Frequently Asked Questions (FAQ)

Homebuyers, Homeowners, and Renters – FAQ

Homebuyers

How do I know if I am eligible for a PHFA Loan?
Does PHFA offer Homebuyer Workshops for individuals just getting started?
Does PHFA have their own lenders?
Can an application be completed online?
Does PHFA offer any special programs for individuals with physical disabilities?
Are there purchase price and income limits?
How long does it take to get a PHFA loan?
I currently own a home and would like to purchase another one. Will I be able to get financing through PHFA?
Would PHFA be able to assist me if I do not have the best credit score?
Will I be eligible for a loan if I declared bankruptcy in the past?
Does PHFA offer Closing Cost Assistance?
Will I be considered a first–time homebuyer if I own a mobile home?
I’ve heard that people who get a PHFA home loan have to pay a tax if they ever sell their home. Is that true?

How do I know if I am eligible for a PHFA Loan?

You may be eligible for a PHFA financed, 30–year fixed rate home purchase loan if you meet the program requirements for the Keystone Home Loan or the Keystone Home Loan PLUS.

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Does PHFA offer Homebuyer Workshops for individuals just getting started?

We have a network of approved counseling agencies that provide potential homebuyers with education about the home buying process. With no cost to the prospective PHFA borrower, these workshops will increase your level of confidence when shopping for a home and obtaining a mortgage.

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Does PHFA have their own lenders?

Yes, we have many participating lenders throughout the state. They will guide you through the application and closing of your PHFA home loan.

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Can an application be completed online?

Unfortunately applications cannot be processed online with PHFA. However, you may be able to complete an application online or over the phone with one of our participating lenders (see above).

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Does PHFA offer any special programs for individuals with physical disabilities?

Yes. We offer the Access Home Modification Program in conjunction with any of PHFA’s first mortgage programs. The program helps persons with physical disabilities or who have physically disabled family member(s) living in the household make accessibility modifications. This is a deferred payment loan, with no interest or monthly payment. In addition to the Access Modification funds, some applicants may also qualify for the Access Downpayment and Closing Cost Assistance Program.

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Are there purchase price and income limits?

Yes, there are purchase price and income limits for each county, but they differ per program. The Keystone Home Loan has the highest Purchase Price and Income Limits and fewest restrictions. The Keystone Home Loan PLUS offers the lowest rate available but the purchase price and income limits are also lower. The HOMEstead Program offers downpayment and closing cost assistance to eligible homebuyers and has different purchase price and income limits.

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How long does it take to get a PHFA loan?

This varies depending on many factors: the condition of the property, the seller’s timeline, the lender, the real estate agent, the documentation you supply to the lender, whether you are building a new home, etc. However, the process should not take any longer simply because you are getting a PHFA loan.

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I currently own a home and would like to purchase another one. Will I be able to get financing through PHFA?

Yes, if the home you intend to purchase is in a Target County or census tract where the first–time homeowner requirement is waived under the Keystone Home Loan program. All buyers getting a Keystone Home Loan PLUS must meet the first–time buyer definition (anyone who has not had an ownership interest in a principal residence within the past three years).

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Would PHFA be able to assist me if I do not have the best credit score?

Individuals whose middle FICO score is below 660 are required to attend a pre–closing homebuyer workshop or counseling session from one of our approved counseling agencies. The counseling agency and/or lender can help you determine if you would qualify for PHFA financing.

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Will I be eligible for a loan if I declared bankruptcy in the past?

Bankruptcies need to be fully discharged for at least two years. The counseling agency and/or lender can help you decide if you would be eligible for a PHFA home loan.

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Does PHFA offer Closing Cost Assistance?

Yes, if you meet the eligibility requirements of the Keystone Home Loan Program, you may be eligible to receive a zero-interest loan of up to $1,500 from the Keystone Assistance Loan Program. For the Keystone Home Loan PLUS Program, qualified borrowers may be eligible to receive a zero–interest loan of up to $3,000. Qualifying homebuyers who participate in the "HOMEstead" program can borrow between $1,000 and $14,999 to help with downpayment and closing costs. The Access Downpayment and Closing Cost Assistance Program is available to qualifying applicants who are also using the Access Modification Program.

