first proposed has
changed or will change prior to closing, THDA must be notified immediately and updated
loan documentation must be submitted.
The application file when submitted to THDA, must have all documentation being
submitted in the order shown on the THDA Underwriting Submission Checklist
including
final approval from OA’s underwriter.
All application files are reviewed to determine all documentation per the THDA
Underwriting Submission Checklist, AUS results and Agency guidelines have been
included in the submission. THDA's processing department will hold incomplete
applications (suspend), and notify lender of missing documentation electronically. OA’s
staff person submitting the file will be the point of contact receiving the email. Once all
required documents have been submitted, the file will be submitted to the underwriting
queue.
REQUIRED DOCUMENTS
Underwriting Submission Checklist
Include this form with each application file submitted to THDA for underwriting.
See
Section IX.
Application Declaration
The executed Application Declaration must be uploaded as part of the loan submission
package. The Application Declaration must be signed by each loan applicant(s).
Married applicants must both sign the Application Declaration and meet first-time
homebuyer eligibility requirements, even if a non-purchasing spouse is involved.
Veteran Exemption Application Declaration
The executed Veteran Exemption Application Declaration must be received as part of
the loan submission package if the veteran is applying under the exception to the three
year requirement for homeownership. Married veteran applicants must both sign the
Veteran Exemption Application Declaration and the veteran’s spouse does not have to
meet the three year requirement.
Seller Declaration
The seller of the property must execute a Seller Declaration for each application file
submitted to THDA. The original Seller Declaration must be retained by the lender.
See
Section IX for additional information.
Tax Returns
Signed and dated Federal Income Tax Returns, including W-2’s, for the most recent tax
year for the Applicant(s) must be included in the initial application file. If an Applicant
cannot provide a copy of their most recent Federal Income Tax Return, they must obtain
an IRS Tax Transcript which is available from the IRS. The applicant can visit “Get Your Tax
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Record” at www.irs.gov. Transcripts may be ordered by the lender using IRS Form 4506-C.
If an Applicant was not required to file a Federal Income Tax Return, provide a non-filing
status from the IRS. If non-filing cannot be obtained, provide an explanation, credit
report, and Application Declaration which may be used at THDA’s discretion.
THDA, at its sole discretion, may require the most recent three years Federal Income Tax
Returns if there is any indication in the loan file of prior homeownership.
Notice to Applicants Federal Recapture Requirements
This THDA disclosure is required for all loan types under the Great Choice and
Homeownership for Heroes and must be signed at the time of application. Furnish the
Applicant a copy of the signed original.
Grants/Down Payment Assistance Approval Letters
If the Applicant expects to receive a grant or down payment assistance from an entity
other than THDA to facilitate the purchase of the property, include an approval/award
letter from the granting organization indicating the type of assistance and the approved
amount in the application file. The granting entity must be approved by the Agency and
meet all the guidelines.
Transmittal Summary (Conventional and USDA/RD)
Include a Transmittal Summary with each conventional and USDA/RD application. This
form is considered as the Originating Agent’s underwriting approval and must be signed
and dated by the underwriter.
Agency Loan Approval
Based on the applicable loan type, include a copy of one of the following,
accompanied by a copy of its condition sheet (if approved with conditions):
1. FHA Transmittal signed and dated by a DE Underwriter if manually underwritten. If
using LP or DU automated underwriting systems and states an Accept/Approve,
then an underwriter’s signature is not required. CHUMS number must be ZFHA; or
2. VA (or VA Automatic) approval signed and dated by VA or the Originating Agent’s
Automatic underwriter; or
3. Executed USDA/RD 1980-18.
4. See Section X
– Freddie Mac HFA Advantage® for program requirements.
Loan Application and Addendums (URLA & 92900A)
For FHA loans, include the initial URLA and 92900A, signed and dated by the Applicant(s)
and the loan officer and page 3 by the underwriter. Final URLA and 92900A should be
provided with closing package, all pages with the appropriate signatures.
Supplemental Consumer Information Form (SCIF, FORM1103)
All loans delivered to THDA must include the SCIF. The SCIF (Form 1103) collects
information about a borrower’s language preference and any homeowner education
or counseling that the borrower completed in the prior 12 months.
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Positive Identification
For all loan types, positive identification of each Applicant must be obtained in
accordance with Agency’s guidelines. It is the Originating Agents responsibility to insure
that those guidelines are met.
Credit Report
The Applicant’s credit report must comply with the Agency’s credit verification
guidelines. Merged credit reports that comply with program guidelines are acceptable.
Explanation letter should be included in the file for any recent inquiries
Final Divorce Decree/Marital Dissolution; Court Ordered Child Support; SSI or Other
Assistance
Include copies of any or all of these documents, as applicable. If a divorced Applicant
did not have an ownership interest in the primary residence, the Final Divorce Decree
confirming such must be included in order to meet the three year requirement. Parenting
plan may be used to determine the accuracy of household composition. Divorce may
need to be final for 30 days prior to closing a THDA mortgage loan.
Verification of Employment; Most Recent Pay Stub; Form Evidencing Telephone
Verification of Prior Employment; Self-Employment
OA must document the Applicant’s income and employment history for the most recent
2 years. Verification of the accuracy of the income used for qualification purposes must
be represented in the submission. If primary employment is salary income cannot be
averaged. If income is hourly, the base pay for qualification purposes must be supported
appropriately with the number of hours worked. Expected Income can be considered
on a case by case basis at the discretion of THDA. Applicant must have sufficient cash
reserves to support all obligations between closing and the beginning of the receipt of
income. Upon THDA approval, Expected Income must be handled in accordance with
program Agency’s guidelines. THDA reserves the right to request the first paystub after
loan closing, loan may be subject to repurchase if income is not supported.
For additional information See Section V, Employment Verification
.
Documentation for Veteran Exemption
Veteran Exemption is only needed if applicant is not a first time homebuyer and is
applying for first time homebuyer exemption. VA Form DD-214 if applicant is a discharged
or released veteran. VA Form DD-4 if applicant has re-enlisted, but was eligible for a
discharge or release at the time of re-enlistment.
Original Certificate of Title or Original Manufactured Certificate of Origin (Manufactured
Home)
The original Certificate of Title with any lien noted thereon having been marked released,
or original Manufactured Certificate of Origin (“MCO”) in the name of the seller of the
subject property or having been endorsed to the seller MUST be included in the
Underwriting Submission package. The file may be submitted electronically, however, a
commitment will not be issued until THDA receives the original Certificate of Title or
original “MCO”. The only exception to this requirement is, if the seller of the subject
property has a mortgage on the property and the lien holder is in possession of the title
or MCO and will not release it until their loan is paid off. Under this scenario, a copy of the
Certificate of Title or MCO must be included in the Underwriting Submission package and
the commitment will be conditioned to receive the original Certificate of Title or MCO
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with the Closed Loan package. Mortgage loan is subject to repurchase if original
certificate of title or original MCO is not received by 90 days after closing. If Manufactured
Home is already de-titled, please submit with the underwriting package.
Verification of Deposit or Bank Statements for Previous Two Months
See Section V, Verifications.
Sales Contract
Include a copy of the purchase agreement (fully executed by seller and Applicant) in
the application file. Any changes to the purchase agreement must be initialed by seller
and Applicant. All addendums should be included with the submission. Sales Contract
should not be expired. Deed section of Sales contract should only have applicant(s) and
spouse, if applicable, named to be on the warranty deed.
FHA Conditional Commitment
Enclose the HUD Form 92800.5B (FHA Conditional Commitment) signed by the DE
Underwriter.
Appraisal
Uniform Residential Appraisal Report (FMNA 1004) must be included in the application
file. The Uniform Residential Appraisal Report must reflect inspections of both the interior
and exterior of the dwelling. If appraisal has a “subject to” repair value, final inspection
must be provided to THDA. Appraisal must state the purpose and the intended use of
the appraisal in accordance to the Agency’s guidelines.
If the negotiated sales price for the property was modified after the Appraisal was
provided, enclose a letter from the appraiser that indicates any changes in the
appraiser’s conclusions.
Flood Notification
If the property lies within a Special Flood Hazard Zone, the Originating Agent must make
proper and timely disclosure to the Applicant in compliance with federal regulations.
Provide a life of loan Flood Hazard certification with the initial underwriting submission
package. Flood certification should be transferred to THDA in the closed loan package.
Loan Estimate
The initial Loan Estimate (LE) must be included in the Underwriting Submission Package
and any subsequent changes in the LE, if necessary, must be included in the Closed Loan
Submission Package. The LE must be provided for all second mortgage loans, partial
exemption form is allowed for the deferred, no payment option. All OAs are expected
to adhere to all timing guidelines as outline in 12 CFR § 1026.19(e)(1)(iii)(A) for the Loan
Estimate. THDA should also have a LE reflecting the rate is locked.
Title Commitment
Title commitment must be provided to determine if applicants have any tax liens or
judgments. Title searches must include public record information. Legal description of
the property should be included with the title commitment. Title commitment must be in
the amount of the first mortgage loan, and include the lenders name its successors
and/or assign as their interest may appear. (ISAOA ATIMA)
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Hazard Insurance
Hazard Insurance Declarations Page must be provided. See Section VII,
Hazard
Insurance.
DOCUMENTING NEW CONSTRUCTION FOR CUSTOM BUILT HOMES
NOTE: This section does not apply to the purchase of a new or proposed residence
located on a lot that is not owned by the Applicant prior to the date of the loan closing.
Documentation Required
1. Copy of Warranty Deed to Lot.
2. Copy of Construction Contract.
3. Contractor’s Detailed Cost Estimate, if Applicable.
4. Contractor’s Final Itemized Bill, if Applicable.
5. Final inspection with Photos, When Complete.
Manufactured Housing
For manufactured housing, additional or substituted documentation must include a
contract for the manufactured home and documentation for the cost of foundation,
utilities, landscaping, driveways and all other necessary improvements.