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Will I be considered a first–time homebuyer if I own a mobile home?

Yes, as long as your home is not deeded and taxed as real estate. Generally, if the home is permanently attached to land that you own, it is considered real estate.

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I’ve heard that people who get a PHFA home loan have to pay a tax if they ever sell their home. Is that true?

No. While there is a small possibility that you could be subject to a Federal Recapture Tax upon the sale of your home, it only applies when three conditions are met: 1) you sell the home within the first nine years from closing on your loan; 2) your income exceeds the limit established by the federal government; and, 3) you make a profit from the sale of your home. In order to help take the confusion and worry out of the purchase of your home, PHFA agrees to reimburse you if you ever have to pay a Recapture Tax in connection with the sale of your home. This applies to borrowers who make application for a PHFA loan on or after January 1, 2004. The Recapture Tax Notice, which is supplied to and signed by all PHFA borrowers, provides a more detailed explanation.

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Homeowners

Homeowners' Emergency Mortgage Assistance Loan Program (HEMAP) – FAQ

What is foreclosure?
How do I apply?
When can I apply for HEMAP assistance without an Act 91 Notice?
When is a lender not required to send an Act 91 Notice?
Where do I get help?
What is the role of the counseling agency?
What do I bring to the counseling agency?
What happens after I meet with a counseling agency?
Who qualifies for a HEMAP loan?
What are circumstances beyond your control?
How do I demonstrate a reasonable prospect of resuming full mortgage payments?
How long does the process take?
Is the HEMAP loan a lien against the home?
When does repayment begin and on what terms?
What if I’m approved?
What if I’m denied?
What if circumstances change?
How do I contact HEMAP?
If I am not eligible, or my application has been denied, what are some other options to avoid foreclosure?

What is foreclosure?

Foreclosure is a legal action taken by the lender wherein a homeowner could lose their home and all rights and privileges associated with homeownership. After a foreclosure action is completed, the owner no longer holds legal title to the residence and, in most cases, will be required to vacate the subject property.

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How do I apply?

The application process can take up to four months to complete. An applicant must meet (the Face–to–Face Meeting) with a designated counseling agency within 33 days from the date of the Appendix A – Act 91 Notice in order to begin the application process. The counseling agency compiles the appropriate information, prepares the application, and forwards it to HEMAP for processing. This must be done within 30 days from the Face–to–Face Meeting. During this time while applications are processed, foreclosure actions cease, as long as the procedural time limits are met.

Upon initial contact with the designated counseling agency to schedule the Face–to–Face Meeting, the applicant will be notified of the information they must bring to the meeting. The applicant must also prepare a Letter of Circumstance explaining the exact reason their mortgage is delinquent and include verificaton.

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When can I apply for HEMAP assistance without an Act 91 Notice?

An Act 91 Notice is not required on a Rural Housing/USDA/Farmers Home Administration mortgage, but these mortgagors may apply with a delinquent notice from the lender, typically a Notice of Acceleration.

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When is a lender not required to send an Act 91 Notice?

Lenders are not required to issue an Act 91 Notice if:

The mortgage is insured under Title II of the National Housing Act (FHA Title II)
The secured property is used primarily for commercial or business purposes
The mortgage is more than 24 months delinquent
The amount required to reinstate the delinquent mortgage exceeds $60,000.00

Lenders are not required to issue an Act 91 Notice if the property is :

Not a one– or two–family owner occupied residence
Not secured by a mortgage
Not the principal residence of the mortgagor
Not located within Pennsylvania

A mortgage held by a non–corporate seller is not eligible for assistance unless the non–corporate seller elects to issue an Act 91 Notice. Once the Act 91 Notice is issued, the non–corporate seller becomes bound by the terms of the Act 91.

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Where do I get help?

A listing of HEMAP approved counseling agencies should be included with the Appendix A – Act 91 Notice issued by the lender. If a Homeowner did not receive a listing of designated counseling agencies, they may contact the HEMAP offices at 717.780.3940 or 1.800.342.2397 for assistance in selecting an agency most convenient to them.

Please note the application process cannot begin without first receiving an Act 91 Notice. The only exception to this rule are mortgages held by USDA, Farmers Home Administration, or Rural Housing. These mortgages are not required to issue an Act 91 Notice, however those mortgagors may still apply for a HEMAP loan.

Mortgages which originated as FHA Title II, or are insured by the Federal Housing Administration under FHA Title II of the National Housing Act, are not eligible for a HEMAP loan. An Act 91 Notice is not required to be issued by a the lender and the mortgagor may not apply for assistance without the Act 91 Notice.

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What is the role of the counseling agency?

The Counseling Agency is under contract with PHFA to prepare an application for a HEMAP loan. The Counseling Agency does not make the decision to approve or deny HEMAP loan applications. They do not make any recommendations to PHFA as to whether or not a homeowner should receive a loan. Their job is to help homeowners present the most complete and accurate application possible. Applicants must provide all necessary information with their loan application. The circumstances that caused their financial hardship and the factors affecting their reasonable prospect of resuming mortgage payments must be explained in detail. Certain income and expense information must be documented. The Counseling Agency should offer suggestions which will help homeowners obtain the necessary information.

The Counseling Agency is prepared to counsel homeowners with their financial matters and spending habits. If appropriate, the Counseling Agency will attempt a forebearance agreement with the lender. The Counseling Agency should also provide information about other financial assistance or employment training opportunities in their community.

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What do I bring to the counseling agency?

LETTER OF CIRCUMSTANCES – Please prepare and sign a detailed letter explaining the exact reasons for your current mortgage delinquency. Be as specific as possible since this letter is very important in determining your eligibility for loan assistance.
EVIDENCE OR DOCUMENTED PROOF OF CIRCUMSTANCES such as lay off notice, paid bills, medical or legal counsel statements, copies of cash receipts and/ or cancelled checks for expenses that contributed to the mortgage delinquency.
ACT 91 NOTICE and any other Notices of Foreclosure.
Three most recent consecutive PAY STUBS for all working household members from all current places of employment.
VERIFICATION OF OTHER INCOME – Unemployment Compensation, Workers’ Compensation, child support, alimony, Public Assistance, Social Security, rent, pensions, etc.
EMPLOYMENT HISTORY – names, addresses, position title, income, and work dates of all employers where all applicants have worked over the past five years.
FEDERAL INCOME TAX RETURNS for the past three years (transcripts can be obtained by calling the IRS at 1.800.829.1040 and ask for Form 4506).
DEED TO PROPERTY FACING FORECLOSURE and any other real estate owned (this information can be obtained from your County Courthouse).
MONTHLY STATEMENTS of all loans and charge accounts.
Proof of REAL ESTATE TAXES (if not escrowed by your lender). Copies of tax bills can be obtained from your county and township government offices.
HOMEOWNER’S INSURANCE POLICY showing annual premium amount (can be obtained from Insurance Agent).
CHECKING & SAVINGS ACCOUNT STATEMENTS verifying balances.
VERIFICATION of stocks, bonds, retirement accounts, IRA’s, 401(k)’s, cash value of life insurance policies, etc.
UTILITY BILLS – Copies of three summer and three winter bills (contact utility company if necessary).
SOCIAL SECURITY NUMBERS for all applicants.
MORTGAGE YEAR END STATEMENT and a copy of a coupon from the mortgage payment book.
AN EXPLANATION of how the homeowner intends to increase income to the point necessary to resume and maintain full monthly mortgage payments.

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What happens after I meet with a counseling agency?

After the homeowner meets with the designated counseling agency, the counseling agency notifies the lender of the meeting (Appendix B – Counseling Agency Notice to Lenders), and mails out all verifications (to include employment, deposit, and mortgage). The counseling agency then packages the information gathered from the homeowner/applicant along with the completed application and forwards the package to PHFA/HEMAP in Harrisburg. To remain timely, the application must be submitted to PHFA within 30 days from the date of the Face–to–Face Meeting.

Upon receipt, the Agency notifies the applicant and the lender in writing that the application has been received. HEMAP personnel then review the application to determine a Homeowner’s loan eligibility. A decision is made within 60 days from the receipt of the application by HEMAP. Applicants and lenders are notified in writing of the decision.