Borrower Obtains Construction Loan
1. Verification of the construction loan amount and term is required and should be
added to the 1003. No cash out to borrower at closing is allowed
2. If the applicants have hired a contractor to build the home, a copy of the
construction contract is required and, at a minimum, the construction contract
must state total cost or price. It cannot state cost plus a percent for profit.
THDA UNDERWRITING DECISIONS
THDA Underwriting Results
THDA Underwriters review each application file (initial or re-submission). This review results
in one of the following:
1. THDA Underwriters will approve an application file with closing conditions or
subject to prior to closing conditions as specified in See Section VI, Commitments
.
2. THDA Underwriters may request additional documentation from the Originating
Agent, therefore pending the file.
3. THDA Underwriters may reject an application that fails to meet the requirements
of this Guide or if an application if the Applicant’s credit is not acceptable to
THDA. THDA, at its sole discretion, reserves the right to credit underwrite any loan
and issue a denial based on unacceptable credit issues.
Rejections
Any application file rejected by a THDA Underwriter is reviewed by management before
the Originating Agent is notified. Email SFAsk@thda.org
for any questions regarding
resubmissions.
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COMMITMENTS
Application Approval
An application file is not approved until a written Commitment is issued by THDA.
Commitment Term
Commitment term is determined when a mortgage loan file has a rate locked.
Commitments for existing homes are issued for a period of up to 60 days. Commitments
for new/proposed construction homes are issued for a period of up to 120 days. Loans
must be closed and loans must be purchased by THDA by the rate lock expiration date.
Commitment is void when rate lock expires.
Commitment Conditions
Commitments may be conditioned by THDA as follows:
Commitments may be issued with Prior-To-Purchase conditions that must be satisfied
before the loan can be purchased, this indicated by “non-trailing” listed beside the
condition, or
1. Commitments may be issued with conditions indicated by “trailing” conditions,
these must be satisfied prior to the 120 day deadline, this is indicated by “trailing”
listed beside the condition).
2. All Commitments are issued with standard closing conditions.
Satisfying THDA Commitment Conditions
1. All Prior-To-Purchase conditions must be satisfied in a manner satisfactory to THDA
prior to loan purchase. Submit all documents needed to clear all Prior-To-Purchase
conditions for each application file simultaneously.
2. All Closing Conditions (indicated on the Commitment as “Receipt, With Closing
Documents”) must be satisfied by the time the loan is closed. Documentation
acceptable to THDA to satisfy Closing Conditions must be included with the closed
loan file when uploaded to THDA.
3. THDA, in its sole discretion, may refuse to purchase any loan when any loan closing
condition is not satisfied.
Update of Application or Commitment
The application file and the Commitment must be updated in the following situations:
1. After the Commitment is issued, if the Originating Agent becomes aware of
significant changes in the Applicant’s household composition, income or credit,
updated documentation must be submitted to THDA for review and approval.
2. When construction is complete (based on new/proposed construction) final
inspection, final photos and updated documentation (based on AUS feedback
results) must always be submitted for THDA review and approval.
Loan Amount or Program Type Changes
Occasionally, there will be a change in the loan amount, and/or the loan program may
change. If the final loan amount is less than the loan amount indicated in the
commitment, the Originating Agent should immediately contact THDA. THDA will issue a
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revised Commitment, but closing can proceed, providing all other elements of the
commitment have been satisfied.
If the final loan amount is more than the amount indicated in the Commitment, the
Originating Agent should immediately contact THDA Underwriting. Closing should not be
scheduled or held if already scheduled. The Originating Agent must submit revised loan
amount documentation and the updated Originating Agent underwriter approval on
the higher loan amount.
In any and all cases where the loan amount changes after receiving the THDA approval,
THDA must be contacted before loan closing occurs. Do not close THDA loans when
discrepancies exist. THDA must receive all new approval documents when loan amounts
change, this includes the second mortgages.
Commitment Delivery
THDA will deliver Commitments to Originating Agents by email based on documentation
provided on the Underwriting Submission Checklist and OA Working Agreement.
Void Commitments
A Commitment is void under the following circumstances:
1. Prior-to-Closing conditions are not satisfied, as determined by THDA, before the
loan is closed;
2. Documentation in connection with “Receipt, With Closing Documents” (Closing
Conditions) is not submitted with the closed loan package, or is not satisfactory to
THDA;
3. A grantee on the Warranty Deed is not named in the Commitment;
4. Change in Employment.
If, at any time between commitment issued and closing,
the Applicant is no longer employed at the employment listed on the 1003, as
determined by the Verbal Verification of employment (VVOE), THDA must be
notified immediately. The commitment is voided.
If the Applicant wishes to continue with the purchase of the property, a correct
1003, income documentation and new approval documents must be provided
and a new commitment will be issued.
5. Change in Property. The property described in the closing documents differs from
the property indicated in the Commitment and/or on original URAR.
If, at any time
between application and closing, the Applicant wishes to purchase a different
property, a new transaction is created. If the Applicant wishes to purchase a
property different from that which is indicated in the Commitment, the
Commitment is void and a new rate lock and application reflecting the correct
property must be submitted to THDA. ;
6. The loan closes as a loan type that is different from the loan type indicated on the
Commitment;
7. The loan closes in an amount larger than the amount indicated on the
Commitment (First or Second mortgage);
8. The interest rate or loan term differs from the Commitment, including subordinate
liens;
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9. The monthly principal and interest payment in the promissory note of the first or
second mortgage loan is different than the principal and interest payment
indicated on the Commitment by more than $.01;
10. The loan closes prior to the date of Commitment;
11. The loan closes after the Commitment expiration date (rate lock date) without
Commitment extension by THDA;
12. The closed loan servicing package is delivered to a servicer other than THDA;
13. The closed loan does not otherwise conform to the requirements contained in this
Guide.
A loan closed with a void Commitment is not eligible for THDA purchase. THDA will not
purchase a loan if the loan was closed with a void Commitment.
Request for Loan Purchase with Acknowledgement and Certification
This document is provided with the THDA Loan Commitment. Execute this form and
enclose in the order indicated on the Closed Loan Submission form.
Legally Enforceable Obligation Letter
If a borrower receives a Great Choice Plus loan and has an FHA first mortgage, a Legally
Enforceable Obligation Letter, Form HO-0476, must be signed by Borrower at closing.
This letter will be sent to the Originating Agent with the THDA loan commitment.
Recapture Tax Disclosure/Exhibits
If a borrower receives a Great Choice mortgage loan, a recapture disclosure and
exhibits must be provided to the borrower at closing. These documents are delivered to
the lender with the THDA loan commitment and should be forwarded to the closing
agent to be delivered to the borrower.
FUNDING THDA LOANS
All THDA mortgage loans, including second mortgage loans for closing costs and down
payment assistance, are funded by the OA. The loan closes with the OA’s funds after all
Prior-to-Closing conditions have been cleared by THDA. After the closed loan file is
delivered to THDA within the delivery deadline schedule, including acceptable
documentation and original mortgage notes are received, THDA may purchase the loan.
SCHEDULING LOAN CLOSINGS
Depending on volume, THDA attempts to review application files in the order received
within two (2) business days following the date of receipt. Application files received later
than those already on hand will not be underwritten out-of-turn due to a scheduled
closing date or the personal circumstances of an Applicant or a seller. However, THDA
will make all attempts to accommodate contract dates. Applications received during
the final 2 business days of the month may not close by end of month.
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SECTION VII: CLOSING A THDA LOAN
OVERVIEW
All THDA approved loans must be closed in compliance with the Commitment and in
compliance with the instructions contained in this Guide by a Settlement Agent who is
an independent, third-party attorney or a title company. THDA will rely on the Originating
Agent to remedy problems concerning closed loan documentation.
Any closed loan subsequently determined to be ineligible due to the terms of the closing,
closing documentation, failure to comply with insurer, guarantor or THDA closing
conditions, early payment default, and/or any other closing related problem or error, is
ineligible for THDA funding without exception and the Originating Agent will be required
to repurchase the loan, at THDA’s discretion.
Expedite Loan Documents
The Originating Agent must immediately submit the closed loan file for loan
guaranty/insurance and upload servicing documents to THDA as soon as possible. Failure
to comply with delivery deadlines will result in the Originating Agent being required to
repurchase the loan from THDA or THDA will refuse to purchase the loan. See Section VIII
for THDA delivery deadlines.
LOAN COMMITMENT
If the terms of the closed loan do not match the Commitment, or Commitment conditions
are not satisfied, the Commitment is void. THDA may refuse to fund, may refuse to
purchase or may demand repurchase by Originating Agent of closed first and second
loans that do not conform to the Commitment. If any element of the transaction does
not match the Commitment or if Commitment conditions are not satisfied, do not
proceed with the closing. A revised Commitment must be issued prior to closing if any
element of the proposed transaction does not match the Commitment. Contact THDA
with any questions or to obtain a revised Commitment prior to closing.
REQUIRED LOAN DOCUMENTS
Loan Documents
The most recent versions of the following instruments for the applicable loan type must
be used, including any applicable riders. A non-purchasing spouse may sign the Deed of
Trust:
1. FHA: Multistate FHA Note (Tennessee)
Multistate FHA Deed of Trust (Tennessee)
THDA Rider
Legally Enforceable Obligation Letter (FHA only)
2. VA: FNMA/FHLMC Multistate Note (Tennessee)
FNMA/FHLMC Multistate Deed of Trust (Tennessee)
VA Rider
THDA Rider
3. USDA/RD (FmHA):
FNMA/FHLMC Multistate Note (Tennessee)
FNMA/FHLMC Multistate Deed of Trust (Tennessee)
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THDA Rider
USDA/RD loans must close with FNMA/FHLMC documents only.
4. Uninsured Conventional Portfolio:
FNMA/FHLMC Multistate Conventional Note (Tennessee)
FNMA/FHLMC Multistate Deed of Trust (Tennessee)
THDA Rider (not needed for HFA Advantage)
5. THDA Second Mortgage Loans
Great Choice Plus/HFA Advantage Plus with Payment Subordinate Note
Amortizing (Payment)
Great Choice Plus/HFA Advantage Plus with Deferred/Forgivable
Subordinate Note (No Payment)
Great Choice Plus/HFA Advantage Plus Subordinate Deed of Trust
Due Dates
The promissory note must specify a first payment due date as the first day of the second
calendar month following the date of closing. All subsequent payments are due the first
day of each month. Interest credits are discourage on THDA loan closings. First and
second mortgage loans should have the same first payment due date.
Late Charges
Late charges are permitted only in compliance with the applicable program insurer’s
guidelines. If the charge exceeds the allowable rate, the note will be returned for
correction and signature by Borrower(s).
Great Choice Plus secondary mortgage loan must reflect in the Deed of Trust and Note
a late charge of 5% of the overdue payment of principal and interest if the monthly
payment is not made by the end of 15 calendar days after the date it is due.
TITLE POLICY
Use ALTA Loan Policy or ALTA Short Form Residential Loan Policy and include the
following:
1. The insured amount must be equivalent to the amount of the first mortgage. THDA
will not require a Lender's Title Policy on the Great Choice Plus second mortgage.
2. THDA must be a “named insured”. Use the following language:
(Name of Originating Agent), and/or Tennessee Housing
Development Agency, and/or (Name of insuring or guaranteeing
entity), as their interests may appear.
OR
(Name of Originating Agent), its successors and assigns and/or (Name
of insuring or guaranteeing entity), as their interests may appear.
3. Taxes/assessments that are due and payable cannot be indicated as unpaid.
Endorsements to the Title Insurance Policy may be required as determined by THDA.
Warranty Deed
The Warranty Deed must convey the property to the borrower(s) indicated on the
Commitment. Borrower(s) listed on the Warranty Deed must also be listed on the Title
Commitment.
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Termite Inspection/Treatment Certificate
Termite Inspections/Treatment Certificate provided as required by the Agency or the
appraiser.
Hazard Insurance
Hazard insurance coverage must be issued in the name(s) of the titled property owner(s).
The insurance company issuing the hazard insurance policy must meet the Agency’s
guidelines.
The policy must insure against loss due to fire and other hazards covered by the standard
extended coverage endorsement on a replacement cost basis. The Borrower may elect
to include additional coverages, such as liability and earthquake insurance, and special
policy riders.
For all Great Choice mortgage loans, THDA must require insurance at 90% of the insurable
value of the improvements to the mortgaged real property per TCA 13-23-118 h(8) since
this law, specifically applicable to THDA, takes precedence over Fannie/Freddie
regulations that only require this insurance at 80% of the insurable value.
The insurable value should be determined by a third party appraisal whenever possible.
In order to do so, the appraisal should include either the estimated value of the land (site
value) or an estimated replacement cost for the structure. In cases where this information
is available or can be made available as part of the appraisal, it should be relied upon.
If the site value or replacement cost is not accessible from the appraiser, the appraisal
cannot be utilized since it would not have any other reliable information to properly
exclude the cost of the land. It is not appropriate to use the full appraisal value that
includes the land value when determining the insurable value.
The maximum allowable amount for deductible will be 1% of the loan amount or $2,500,
whichever amount is the highest. The deductible clause may apply to either fire,
extended coverage, or both.
Minimum initial term is one year.
THDA must be named as mortgagee in the original policy or in an endorsement. Use the
following language:
Tennessee Housing Development Agency
and its successors and/or assigns as their interests may appear
502 Deaderick St., 3
rd
Floor
Nashville, TN 37243
Loan # _ _ _ _ _ _ _ _
Coverage must be in force on or before the day of closing.
An original insurance policy or Certificate of Insurance is required. An insurance binder,
a memorandum of insurance or a premium bill is not acceptable. The Originating Agent
must submit the original policy or certificate to the THDA Servicer promptly after closing
and a copy of the declarations page to THDA with the closed loan package. For loans
in condominium developments, secure a Certificate of Insurance for the blanket hazard
insurance policy that covers the development or building.
Policies are not acceptable if, under the terms of the carrier’s charter, by-laws or policy,
contributions or assessments may be made against the Borrower, THDA or THDA’s
designee; or if by the terms of the carrier’s charter, by-laws or policy, loss payment is
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contingent upon action by the carrier’s Board of Directors, policyholders or members; or
the policy includes any limiting clauses (other than insurance conditions) which could
prevent THDA or Borrower from collecting insurance proceeds.
Flood Certification and Flood Insurance
The Flood Hazard Determination should be transferred to THDA or reflect its successors
and/or assigned. Flood Certification MUST state it is for the life of loan. If part of the
property is located in Flood Zone A but all of the improvements are outside Flood Zone
A, flood insurance is not required, subject to the rules of the Agency.
Flood insurance is mandatory for all loans with improvements located in Flood Zone A,
without exception. A copy of FEMA Form 81-93 Standard Flood Hazard Determination
must be included with the closed loan package when submitted to THDA.
To waive the flood insurance requirement, a loan survey is required and must indicate
the boundary of Flood Zone A and show that all improvements included in appraised
value are outside of Flood Zone A.
The amount of coverage must equal the total amount of the THDA approved loan up to
the maximum amount available through the National Flood Insurance Program.
The maximum allowable amount for deductible will be the maximum of 1% of the loan
amount or $2,500, whichever is the highest, or the maximum of the guarantor’s guidelines
for VA and USDA loans.
The same mortgagee clause and mailing address previously indicated under “Hazard
Insurance” must be used.
A copy of the flood insurance application and a copy of the check for the first year’s
premium must be enclosed with the closing package shipped to THDA.
Escrow for Repairs or Completion of Construction
Escrows for “subject to” repairs should be avoided when possible and should meet
Agency’s guidelines, if applicable. Submit the proposed escrow agreement to THDA prior
to closing. At a minimum, the escrow agreement must state what the escrow is for, the
dollar amount to be escrowed, and the completion date which may not exceed 60 days.
Loans should be closed with repair escrows only if the repairs can be completed in the
60 day timeframe. Estimates or bids should be included with escrow agreements.
Escrows for “subject to” completion of construction should only be for minor items
identified in the appraisal, or documented in the underwriting file submitted. Final
landscaping that is delayed due to seasonal weather or “punchlist” items identified after
THDA loan approval can be addressed at closing with an escrow agreement if needed,
without THDA’s prior consent. The amount to be placed in escrow for the completion
must be the greater of (a) 150 percent of the estimated cost of the repairs or the
estimated cost to complete construction when a “subject to” appraisal is submitted or
(b) the amount required by the applicable Agency.
All work must be completed and a final inspection delivered to THDA by no later than
60 days after closing. An escrow agreement acceptable to THDA for repairs or
completion of construction must be used. The Originating Agent must hold and disburse
the escrow funds in accordance with the Escrow Agreement.
Repairs not completed within 60 days of loan closing will void commitment, therefore the
loan will be subject to repurchase.
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Properties Affected by a Disaster
It is the OA’s responsibility to be aware of and act upon any mortgage loan impacted
by disasters prior to the sale to THDA. The OA must have a policy in place to identify
properties with pending mortgages (or endorsements if applicable). OA should contact
the appropriate source e.g. Tennessee Emergency Management Agency (TEMA),
Federal Emergency Management Agency (FEMA) to determine whether properties
located in its origination footprint are included in the disaster areas. OA must ensure
appropriate Agency guidelines are followed that identifies and quantifies any dwelling
damage. This information and documentation must be available to THDA upon request.
Any damages to properties must be reported to THDA immediately.
THDA’s Disaster Policy applies to any of the following:
• FEMA declared disaster areas eligible for Individual Assistance.
• Areas Identified by TEMA or THDA.
• Properties that the Lender has reason to believe sustained damage in a disaster.
By the sale of the loan to THDA, the OA warrants that the subject property is in marketable
condition and that there are no repairs or other detrimental conditions to the subject
property at the time of sale.
THDA is not responsible to provide notification to the OA of disaster areas. If at any time
after loan purchase, THDA or a subsequent investor, determines that the subject property
was damaged and not in fully marketable condition at time of sale, the loan is subject to
repurchase.
Documentation Requirements for Properties Affected by a Disaster
Appraisals completed on or before the incident period end date.
Prior to loan purchase, THDA will require a post disaster inspection confirming the property
has not been adversely affected by the disaster. The inspection may be provided in
various formats as long as the appropriate Agency’s requirements are met.
• Property Appropriate Inspection Report
• Appraisal Update and/or Completion Report (Form 1004D)
• Certification from a Licensed Property Inspector
• Post-disaster inspection from an established and reputable service provider, with
post-disaster photos that clearly demonstrate the property has not been
adversely affected by the disaster.
• Lender Certification with post-disaster photos that clearly demonstrate the
property has not been adversely affected by the disaster. The Certification must
not be executed by an employee that receives direct compensation from the
subject transaction.
Appraisals completed after the incident period end date.
For a period of 90 days from the incident period end date, full appraisals are required on
impacted properties. In the report, the appraiser must confirm the property has not been
adversely affected by the disaster.