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Who qualifies for a HEMAP loan?

Homeowner must be at least 60 days delinquent on their mortgage and have received an Act 91 Notice from their lender.
The home must be located in Pennsylvania and must be owner–occupied.
The property must be a one– or two–family residence. A home used primarily for business purposes is not eligible.
Mortgage loans obtained primarily for business purposes are not eligible.
FHA Title II loans are not eligible.
The homeowner must have had a favorable mortgage credit history prior to the delinquency during the previous five years.
The homeowner must be suffering financial hardship due to circumstances beyond their control.
The homeowner must have a reasonable prospect of resuming full mortgage payments within 24 months and paying the mortgage in full by maturity.
A HEMAP loan cannot exceed $60,000.00.
A HEMAP loan cannot exceed 24 months from the date of the delinquency.
PHFA/HEMAP must have at least a third lien position.

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What are circumstances beyond your control?

To be eligible for a HEMAP loan, a homeowner must be suffering financial hardship due to circumstances beyond their control. Loss of employment due to layoff, strike or plant closing, serious medical problems, divorce, or separation are typically circumstances beyond one’s control. On the other hand, quitting a job, committing a crime and being jailed, or money mismanagement are all examples of circumstances within one’s control.

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How do I demonstrate a reasonable prospect of resuming full mortgage payments?

Some circumstances which cause financial hardship are, by nature, temporary and predictable. A job layoff or temporary unemployment due to a curable medical condition are examples of circumstances which will clearly come and go, and the homeowner will be re–employed and be able to resume making their mortgage payments. The loss of a job usually creates a longer term problem; however, the homeowner’s job skills, training, job history, efforts at retraining, etc., are all relevant factors which the Agency will consider in determining whether there is a reasonable prospect of the homeowner being able to resume full mortgage payments within 24 months. If a person demonstrates a good employment history, a good credit history while employed, employable skills or efforts toward retraining, and an active search for employment, they will likely meet the reasonable prospect issue.

On the other hand, a person who has mortgaged their home to the limit, whose spouse dies without life insurance, who has no employable skills with no plans of entering into an employment training program, or who has a medical condition limiting their employment prospects, probably has little prospect of resuming their mortgage payments within 24 months and would likely not be found eligible.

It is extremely important for the homeowner to do a complete self evaluation of their job history, job skills, and potential for securing future employment in order to present an accurate picture of whether or not there is a reasonable prospect of being able to resume mortgage payments within the required timeframe.

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How long does the process take?

A homeowner must attend a Face–to–Face Meeting with a designated Counseling Agency within 33 days of the date of their Act 91 Notice. The Counseling Agency must forward the application to PHFA within 30 days from the Face–to–Face Meeting date. PHFA has up to 60 days from the date the application is received to make a decision.

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Is the HEMAP loan a lien against the home?

HEMAP’s loan is recorded in the Recorder of Deeds office in the county where the assisted property is located as a mortgage lien against the homeowner’s property.

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When does repayment begin and on what terms?

Loan recipients of a non–continuing loan must begin repayment immediately following loan closing. Repayment is set based on income, but must be at least $25.00 per month per mortgage assisted. Twenty–five dollars is the minimum payment amount allowed by law. The payment amount is reviewed at least annually during the recertification process and may by adjusted at that time. Any increase in the payment amount in excess of the $25.00 level is based on 40 percent of a homeowner’s net monthly income less their total monthly housing expense. Total housing expense is the sum of the mortgagor’s monthly mortgage payments, including escrows, utility costs, hazard insurance expenses, real property taxes and, in the case of cooperatives and condominiums, the monthly amount the unit is assessed for the maintenance of common elements.

Homeowners must seek repayment or refinance of their mortgage once they have established better credit and equity in the property. Loan recipients of a continuing loan must begin repayment immediately following termination of continuing loan disbursements.

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What if I’m approved?

Approved applications usually move to a loan closing within 60 days from approval date, however this timeframe is dependent upon lenders and tax offices providing timely responses to HEMAP’s requests for information. At loan closing, appropriate loan documents are signed by the homeowners along with a mortgage which is recorded against the property. Following the loan closing, payments are made to the lenders to bring the delinquent mortgage payments and any outstanding real estate taxes current.