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Closing Disclosure
The initial and final Closing Disclosure (CD) is required. The net amount (amount after
allowable closing costs) of the second loan should be listed on the CD for the first loan.
Any borrower’s debt paid at closing must be listed on the THDA commitment as well as
the CD. Source used to pay off these debts must meet Agency guidelines. THDA’s second
mortgage funds cannot be used. All Originating Agents are expected to adhere to all
timing guidelines as outlined in 12 CFR § 1026.19(f)(1)(ii) for Closing Disclosures.
Verbal Verification of Employment (VVOE)
The verbal verification of employment (VVOE) utilized by lenders to confirm the
borrower’s current employment status within 10 business days prior to the note date must
be included in the closing package.
Name Affidavit
Name Affidavit must be provided for all borrowers.
Power of Attorney
THDA follows the Agency’s guidelines in regards to a Power of Attorney (POA) in
circumstances of hardship, emergency situations and for military service members.
Therefore, THDA must verify and document that all requirements to utilize a POA have
been satisfied.
THDA must review and approve the POA prior to closing. Please submit with the
Underwriting package. POAs should be notarized and recorded. If the original POA is
recorded prior to the Note Date, please deliver the original POA with the original
Mortgage Note. Otherwise, a certified copy of the POA must be included in the closing
package and the original POA delivered to THDA with the recording information within
30 days of closing.
OTHER REQUIREMENTS
Close In The Name Of
All THDA approved Great Choice loans must be closed in the name of the Originating
Agent noted on the Commitment and are assigned to THDA via MERS. THDA Great
Choice Plus loans must also close in the name of the Originating Agent noted on the
Committed and are assigned to THDA via MERS.
Non- Purchasing Spouse
A non-purchasing spouse may sign the Deed of Trust if named on the sales contract,
warranty deed, title commitment, or required by the settlement company.
Rescission
THDA cannot fund or purchase a loan that is closed with a Three-day Right of Rescission
Net Funds “To Borrower”
A borrower cannot receive any funds from the closing that exceed amounts that they
paid in advance from their personal funds for earnest money, appraisal fees, credit report
fees, and homebuyer education counseling. If a grant from an entity other than THDA is
included in the transaction or a gift, coordinate this subject with the grant/gift provider.
Net funds to borrower for grant/gift must meet the Agency’s guidelines. Borrowers using
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Great Choice Plus assistance cannot receive any funds at closing from the assistance
provided. There are circumstances that arise at the closing table that cause excessive
cash back to the borrower. In these situations, THDA will allow a principal reduction to
cure the issue.
Principal Reduction
THDA discourages principal reductions (PR). However, we understand there are times
they cannot be avoided, for example when an error is made. PR is limited to 1% of the
loan amount not to exceed $1500, per THDA’s discretion. PRs are netted from the loan
purchase amount. OA must provide THDA with a payment history for the loan when a PR
is needed. If the PR is due to too much DPA funds being used, apply PR to second
mortgage or reduce the loan amount for the second mortgage.
Original Certificate of Title or Original Manufactured Certificate (MCO) of Origin
(Manufactured Home)
If the seller of the subject property has a mortgage on the property and the lien holder is
in possession of the original title or MCO and will not release it until their loan is paid off,
the original Certificate of Title with any lien noted thereon having been marked released,
or Manufactured Certificate of Origin (“MCO”), in the name of the seller of the subject
property or having been endorsed to the seller MUST be provided to THDA with the closing
documents. If the Manufactured Home consists of more than one (1) unit, you will need
to provide the title or “MCO” for each unit. THDA will not purchase the loan until we
receive the original certificate of Title or original MCO.
Affidavit of Affixation (Manufactured Home)
An Affidavit of Affixation is required on all manufactured home loans if they are not de-
titled. It is sent to the State of Tennessee and utilized when de-titling manufactured
homes, therefore, the owner of record at the time of de-titling must sign the Affidavit. If
de-titling is taking place prior to closing, the seller would execute the document. If de-
titling is taking place after closing, being handled on behalf of the new borrower, it must
be executed by the buyer and must be recorded as a separate document. It cannot be
recorded with or attached to the Deed of Trust. State of Tennessee’s Affidavit of Affixation
(RV-F1322101) is to be used unless the Settlement Agent uses an Affidavit of Affixation
that meets the statutory requirement of TCA Section 55-3-138.
Warranty Deed
A copy of the Warranty Deed to the subject residence must be provided to THDA in the
Closed Loan Submission package. For manufactured homes, a certified copy of warranty
deed or equivalent that shows evidence of real property. The recorded copy is sufficient
as long as it shows the Register of Deeds stamp information.
CLOSING COSTS
Closing Costs and Fees a THDA Borrower May Pay
1. The borrower may pay any and all reasonable and customary fees and costs
normally charged in the market place. However, section A, page 2 of the loan
estimate/closing disclosure cannot exceed $1,400 for Lender Administrative-type
Charges, examples underwriting, processing, application, administrative, etc.
Origination fee is based on rate sheet and product offering at the time of rate
lock. If THDA, in its sole discretion, determines that the borrower has been charged
a fee that is exorbitant or not customarily charged in the market place, the
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Originating Agent will be required to refund these fees to the borrower. $75 tax
service is excluded from the $1,400.
2. Closing Disclosure should not list any fees payable to THDA. Rate lock extension
fees are an allowable fee.
3. Rate lock extension fee charged by THDA may be passed along to the borrower.
4. Origination Fee- Based on the rate sheet and product offering at the time loan is
locked
USE OF MERS SYSTEM – MERS ID#
Originating Agents are required to have written policies and procedures for registering
loans with Mortgage Electronic Registration Systems, Inc. (MERS) and should use loan
documentation reflecting MERS, as the nominee for Originating Agent and Originating
Agent's successors and assigns. OA should have a process to ensure that for each MERS-
registered mortgage, the applicable Mortgage Identification Number (MIN) is included
on the security instrument and related documents. The THDA loan number must be
reflected on all THDA loan documentation in addition to the MIN as required by MERS.
Originating Agents shall cause each first mortgage deed of trust (with THDA Rider)
securing a THDA loan to be properly recorded in the Register's Office of the county in
which the property is located and to register such deeds of trust with MERS in accordance
with applicable MERS requirements.
Originating Agent shall, upon THDA's request, obtain and properly record an assignment
of any MERS registered THDA loan from MERS to THDA or as THDA may direct. In the event
of any dispute regarding a THDA loan registered with MERS, Originating Agent shall take
all steps deemed necessary by THDA to protect THDA's interest. All other requirements of
this Guide and of the Working Agreement between THDA and Originating Agent shall
apply to each THDA loan regardless of registration with MERS.
All second mortgage loans must also utilize the MERS system to assign loans to THDA. THDA
Second Mortgage loans and HFA Advantage loans do not need to have the THDA Rider
recorded.
Paper assignments will not be accepted.
THDA MERS Orig ID is 1014378.
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SECTION VIII: SHIPPING A CLOSED THDA LOAN
ORIGINATION AGENT OBLIGATIONS
Originating Agents must conform to strict time tables when shipping a closed loan file to
THDA. The THDA Closed Loan Checklist lists the documents that must be provided to THDA
with each closed loan file.
In order to avoid potential problems in complying with THDA timeliness guidelines and the
resulting fees for such, upon receipt of the closed loan file from the Settlement Agent,
Originating Agents should:
1. Audit all documents for accuracy,
2. Immediately secure any necessary corrections,
3. Promptly submit required documents to THDA indicated on the Commitment to
facilitate timely onboarding and notification to the Borrower in preparation for the
first scheduled loan payment(s),
4. Submit all information and materials required to obtain insurance or guarantee,
and
5. Comply with THDA delivery deadlines.
If purchase is after first payment due date, provide evidence of payment history. See
Form HO-0444 Request for Loan Purchase with Acknowledgement and Certification
.
SHIPPING ADDRESS
All THDA documents should be submitted through THDA’s online portal, with the
exception of the original mortgage notes and the original recorded Deed of Trust. These
documents should be submitted online and shipped. When delivering documents,
specify “SFLO, Closing Department”. Documents delivered without “SFLO” included in
the address may be misdirected or lost. More than one loan file may be delivered in each
envelope, however, documents for each loan file must be clearly identified.
THDA
Attn: SFLO Closing Dept.
502 Deaderick Street, 3
rd
Floor
Nashville, TN 37243
DELIVERY DEADLINES
Delivery of all THDA closed loan files must conform to the following deadlines:
1. 10 Day Deadline
For all THDA loans, THDA must receive the Closed Loan, as outlined in the Closed
Loan Submission Check list, including items on the Commitment, uploaded to the
portal. The Original Notes, and all other required initial submission documentation,
within ten (10) calendar days following closing. Delays in receiving the closed loan
package will delay purchase of the loan and may be subject to non-purchase by
THDA if documentation is received after the first payment due date.
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2. 30 Day Deadline
Evidence of all insuring/guaranty documentation must be received by THDA. This
includes Mortgage Insurance Certificates (MIC), Loan Note Guarantee (LNG) or
Loan Guaranty Certificate (LGC). THDA may grant one extension.
3. 100 Day Deadline
If the loan has not yet been purchased by THDA, it will immediately become
ineligible for purchase on the 100th day following closing. Loans declared
ineligible for purchase by THDA, including Great Choice Plus loans and/or loans
repurchased from THDA, are not eligible for subsequent purchase by THDA.
4. 120 Day Deadline
THDA must be in receipt of all necessary documentation, including the recorded
Deed of Trust, Assignment for the first and second mortgage loans (N/A if MERS
documents submitted), Title Insurance Policy, and final inspections within 120 days
of closing. Original recorded Deed of Trust, Assignment, if applicable and/or Riders
must be shipped to THDA.
THDA may grant one extension, for a period not to exceed thirty (30) calendar
days, to the delivery deadline to allow for additional efforts to resolve the
problems. THDA may consider additional extensions. Any additional extensions
must be approved by THDA, in THDA’s sole discretion.
THDA may decide to complete a file without all final corrections being received. In those
cases, the Originating Agent would receive notification from THDA (OA Liability Letter) of
the correction(s) to be made and the Originating Agent will be responsible for
completion of the file.
FAILURE TO MEET DELIVERY DEADLINES
Any loan closing file remaining incomplete on the 151
st
day following closing will result in
THDA issuing a demand for repurchase, along with repurchase instructions and deadline,
without any further notice to the Originating Agent.
Originating Agents who consistently fail to meet delivery deadlines will be suspended
from new loan originating until such time that the delinquent loan closings are
completed.
REQUIRED DOCUMENTS FOR A COMPLETE CLOSED LOAN FILE
Closed Loan Submission Checklist
A completed THDA Closed Loan Submission Checklist must be used as the cover sheet
when submitting closed loan files to THDA.
Loans closed will be purchased from the Originating Agent by wire transfer. A loan is
eligible for purchase when the initial closed loan package, which must include the
following documents, has been delivered to THDA:
• Original Note for First Mortgage
•
Original Note on Great Choice Plus Loan, using correct form, if applicable
•
Request for Loan Purchase with Acknowledgement and Certification
•
Copy of Executed Deed of Trust for First Mortgage, including any riders
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• Copy of Executed Deed of Trust Great Choice Plus Loan, using correct form, if
applicable
•
Affidavit of Affixation, when a MFG Home is not de-titled
•
Title Insurance Commitment
•
Copy of Executed Warranty Deeds
•
Declaration Page of Hazard Insurance Reflecting Appropriate Coverage
•
Final Closing Disclosure
•
Copy of Legally Enforceable Obligation Letter, FHA Loans Only
•
VVOE
Original Note
Deliver the original Note, endorsed to THDA by an authorized Originating Agent staff
member. THDA will not fund the purchase of the loan until the original note is received.
Original Note Great Choice Plus Form
Deliver the original Second Mortgage Note, executed on the correct form, reflecting the
correct terms, endorsed to THDA by an authorized Originating Agent Staff member. THDA
may not fund the purchase of the loan until the original note is received.
Original Recorded Deed of Trust
Enclose the original recorded Deed(s) of Trust and Rider(s), or a copy (before recording)
of the fully executed Deed(s) of Trust and Rider(s) which have been certified as a true
and exact copy by the Settlement Agent or an authorized Originating Agent staff
member.
THDA must receive the original recorded Deed(s) of Trust and Rider(s) on or before the
120 day deadline. Applicant’s signature and typed name on the Deed(s) of Trust, Title
Insurance Policy and Warranty Deed(s) must match exactly or a name affidavit must be
enclosed. The legal description, book, page, time of recording and other critical data
must match the Title Insurance Policy and the Warranty Deed(s), as applicable.
Deed of Trust-Great Choice Plus
Current subordinate document must be used. Enclose the original recorded Deed(s) of
Trust, (THDA Rider should not be included on second mortgages), or a copy (before
recording) of the fully executed Deed(s) of Trust which have been certified as a true and
exact copy by the Settlement Agent or an authorized Originating Agent staff member.
Affidavit of Affixation (Manufactured Home)
Enclose the fully executed and recorded Affidavit of Affixation.
Title Insurance Policy/Endorsements
Enclose the Title Insurance Policy and all required endorsements. The Title Insurance Policy
must be received by THDA on or before the 120 Day Deadline.
Warranty Deed
Enclose a copy (before recording) of the fully executed Warranty Deed(s) that convey(s)
the property to the Borrower.
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Closing Disclosure
The Closed Loan Submission Package must include the Closing Disclosure (CD). The CD
must be included for Great Choice Plus second mortgage loans.
Great Choice Loan Allowable Fees
1. Great Choice Loan:
THDA allows the Originating Agent to charge normal and customary fees, including
without limitations, appropriate application fee. If the Originating Agent elects to
charge an Application Fee, it must be included on the CD. However, Section A, page
2 of the loan estimate/closing disclosure cannot exceed $1,400 for all normal and
customary fees. Origination may be charged based on the rate sheet and product
at the time the loan is locked. All Originating Agents are expected to adhere to all
timing guidelines as outlined in 12 CFR § 1026.19(f)(1)(ii) for Closing Disclosures
2. Great Choice Plus Loan:
THDA allows customary recording fees, odd days/prepaid interest, mortgage transfer
fee and a loan settlement fee of up to $200. THDA does not allow Lender title policy
on the Great Choice Plus loan. All Originating Agents are expected to adhere to all
timing guidelines as outlined in 12 CFR § 1026.19(f)(1)(ii) for Closing Disclosures. The
Great Choice Plus Loan-Deferred option does meet 12 CFR § 1026.3 for partial
exemption as long as a settlement fee is not charged.
Hazard Insurance
THDA must receive a copy of the hazard insurance policy declarations page, or a copy
of the Certificate of Insurance, signed by an authorized agent of the insurance company.
The original policy or Certificate of Insurance must be sent to the THDA Servicer.
Termite Inspection/Treatment Certificate (when applicable)
Termite Inspections/Treatment Certificate provided as required by the Agency’s
guidelines.
Flood Insurance (when applicable)
See Section VII
Commitment Conditions
Enclose any documents to satisfy, at closing, conditions specified in the Commitment, if
not otherwise satisfied with documents listed above.
MIC/LGC; USDA/RD 3555-17, or As Applicable
1. The MIC must be ordered immediately after closing and provided to THDA within
30 days of closing. FHA Connection should reflect insured and holder as THDA.
Evidence of Upfront MIP paid must also be submitted to THDA.
2. The LGC must be ordered immediately after closing. THDA must receive a copy of
the LGC within 30 days following closing.
3. For USDA/RD loans, enclose the Loan Note Guaranty 3555-17 within 30 days of
closing.
Also enclose a copy of RD Form 3555-11, Lender Record Change. The original 3555-11
must be submitted to Rural Development. In the appropriate space, indicate THDA’s
USDA/RD ID number: 6206001445.
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Final Loan Application and 92900A (URLA)
The final URLA executed by the borrower(s) and loan officer must be included in the
Closed Loan Submission Package. All pages of the 92900A should be executed by the
borrower(s) and lender.
SERVICING PROCEDURES
All loans shall be sold servicing-released to THDA dba Volunteer Mortgage Loan Servicing
(VMLS). VMLS servicing effective date is the THDA purchase date.
Service Release Premium
THDA will pay a Service Release Premium (SRP) in an amount equal to .75% of the loan
amount. Closed loan packages must be received and purchased prior to the first
payment due date and meet the delivery deadline described in Section 8.2 of the O. A.
Guide. THDA will withhold the SRP amount from the purchase price of the loan. THDA will
pay the SRP for a loan once all documents as described in section 7 of the O. A. Guide
are received from the lender for that loan.
The THDA prepared SRP report will be emailed to the lender each week to the most
recent email address THDA has in its files for each lender. THDA will send the SRP each
week using the most recent ACH instructions THDA has in its files for each lender. It is the
lender’s obligation to ensure that email addresses and ACH instructions are accurate
and up to date.
Tax Service Fee
A $75 tax service fee must be charged on all loans. It can be paid by the borrower or
lender and must be reflected accurately on the Loan Estimate and Closing Disclosure.
THDA deducts this amount from the SRP and remits the tax service fee to CoreLogic.
Changing Fees/Compensation
Compensation and fees may be changed or eliminated at the discretion of THDA.
Tax and Insurance Escrow
The initial Escrow Account Disclosure statement must be completed accurately to be
sure sufficient funds are collected at closing. The initial escrow funds will be deducted
from the purchase of the loan.
Volunteer Mortgage Loan Servicing Directory
VMLS Customer Service
Monday-Friday, 8am-5pm CST
844-865-7378
custserv@volservicing.com
Payment Address:
Volunteer Mortgage Loan Servicing
502 Deaderick Street, 3
rd
Floor
Nashville, TN 37243
Physical Address:
Volunteer Mortgage Loan Servicing
502 Deaderick Street, 3
rd
Floor
Nashville, TN 37243
THDA Originating Agents Guide Page | 57
Revised 04.09.2024
Primary Escalation Contacts for VMLS:
Trebia Johns, Director of Mortgage Loan Servicing
(615)649-3424
tjohns@volservicing.com
Heather Johnson, Assistant Director of Mortgage Loan Servicing
(615)649-3420
hjohnson@volservicing.com
Payments Received After Purchase
In the event the Originating Agent receives a mortgage payment AFTER THDA purchases
the loan, the payment is to be sent to VMLS immediately.
1. Payment can be mailed to the VMLS Physical Address:
Volunteer Mortgage Loan Servicing
502 Deaderick Street, 3
rd
Floor
Nashville, TN 37243
2. Or, payment can be wired with a confirmation email sent to
payments@volservicing.com
.
3. Email payments@volservicing.com indicating the amount received, the date
received, and method for transferring the payment in full to VMLS.
Payments Received Prior to Purchase
If a payment is received PRIOR to THDA Purchase, the Originating Agent is to notify VMLS
immediately but retain the payment until THDA purchases the loan.
Email payments@volservicing.com indicating the amount received and the date
received.
Any payment(s) received by the Originating Agent that is not forwarded to THDA
promptly, will be considered a violation of the Working Agreement.
Service Transfer After First Payment Due Date
In the event the first payment becomes due prior to THDA purchasing the loan, the
Originating Agent is responsible for all servicing activities up to the THDA Purchase date
and subsequent Service Transfer Effective Date.