All homeowners who receive HEMAP loan assistance must complete a recertification for their assistance loan at least annually. Recertification is a requirement of the program where the loan recipient must update their financial situation. The loan recipient must report all current income along with information concerning their mortgage loan(s), any changes in household employment, any changes in their household circumstances and utility expense. Any adjustment in the homeowner’s repayment/contribution, deemed necessary by the Agency, is made at the time of the recertification.

Recipients of HEMAP loans are also required to notify the Agency in writing of any changes in their financial status throughout the life of the loan as they occur, not just at recertification times.

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What if I’m denied?

If a loan application is denied, applicants have the right to request an administrative appeal hearing. The request must be made in writing and must be postmarked within 15 days of the date of the letter denying HEMAP assistance. Hearing examiners, who are separate and distinct from the staff making the initial loan decision, schedule and conduct hearings to weigh the facts and circumstances and determine if the initial decision should be affirmed (remains a denial), reversed (becomes an approval), or remanded (sent back to the Loan Evaluations staff for further review).

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What if circumstances change?

All HEMAP loans are reviewed at least once a year to recertify a homeowner’s eligibility based upon financial information and other circumstances. If homeowners are receiving a continuing loan, the recertification process will determine if PHFA loan disbursements should continue, increase, decrease, or stop. If continuing loan disbursements are discontinued, the amount of HEMAP loan repayment is determined at this time. Failure to cooperate with the recertification process will result in termination of loan disbursements and/or trigger a demand for full payment. The recertification process will occur each year until the loan is paid in full. This process is handled through the mail; therefore, it is extremely important that PHFA be notified of any change in mailing address.

If circumstances change at any time during the life of the HEMAP loan, homeowners must notify this Agency of the changes and request a re–evaluation of their loan. A request for a reevaluation must be in writing and documentation supporting the change in circumstances must be included with the request. New employment, loss of employment, high medical expenses, large home maintenance expenses, any increase or decrease in household income are all reasons to request a re–evaluation.

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How do I contact HEMAP?

PHFA Staff may also be contacted by phone or by mail as follows:

General Information – 717.780.3940
Toll Free – 1.800.342.2397
Hearing Impaired – 717.780.1869
Fax No. – 717.780.3995
E–mail: Click Here

Mailing Addresses:

Payments
PHFA/HEMAP
PO Box 15206
Harrisburg, Pennsylvania 17105–5206

Correspondence
PHFA/HEMAP
PO Box 15530
Harrisburg, Pennsylvania 17101–5530

Overnight Delivery
PHFA/HEMAP
211 North Front Street
Harrisburg, Pennsylvania 17101–1406

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If I am not eligible, or my application has been denied, what are some other options to avoid foreclosure?

If you truly are not eligible to receive a HEMAP loan, you can also access our Additional Foreclosure Prevention Information page and explore the other Alternatives To Avoid Foreclosure with your lender and a Housing Counseling Agency.

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Homeownership Professionals – FAQ

Originations

How do I know if my buyer is eligible for a PHFA loan?
Would my buyer meet the ‘first–time buyer’ definition even if he/she owned a principal residence within the past three years, but hasn’t been living there during that time (for example, he/she was going through a divorce)?
Is my buyer still considered a first–time buyer if he/she currently owns a mobile home?
How does PHFA define ‘permanent disability’ under the eligibility guidelines of the PLUS program? (i.e., a buyer does not have to meet the family requirement of this program if he/she or a dependant has a permanent disability)
Will PHFA finance manufactured homes?
Does PHFA have any special requirements for Condo’s or PUD’s?
How do I lock in a rate?
Can a reservation (e.g., rate lock) be extended?
What is the charge for an extension?
Will my borrower lose his/her rate if the reservation expires before the loan is approved?
Should I cancel the reservation with PHFA if the borrower must choose another property?
What happens to my borrower’s rate if the reservation expires right after closing, and PHFA has not purchased it yet?
Can a lender cancel or change a loan reservation?
Do buyers have to escrow for taxes and insurance?