1.
Collect timely payment from the borrower(s); proof of current due date will be
required prior to THDA Purchase
2. Disburse timely PMI/MIP payments to Agency’s guidelines.
3. Disburse additional Hazard Insurance, Flood Insurance, or Tax payments that
come due prior to the THDA Purchase date
4. Complete required Agency monthly reporting, if applicable
5. Send a new Goodbye Letter meeting all RESPA requirements and coordinate the
Service Transfer effective date with VMLS
Immediately following the effective Service Transfer date, Originating Agent is to send
the following to VMLS
a. Loan History indicating due date, payments received, principal curtailments,
suspense balance, escrow disbursements, and escrow balance at transfer
THDA Originating Agents Guide Page | 58
Revised 02.01.2024
b. All payments collected; disbursed escrow may be netted from funds
transferred to VMLS
c. Copy of notices sent to borrower(s) including Goodbye Letter
d. Complete MERS TOB/TOS, if loan is active in MERS
SECTION IX: THDA FORMS AND INSTRUCTIONS
As a result of Tax Code requirements, THDA must require certain forms. Application files
or closed loan packages that do not contain fully executed THDA forms, as required, will
not be accepted by THDA. These forms must be included in THDA application files and in
THDA closed loan packages as indicated in this Guide. THDA forms are in addition to the
typical forms utilized in the mortgage industry. These forms are to be considered part of
this Guide.
THDA forms may not be altered.
THDA forms may not be distributed to a lender who is not an Originating Agent or to any
other unauthorized individual or entity.
Detailed instructions for completion of each THDA form follows in the order that they are
typically encountered in the lending process:
Application Declaration HO-0450 (07.23)
Veteran Exemption Application Declaration HO-0460 (08.23)
Notice to Applicants Federal Recapture Requirements HO-0448 (05.21)
Seller Declaration HO-0451 (09.21)
Underwriting Submission Checklist HO-0549 (01.24)
Affidavit of Affixation RV-F1322101
Legally Enforceable Obligation Letter HO-0476
Closed Loan Submission Checklist HO-0541 (08.22)
THDA Rider HO-0440 (08.03)
Request for Loan Purchase with Acknowledgement and Certification HO-0444 (08.20)
Great Choice Plus/ HFA Advantage Plus Amortizing Subordinate Note (Payment)
Great Choice Plus/ HFA Advantage Plus Deferred Subordinate Note (No Payment)
Great Choice Plus/ HFA Advantage Plus Subordinate Deed of Trust
Application Declaration HO-0450
Veteran Exemption Application Declaration HO-0460 (If Applicable)
The Application Declaration or Veteran Exemption Application Declaration (if applicable
Application Declaration must be executed by each applicant and non-qualifying
spouse. The MRB income figure to be provided in item #4 is the maximum allowable
income for the size of the applicant’s household and location of property. The acquisition
THDA Originating Agents Guide Page | 59
Revised 02.01.2024
cost figure for Great Choice is to be provided in item #5 is the maximum THDA acquisition
cost for the county in which the property is located.
Notice to Applicants Federal Recapture Requirements
HO-0448
This form is mandatory for all THDA loan applications. The Applicant and all Co-Applicants
must sign and date the form at the time of application. Provide a copy to the Applicant.
Enclose the original signed and dated form in the application file when submitted for
THDA underwriting.
Seller Declaration
HO-0451
The seller of the property must complete a Seller Declaration for each application file
submitted to THDA. The Seller Declaration is to assist in determining whether the purchase
of the property involves more than the purchase price specified in the sales contract. The
seller must sign and date the Seller Declaration. Enclose the Seller Declaration in the
application file when submitting for THDA underwriting. In the absence of the Declaration
at the time of loan approval, a prior to closing contingency will be required.
Underwriting Submission Checklist
HO-0549
Use this form as a cover sheet for all application files submitted to THDA. Follow the
checklist closely and complete all information. Items omitted may cause the application
file to be returned for completion and resubmission. Do not change the size of this form.
Affidavit of Affixation RV-F1322101
An original Affidavit of Affixation is required on all manufactured home loans that are not
de-titled and must be recorded as a separate document. It cannot be recorded with or
attached to the Deed of Trust for recordation. Owner of record when the de-title takes
place should sign the Affidavit.
Legally Enforceable Obligation Letter HO-0476
For any Great Choice loans insured by FHA/HUD, the Originating Agent will receive a
Legally Enforceable Obligation Letter (LEOL) attached to the THDA Loan Commitment.
HUD/FHA requires that THDA provide a Legally Enforceable Obligation Letter when THDA
has agreed to provide DPA funds in the form of the Great Choice Plus Loan. The
Borrower(s) is to sign the LEOL at closing and a copy of the executed LEOL must be sent
back to THDA with the initial closing submission package in order for THDA to purchase
the Great choice Plus loan.
The Originating Agent is to retain the original LEOL in their loan file to accompany the FHA
insurance application associated with the first mortgage.
Closed Loan Submission Checklist HO-0541
Use this form when submitting all closed loan files to THDA. This form can also be used as
a checklist for submission of follow-up documentation.
THDA Rider HO-0440
The THDA Rider must be completed, executed, attached to and recorded with the deed
of trust for all Great Choice THDA first mortgage loans. The THDA Rider must be signed by
all Borrowers who are required to sign the first deed of trust and recorded with the deed
of trust. THDA Rider is not applicable for any THDA second mortgage loans or HFA
Advantage mortgage loans.
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Revised 02.01.2024
Request for Loan Purchase with Acknowledgement and Certification HO-0444
All loans closed must be accompanied by an executed Request for Loan Purchase with
Acknowledgement and Certification when delivered to THDA. The most recent version
of the HO-0444 form must be utilized. By submitting a loan file for purchase by THDA, each
Originating Agent is deemed to affirm the Acknowledgement and Certification
appearing on the master form of the Request for Loan Purchase with Acknowledgement
and Certification with respect to each loan file submitted regardless of whether the
Acknowledgement and Certification is included with the form submitted with a particular
loan file.
THDA provides a Request for Loan Purchase with the Loan Commitment. Utilizing this
version of the form limits the amount of data and errors. Provide all information indicated.
Check the appropriate box indicating whether the loan file is complete in all respects or
not. Sign and date where indicated, print name and title, and provide telephone
number. Omitted information may cause the loan file to be returned to the Originating
Agent.
Great Choice Plus/HFA Advantage Plus Amortizing Subordinate Note (Payment) Form
#3295
All loans that include a THDA subordinate DPA in the amount of 5% of the sales
price/maximum of $15,000, interest rate the same as the first mortgage, 30 year term and
a monthly payment used for qualification purposes, must use this note at loan closing.
Great Choice Plus/HFA Advantage Plus With Deferred Subordinate Note (No Payment)
Form #3296
All loans that include a THDA subordinate DPA in the amount of up to $6,000, 0% interest
rate, deferred payment and forgiven at the end of the 30 year term, must use the note
at closing.
Great Choice Plus/HFA Advantage Plus Subordinate Deed of Trust Form #3800.43
All loans that include a THDA subordinate DPA must use the Deed of Trust at closing.
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Revised 05.22.2024
SECTION X: FREDDIE MAC HFA ADVANTAGE® CONVENTIONAL PROGRAM
OVERVIEW
This section of the guide is specific to insured conventional Freddie Mac mortgage.
HFA Advantage & HFA Advantage Plus
This MBS loan offers a choice for down payment and closing cost assistance, one
offering has deferred payments and the other has a low interest rate with monthly
payments. Both are secured by a second deed of trust. This loan is available only with
the HFA Advantage first mortgage loan. The HFA Advantage Plus loan with payment is
at an interest rate the same as the first mortgage, monthly payments amortized over a
30 year term, and up to 5% of the sales price, maximum of $15,000. The HFA Advantage
Plus with No Payment is up to $6,000 at a 0% interest rate, 30 year term, and must be
repaid if the home is refinanced or sold.
Loan Product Advisor
HFA Advantage through Loan Product Advisor (LPA)
LPA with “Accept” risk class and “Eligible” purchase
eligibility required. Manual Underwriting is not allowed.
Maximum Income
Great Choice Mortgage Program limits for a 3+ person
household
Maximum Household
Acquisition
Varies by County
Loan Term 30 year Fixed
Debt-to-Income Ratio
Per LPA Feedback Results
Manual Underwriting
Not Permitted
Maximum LTV/CLTV
Per Freddie Mac Guidelines 97%/105%
Eligible Properties
See Eligible Properties
Mortgage Insurance
Section 4701.1 of Freddie Mac Guidelines
Subject to Recapture
No
Minimum Investment
No minimum borrower investment is required by THDA, unless
required by Freddie Mac.
Occupancy Requirement
Owner-Occupied Properties Only*
Homebuyer Education
Required
Origination Fee
Based on rate sheet and product offering on the date loan is
locked.
Down Payment Assistance HFA Advantage Plus.
ELIGIBLE BORROWER
First-time homebuyers and/or Repeat homebuyers are eligible.
All borrowers must occupy the mortgaged premises as their primary residence. Non-
occupying borrower(s) are permitted for one-unit primary residences with maximum 95%
LTV and 105% TLTV ratios, per Freddie Mac guidelines.
Ownership Interest
The occupying borrower(s) must not have an ownership interest in more than two
financed residential properties, including the subject property, as of the note date.
Borrower may not currently have an active THDA/VMLS loan.
THDA Originating Agents Guide Page | 62
Revised 05.22.2024
ELIGIBLE PROPERTIES
For maximum LTV/CLTV, Freddie Mac HFA Advantage® allows Single-family, one-unit
primary residence, condos, and PUDS are acceptable. Manufactured homes and 2-4
unit are not eligible for maximum LTV/CLTV- See Freddie Mac HFA Advantage guidelines.
Condo Eligibility Guidelines
As part of our Seller/Servicer Agreement with FNMA and FHLMC, THDA must verify that
the quality of mortgages secured by units in condo projects and PUDs meet Agency
eligibility requirements. THDA does not formally approve specific condo projects. It is the
Originating Agent’s responsibility to verify that the project meets FNMA & FHLMC
guidelines. THDA is required to perform a review of the loan file presented to confirm that
the lender completed the necessary steps to verify the condo unit meets requirements.
• Fannie Mae Section B4-2.1-01, General Information on Project Standards, lists the basic
requirements for determining project eligibility.
• Freddie Mac Section 57.02, Condominium Project review and general Condominium
Project eligibility requirements, lists the basic requirements for determining project eligibility.
It is the OA’s responsibility to conform to Agency’s requirements in these sections.
Project eligibility and financial strength are key drivers of credit performance on individual
unit mortgages and critical to the long-term success of the project. Project eligibility and
underwriting requirements seek to mitigate project level risks and to ensure that projects
are demonstrably well-managed.
A review of each condominium loan submitted to THDA will be completed to ensure the
OA has performed the necessary due diligence to determine the unit meets
requirements. THDA is requiring the OA to provide the signed THDA Condo Project Lender
Approval form with the submission package.
PURCHASE PRICE LIMIT
HFA Advantage follows the same Purchase Price Limits as Great Choice. Section II.
QUALIFYING INCOME LIMIT
The income limit for HFA Advantage and HFA Advantage Plus amortizing is based upon
the income of the qualifying borrower(s) only. Qualifying income inclusions/exclusions per
Freddie Mac Guidelines
. Qualifying income is a maximum of the 3+ person household
limits for the Great Choice Program.
FIRST MORTGAGE LOAN TERMS AND GUIDELINES
Loan Types/Investor Feature Identifiers (IFIs)
• Freddie Mac HFA Advantage Mortgage Loans only.
• HFA Advantage should be selected in LPA drop down, Program Identifier.
• IFI 251 Home Possible Advantage for HFAs should be identified in Loan Selling
Advisor.
Maximum LTV/CLTV
• First loan mortgage amounts are subject to THDA purchase price limits.
THDA Originating Agents Guide Page | 63
Revised 05.22.2024
• Maximum Freddie Mac HFA Advantage: 97%/105% for one-unit properties, see
Freddie Mac’s guidelines for manufactured homes and 2-4units.
• Maximum 95% LTV and 105% CLTV for non-occupying borrower, see Freddie Mac’s
guidelines.
Transaction Type
• Purchase transactions only.
• Refinance loans are not permitted.
• Construction loan permanent financing allowed.
Mortgage Loan Rates and Reservations
Mortgage loan rates and prices will be posted on the THDA website daily between 9:00
AM and 5:30 PM CST on Monday through Friday. These rates and prices are subject to
change on a daily or intra-day basis. Lenders reserve loans through THDA Online
Reservation system (THELMA).
Rate Locks and Extension Fee
Loans reserved through the THELMA system will have a rate lock to the lender of 60
calendar days. The mortgage loan must be closed and all closing documentation must
be delivered to THDA by the 60
th
calendar day. Any loan cancelled during the rate lock
period or rate lock expiration may not be reserved again for 60 days from the original
reservation expiration date or cancellation date for the same borrower purchasing the
same property. Pricing for loans re-reserved will result in pricing of original rate lock or new
rate lock, whichever is worse day pricing. One rate lock extension for 30 days at a cost
of 25 bps can be initiated by the lender. Additional time needed could result in repricing,
contact THDA. Read further in Section V
for more related information.
UNDERWRITING
Freddie Mac HFA Advantage®
Follow Freddie Mac HFA Advantage® guidelines found on their website
, with the
following exceptions:
• Purchase only
Please note the following:
• HFA Advantage is the Offering Identifier reflected in the Mortgage Details
Section.
• Verify Affordable Lending and Access to Credit Message. A message will be
displayed if the transaction is a Very Low Income Purchase (VLIP) AMI at or
below 50%; Low Income Purchase (LIP) AMI at or below 80%; or if income
exceeds 80% to compare to THDA’s maximum income limits.
• Verify Mortgage Insurance Message to determine if AMI and LTV qualify for
reduced charter coverage.
• Loan Prospector Document checklist should be uploaded to THDA with the LPA
Feedback results.
Freddie Mac Resources
1-800-Freddie (800-373-3343)
THDA Originating Agents Guide Page | 64
Revised 05.22.2024
• Freddie Mac approved Seller Servicer , please press 1
• For underwriting guideline support, please press 1
• For affordable lending, HFA Advantage, please press 1
• Enter your six-digit Seller Servicer number or seven-digit third party originator
number, followed by pound sign.
Private Mortgage Insurance (PMI)
• Insurers must be acceptable to Freddie Mac
• Lender is responsible for activating any PMI policy and remitting any PMI
payments due to the mortgage insurer prior to the sale of the loan to THDA.
Lender is also responsible for transferring the PMI policy to THDA after the loan
sale. PMI rates, pricing and guidelines may differ among the participating
mortgage insurers and are subject to change. Lenders should consult the
current PMI guidelines at each company to determine the terms and conditions
by which such loans will be insured.
THDA program guidelines do not supersede, nor are they a substitute for, the guidelines
in place with each mortgage insurer at the time the loan is underwritten.
Mortgage Insurance Coverage
Each mortgage must have mortgage insurance that complies with the required
coverage levels:
Area Median Income
(AMI)* per Freddie Mac
Loan-to-Value Ratios
Mortgage
Insurance
Coverage
Less than or equal to
80%
Greater than 95% up to and including
97%
18%
Greater than 90% up to and including
95%
16%
Greater than 85% up to and including
90%
12%
Greater than 80% up to and including
85%
6%
Greater than 80%
See Freddie Mac Guide Section
4701.1
Standard
Coverage
Discount Points/Assumable/Escrow Waivers/Temporary Buydown
• Not permitted.
DOWN PAYMENT ASSISTANCE (HFA Advantage Plus)
THDA will be offering two second mortgage loan program options available across the
entire state, regardless of the sales price, as long as it meets THDA’s acquisition limits.
HFA Advantage Plus with No Payment terms (Deferred):
• Loan Amount is up to $6,000
THDA Originating Agents Guide Page | 65
Revised 05.22.2024
• 0% interest rate
• 30 year term, due on sale or refinance
• Deferred payments, therefore, no payment for qualifying purposes
• Second mortgage loan will be locked simultaneously with the first mortgage, key
words in program description for a successful lock “No Payment”.
• Max 105% CLTV
HFA Advantage Plus with Payment terms: (Amortizing)
• Loan Amount is up to 5% of the sales price (or appraised value if less than the sales
price)
• 30 year amortizing
• Interest rate is the same as the first mortgage
• Monthly payment must be considered in the debt ratio.
• Second mortgage loan will be locked simultaneously with the first mortgage, key
word in program description for a successful lock “Payment”.
• Max 105% CLTV
• This is considered an affordable second in LPA, when entering subordinate lien
“Yes” should be selected for Affordable Second and monthly payment should be
entered.
Late fee is 5% of the overdue payment after the 15th calendar day.
Lender Advance
Lenders will advance the second loan at the loan closing for the benefit of the borrower,
which will be reimbursed based upon the purchase of the mortgage loan by THDA.
Compliance Issues
The second loan is evidenced by a second mortgage note and secured by a
subordinate deed of trust. See TRID section below for disclosure procedures and
documentation.
Limitations on Down Payment Assistance
At closing, an Eligible Borrower may not receive cash back except for the following
reason, reimbursement of fees and/or expenses paid outside of closing, including but not
limited to earnest money deposit, appraisal fees, home inspection fees, credit report and
homebuyer education expenses charges.
The eligible borrower may be reimbursed up to the amount of overpayment with
documented expenditures. In the event of remaining funds after the eligible borrower
has been reimbursed for appropriate requested amounts, the borrower shall not receive
the additional funds. However, surplus funds may be applied as a principal curtailment
on the first mortgage and be documented on the closing disclosure.
Down Payment Assistance cannot be used to pay off debt.
THDA Originating Agents Guide Page | 66
Revised 05.22.2024
TRID
Loan Estimate
All assisted loans will require a Loan Estimate (LE). Lenders can generate one from their
LOS system that contains the appropriate terms. Only recording fee, odd days/prepaid
interest, mortgage tax fee, and a loan settlement fee of up to $200 may be listed. ). All
Originating Agents are expected to adhere to all timing guidelines as outline in 12 CFR §
1026.19(e)(1)(iii)(A) for the Loan Estimate.
Closing Disclosure
Lenders are required to provide a Closing Disclosure at closing listing only the recording
fee, odd days/prepaid interest, and mortgage tax fee for the second mortgage for all
loans reserved. Any fees in addition to the recording fee, odd days/prepaid interest, and
mortgage tax fee listed on the second mortgage CD will be required to be refunded to
the borrower prior to purchase approval. Any excessive recording fees charged will
require a detailed explanation. Any fees not proven to be for recording will require a
refund to the borrower prior to purchase approval. All Originating Agents are expected
to adhere to all timing guidelines as outlined in 12 CFR § 1026.19(f)(1)(ii) for Closing
Disclosures.
LENDER PROCESS
Application and Reservation
Lender determines borrower eligibility per Freddie Mac and THDA guidelines, income
limits and purchase price limits. Lender reserves the loan through THDA’s online lender
portal THELMA. When loan is reserved, the rate is locked. Lender processes the loan,
gathers documentation, obtains the appraisal and lender issues approval on file. Lender
submits approved loan to THDA’s online lender portal THELMA to receive commitment
from THDA.