Underwriting

How is income calculated for income limit purposes?
How is income calculated for qualifying purposes?
Can the lender use an automated underwriting system such as Desktop Underwriter (DU) or Loan Prospector (LP)?
Who underwrites the file—the lender, or PHFA?
When is the file submitted to PHFA for approval?
How long does it take for PHFA to approve a loan once the lender has submitted it?
What documents are required in the underwriting package that is submitted to PHFA prior to closing?

Purchasing

Are there instructions for compiling the purchase package that gets shipped to PHFA after a loan closes?
What is the deadline for submitting the purchase package?
Is there a penalty for loans submitted after the purchase deadline?
Can a loan be purchased without the original Title Policy?
If it is known for a fact that the legal description or Transfer Rider was not recorded with the mortgage, should the loan still be submitted for purchase to avoid late fees?
The Recapture Tax Form was not signed at closing. Can we submit a copy of the form with a copy of the letter that was mailed to the borrower so that you can purchase the loan?
When a file has ineligible purchase conditions and post–purchase conditions, must we hold the file until all conditions are met?

ORIGINATIONS

How do I know if my buyer is eligible for a PHFA loan?

The Eligibility criteria can help you determine if your buyer is eligible for a PHFA–financed home loan.

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Would my buyer meet the ‘first–time buyer’ definition even if he/she owned a principal residence within the past three years, but hasn’t been living there during that time (for example, he/she was going through a divorce)?

Yes, if the buyer can provide documentation showing he/she has neither resided in the home, nor taken the respective tax deductions. Usually, copies of the past three years of federal tax returns are sufficient to document both conditions.

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Is my buyer still considered a first–time buyer if he/she currently owns a mobile home?

Yes, as long as the home is NOT deeded as real estate. Generally, if the home is permanently attached to land that the buyer owns, it is considered real estate.

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How does PHFA define ‘permanent disability’ under the eligibility guidelines of the PLUS program? (i.e., a buyer does not have to meet the family requirement of this program if he/she or a dependant has a permanent disability)

The disability must fall within the definitions set forth under the Americans with Disabilities Act (ADA). If the person is receiving Social Security Disability Income (SSDI), that is sufficient documentation. If the person is not receiving disability income, documentation from a physician that specifies the condition would be acceptable verification.

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Will PHFA finance manufactured homes?

Yes. See Chapter 04 Loan Requirements of the Sellers’ Guide for details and specifications.

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Does PHFA have any special requirements for Condo’s or PUD’s?

See for details. PHFA does require proof of insurance for contents coverage (HO6), even though it is not included in the escrow amount (unless there is additional dwelling coverage in excess of $10,000). The lender should follow the guidelines and requirements of the respective insurer/guarantor, if applicable. For loans with 20 percent down, PHFA only requires proof of the development’s insurance.

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How do I lock in a rate?

Participating lenders may lock in a rate by reserving the loan using PHFA’s online reservation system. Each lender has an administrator of the system that can set up lender employees with their own user name and password. Reservations may also be faxed to PHFA using Form Reservation of Funds Request Form. However, PHFA highly encourages all lenders to use the online system, as it provides additional functionality.

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Can a reservation (e.g., rate lock) be extended?

Yes, as long as it has already been approved by PHFA, but has not yet closed. Use Form 45 Rate Lock Extension Request.

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What is the charge for an extension?

There is no charge for the first 30 day extension. All additional extensions will cost .50 percent multiplied by the loan amount for each 30 days requested.

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Will my borrower lose his/her rate if the reservation expires before the loan is approved?

You should contact PHFA at 717.780.3871 on a weekly basis to let us know you are still working on the file. We will continue to hold the rate for an extended time, within reason.

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Should I cancel the reservation with PHFA if the borrower must choose another property?

You should contact PHFA at 717.780.3871 to see if the same reservation can be used with the new property information.

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What happens to my borrower’s rate if the reservation expires right after closing, and PHFA has not purchased it yet?

Nothing happens to the rate but there will be a late fee deducted from the lender’s proceeds when PHFA purchases the loan.

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Can a lender cancel or change a loan reservation?

Yes. To cancel or change a reservation, fax the reservation confirmation to PHFA at 717.780.3872 with an explanation of the change (e.g., loan amount change, program change) or cancellation. Cancellations and changes cannot be done using the online system.