If incorrect program type has been selected at rate lock, loan must be withdrawn and
resubmitted under correct program type. If submission is in error, loan will be locked at
current secondary rate. Subject to THDA review of original disclosures.
Lender is responsible for uploading the appraisal into Uniform Collateral Data Portal
(UCDP). LPA feedback certificate should contain Home Value Explore (HVE) results
Commitment Compliance Package
The lender should upload the loan package to THDA through the lender portal THELMA
per the Underwriting Submission Checklist. Please submit all documents on checklist in
proper stacking order and indicate the LPA results have been transferred to THDA.
THDA will either approve the compliance package, issue prior to closing conditions, or
decline the file. If conditions are issued, please submit immediately to expedite the
approval. Once the underwriting compliance package is approved, THDA will email the
commitment. Commitment is also available for review/download in the THELMA system.
The lender is authorized to proceed with the loan closing once approval commitment
has been issued. Commitment will expire on lock expiration date.
Purchase Compliance Package
Lenders must submit a closed loan package to THDA after closing, per the
Closed Loan
Submission Checklist. Included on the checklist is Form SSA-89, Authorization to Release
SSN, which must be signed by the borrower at closing. Lender is responsible for providing
THDA Originating Agents Guide Page | 67
Revised 05.22.2024
UCD and LQA results. Once the closed loan package is approved by THDA, and the
original note received, THDA may purchase the mortgage loan.
COMPENSATION AND FEES
Lender Compensation
Lenders are permitted to charge borrower or seller origination fee based on rate sheet
and product offering as of the date the rate is locked. Rate lock extension fee can be
charged to the borrower.
Compensation will be paid at the time of purchase on all first Mortgage Loans that are
closed and delivered in purchasable condition within the 60 day lock period. Loans over
60 days are subject to applicable extension fees. Lender Compensation is based on rate
sheet and product offering as of the date of rate lock.
Lender may receive a Service Release Premium (SRP) based on the first mortgage loan
amount paid by THDA at the time of loan completion. Delivery deadline must be met.
SRP is based upon rate sheet and product offering as of the date the rate is locked. See
section VIII, Service Release Premium
.
Allowable Fees
Reasonable and customary fees not to exceed $1400, and closing costs may be charged
as long as such compensation payments are fully disclosed to the borrower in
accordance with federal, state, and local laws and regulations. Rate lock extension fee
is an acceptable fee. Origination fees per THDA rate sheet, at the time of the rate lock,
are allowed to be charged.
Non Delivery Fee
If an extension is elected, but the related Mortgage Loan is not sold to THDA, the Lender
may be billed for the extension fee.
CLOSING/DELIVERY INFORMATION
Uniform Closing Dataset (UCD)
THDA requires a Freddie Mac UCD Findings Report in every conventional loan file. The
report must reflect “successful result” with transfer to THDA, an embedded CD, and no
Fatal Error Edit warnings
4506-C
The IVES participant information MUST be listed on line 5a of the form and MUST match
the requestor’s information. THDA will require two 4506-C forms completed at closing; one
(1) with THDA’s vendor information (listed below) and one (1) with your own information.
• Ives Participant Name: KCB Credit LLC
•
Ives Participant Address: 1407 N Batavia ST #201 Orange CA 92867
•
Participant ID: 304088
•
Mailbox ID: fawcettinc
THDA’s information should appear in section 5d.
Delivery of Mortgage Loans
Mortgage Loans must be delivered and ready for purchase within 60 calendar days of
the loan reservation/rate lock date. Failure to comply with the 60 day delivery deadline
will be subject to a 0.25% extension fee for 30 days beyond the original 60 days. Extension
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Revised 05.22.2024
Fee will be netted from the Loan Purchase compensation when the Mortgage Loan is
purchased from the Lender.
Committed loans that are not purchased within 100 days after rate lock are subject to
cancellation or price adjustments.
All closing packages should be uploaded into the THELMA portal, original notes must be
sent to THDA.
Loan Quality Advisor
All loans must be evaluated using Freddie Mac’s Loan Quality Advisor (LQA). LQA uses
the ULDD file format THDA requires for loan delivery. It provides a Loan Evaluation
Summary which includes loan-level information and results. This summary should be
submitted to THDA in the closed loan package. The only critical edit acceptable is for
the HFA Advantage Loan Offering. THDA will clear this edit.
Uniform Loan Delivery Dataset (ULDD)
THDA requires lenders to deliver final ULDD data points required for HFA Advantage
mortgage in accordance with Freddie Mac Guide Sections 6302.14 & 6302.34.
In addition, lender must ensure the following program specific ULDD data points are
included, as applicable:
ULDD Data Point
Valid Value
Loan Program Identifier
HFA Advantage or Home
Possible Advantage HFA
Party Role Type/Party Role Type Other Description
Other-Housing Finance Agency
Loan Manual underwriting Indicator
False
Loan Affordable Indictor in “Product Information”
Section
True
Automated Underwriting Recommendation
Description
Accept
Investor Feature Identifier
VLIP AMI < 50%
LIP AMI < 80%
H56
H55
Assumability Indicator
False
Lien Priority Type in “Secondary Financing/Related
Loan Information” Section
Second Lien
Loan Affordable Indicator Located in “Secondary
Financing / Related Loan Information” Section
True
HELOC Indictor in “Secondary Financing/Related
Loan Information” Section
False
Combined LTV Ratio Percent in “Additional LTV
Details” Section
Must combine all mortgages
Original Mortgage Notes
Deliver the original Note(s), endorsed to THDA by an authorized Originating Agent staff
member. THDA will not fund the purchase of the loan until the original note is received.
Subordinate lien must be on the appropriate form.
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Revised 05.22.2024
Non-Delivery Fee
If the Lender elects an extension fee of .25% for a 30-day extension for a Mortgage Loan,
such extension fee may be due whether or not a Mortgage Loan is ultimately delivered
and/or purchased by THDA. Any Lender with total outstanding extension fees of $5,000
may be ineligible to participate in the Program until the unpaid balance of extension fees
is paid in full.
Final Document Delivery
Final document delivery information and checklist are posted on www.thda.org. Late
delivery more than 120 days from closing may result in 0% SRP payment.
SERVICING
THDA will provide (at no cost to the borrower) Early Delinquency Counseling to all
borrowers who experience problems meeting their mortgage obligations, as outlined in
Freddie Mac’s Servicing Guide Sections 9101.2 and 9102.4. HUD approved housing
counseling agencies can be found the HUD Website
.
For additional servicing information, See Section VIII.
HAZARD & FLOOD INSURANCE
Must meet Freddie Mac Guidelines and Requirements.
PROPERTIES AFFECTED BY A DISASTER
Please see Properties Affected by a Disaster.
HOMEBUYER EDUCATION
A pre-purchase certificate from a THDA approved agency or HUD-approved counseling
agency issued within the previous 12 months. Each person on the loan is required to
obtain homebuyer education, even non-first time homebuyers. Required to be
completed prior to commitment approval. See Section V, Homebuyer Education
, for
additional information. Certificate must be dated prior to the Note Date.
For HFA Advantage Mortgages secured by 2-4 unit Primary Residences, in addition to
homebuyer education, at least one qualifying Borrower must participate in a landlord
education program meeting the requirements of Guide Section 4501.12(b), as
applicable.
SUPPLEMENTAL CONSUMER INFORMATION FORM (SCIF, FORM1103)
All HFA Advantage loans delivered to THDA with an application date on or after March
1, 2023, must include the SCIF. The SCIF (Form 1103) collects information about a
borrower’s language preference and any homeowner education or counseling that the
borrower completed in the prior 12 months.
THDA Originating Agents Guide Page | 70
Revised 02.01.2024
SECTION XI THIRD PARTY ORIGINATION (TPO) CHANNEL
THDA will allow licensed and authorized Third parties to originate THDA loans through an
approved and authorized wholesale lender. Collectively, the parties enter into a broker
agreement. THDA’s agreement remains solely with the wholesale lender. Wholesale
lender is responsible for the complete underwriting and approval of the mortgage loan,
as well as delivering post-closing documents to meet THDA’s delivery deadline.
WHOLESALE LENDER RESPONSIBILITIES
All program guidelines and requirements in the THDA Originating Agent guide apply to
the TPO channel. Responsibilities of the wholesale lender:
• An active working agreement with THDA and written permission for the TPO
channel.
• Documented approval process and agreement in place with the TPO.
• Provide oversight, all services and compensation to the TPO, including all
communication regarding files submitted to THDA.
• May not impose a non-THDA minimum production requirement on TPOs in
exchange for THDA loan product offering.
• Loans originated by TPOs should be included in the quality control plan.
• Only the wholesale lender will have access to THDA’s electronic loan submission
portal.
• TPO must coordinate with wholesaler when locking rate.
• All loans must close in the wholesale lender’s name.
WHOLESALE LENDER REQUIREMENTS
In addition to the correspondent relationship requirements and application
documentation, wholesale lender will also provide the following documentation at
THDA’s request:
• Most recent copy of the broker agreement utilized by organization. Proprietary
information can be redacted.
• Annual list of active TPOs licensed in TN.
• Immediate notice of any termination of TPO agreement for TPOs originating THDA
loans.
• Schedule annual training in conjunction with THDA for all TPOs. Due to the working
agreements in place, including potential overlays, THDA will not conduct a TPO
training without a lender representative.
TERMINATION OF A TPO
THDA reserves the right to disallow a TPO due to conflict of interest with other THDA
programs or suspicious and fraudulent activities.