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Do buyers have to escrow for taxes and insurance?

Yes.

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UNDERWRITING

How is income calculated for income limit purposes?

The current annual household income of all persons intending or expected to reside in the home may not exceed the income limit established by PHFA for the County in which the home is located. Current Annual Household income is defined as the gross income of the borrower(s) and any other person(s) over the age of 18 who is not a dependant child that is a full time student, expected to live in the residence, projected one year forward (it is NOT simply the borrower(s) previous calendar year income). Income such as overtime, bonus, and commissions can be averaged using year–to–date and past year’s earnings divided by the number of months provided the employer can break out this income separately. See Chapter 02 Program Requirements of the Seller’s Guide for more details.

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How is income calculated for qualifying purposes?

For conventional loans, PHFA generally follows standard Fannie Mae and Freddie Mac guidelines. For government insured/guaranteed loans, the lender should follow the guidelines of the respective agency (FHA, VA, or USDA).

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Can the lender use an automated underwriting system such as Desktop Underwriter (DU) or Loan Prospector (LP)?

Yes. In order to streamline the underwriting and approval process, findings of ‘Accept’ or ‘Approve’ are eligible for PHFA financing, as long as the buyer and property meet the PHFA compliance issues. However, the lender must still submit a full appraisal (FNMA form 1004), thorough income information on all adult household occupants (two years of W2’s, paystub showing year–to–date, VOE, and any other income sources), and a VOD or three months of bank statements. Files with a Refer, Caution, or Expanded Approval finding must be manually underwritten, and PHFA will accept the loan as long as there are sufficient compensating factors and evidence of mortgage insurance/guaranty if the downpayment is less than 20 percent. For conventional loans that require insurance, the buyer must be eligible for the ‘A’ paper premium. A minus (A–) premiums are not acceptable.

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Who underwrites the file — the lender, or PHFA?

The lender is responsible for underwriting the file before it is submitted to PHFA for approval.

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When is the file submitted to PHFA for approval?

The underwriting and compliance package must be submitted to PHFA for approval prior to loan closing. For lenders who have Delegated Underwriting Authority, they may approve the loan on behalf of PHFA, thereby eliminating the need to submit a package prior to closing. For further details, please see Chapter 15 of the PHFA Seller's Guide.

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How long does it take for PHFA to approve a loan once the lender has submitted it?

The most it should take is five business days, in times of peak activity. However, the normal turnaround time is one to two business days, as long as the package is complete.

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What documents are required in the underwriting package that is submitted to PHFA prior to closing?

The Lender Underwriting Submission Checklist lists the required documents and instructions for compiling and mailing the package.

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PURCHASING

Are there instructions for compiling the purchase package that gets shipped to PHFA after a loan closes?

Yes, they are listed in the purchase submission checklist, Form Purchase Submission Checklist. This checklist provides instructions for compiling the package and specifies what documents are essential for the loan to be purchased. Please note that the servicing documents listed on Form 25 Service Release Submission Checklist (SEE PAGE 4 OF FORM 58) must also be included with the purchase submission.

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What is the deadline for submitting the purchase package?

PHFA must purchase the loan by the end of the delivery period for which the loan was reserved (90 days for existing homes, 240 for new builds), or within three weeks from closing, whichever occurs first.

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Is there a penalty for loans submitted after the purchase deadline?

Yes. There is a per diem late fee based on the following calculation: three percent multiplied by the loan amount, divided by 365.

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Can a loan be purchased without the original Title Policy?

No. The original Title Policy or a copy stamped “True and Correct” with an original signature by an officer of the Title Company is needed in order for the loan to be purchased.

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If it is known for a fact that the legal description or Transfer Rider was not recorded with the mortgage, should the loan still be submitted for purchase to avoid late fees?

No. The loan will remain ineligible until proof is provided showing recording of these documents. The late fee will continue to accrue until the loan is purchased.

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The Recapture Tax Form was not signed at closing. Can we submit a copy of the form with a copy of the letter that was mailed to the borrower so that you can purchase the loan?

No. PHFA requires a signed copy of this form in order to purchase the loan.

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When a file has ineligible purchase conditions and post–purchase conditions, must we hold the file until all conditions are met?

No, as soon as you have the ineligible conditions cleared we can purchase the loan and you will have additional time to gather the post–purchase conditions.

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Rental Housing Professionals – FAQ

What are the multifamily rental housing financing programs offered by PHFA?
Where can I obtain information on these programs?
Is the financing from the rental programs loans or grants?
How does a conventional permanent loan differ from a PennHOMES permanent loan?
How are the Low Income Housing Tax Credits used to finance affordable housing developments?
Who may apply for the multifamily rental programs?
When are applications accepted?
How soon after the submission of my application will I be notified of a decision?
Is every application approved for financing?
What does my ranking score need to be to be approved for PennHOMES and/or Tax Credits?
Who can I contact with questions about any of the rental programs?
How can resident services be integrated into affordable rental housing?

What are the multifamily rental housing financing programs offered by PHFA?

PHFA has programs that provide both debt and equity. The loan programs include permanent, construction, and equity bridge financing. The Low Income Housing Tax Credit program is a federal tax incentive used to generate equity.

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Where can I obtain information on these programs?

Detailed program descriptions are found in the section of the Multifamily Rental Housing Application & Guidelines.

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Is the financing from the rental programs loans or grants?

The PHFA loan products are loans that require repayment. An allocation of tax credits from the Low Income Housing Tax Credit program does not require repayment.

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How does a conventional permanent loan differ from a PennHOMES permanent loan?

	Conventional loan	PennHOMES loan
Interest Rate	Based on the market and reviewed quarterly.	Zero percent
Loan Term	30–years	30–years
Repayment	Monthly payments of principal and interest.	Annual payment of principal only from 50 percent of excess cash flow. May be deferred if no excess cash flow is generated.
Loan Amount	Based on 1.15 debt service coverage ratio in the year of stabilized occupancy.	Based on an amount per unit. Maximum loan amounts will differ based upon subject property location.
Availability	Unlimited.	Determined annually and consistently less than amount requested by applicants. Average application to available funds has been 3:1.

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How are the Low Income Housing Tax Credits used to finance affordable housing developments?

The Tax Credits are syndicated to an investor or investors. Their cash contribution is used as equity in the financing plan.

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Who may apply for the multifamily rental programs?

An applicant may be an individual, corporation, limited partnership, limited liability corporation, nonprofit entity, or for–profit entity.

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When are applications accepted?

Applications that include a PennHOMES loan or a request for Tax Credits must be submitted within one of the published application cycles. These deadlines are found in the section of the Multifamily Rental Housing Application & Guidelines.

Applications for a taxable bond loan, a construction loan, or equity bridge loan only may be submitted throughout the year.

Applications for a tax–exempt bond loan or an allocation of private activity bond cap will be accepted between October 7, 2005, and August 1, 2006.

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How soon after the submission of my application will I be notified of a decision?

The approval of PennHOMES and/or Tax Credit applications is based upon a ranking score derived from a set of published criteria. Staff is provided approximately five months to complete its initial due diligence and final ranking. All other applicants are notified upon completion of the Agency’s due diligence and Board approval, if required.

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Is every application approved for financing?

The PennHOMES and Tax Credit programs have a limited amount of funds to award annually and, depending on the demand, it is unlikely that all applications will be successful. An application may also be unsuccessful if it fails to obtain the published minimum ranking score.

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What does my ranking score need to be to be approved for PennHOMES and/or Tax Credits?

It is impossible to predict what will be a competitive or successful ranking score. Given the number of applicants in recent cycles, it behooves the applicant to seek consideration of as many of the ranking criteria as possible.

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Who can I contact with questions about any of the rental programs?

Questions regarding any of the PHFA multifamily loan programs should be directed to the Development Division at 717.780.3882. Questions regarding the Tax Credits program should be directed to the Tax Credit Division at 717.780.3948.

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How can resident services be integrated into affordable rental housing?

There are three basic Developing a Supportive Services Program by which resident services can be integrated into affordable rental housing: contracting for services; providing services in–house; or, co–location of services. Determining which model is most appropriate starts with an evaluation of the community, the services needed, and the capacity of management to deliver services.

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