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Revised Down Payment Assistance Funding Process

Background:

Currently, MFA table funds all types of down payment assistance (“DPA”) at closing, including grants and second mortgage loans. Second mortgage DPA loans are also closed in MFA’s name. The implementation of the TILA-RESPA Integrated Disclosure (“TRID”) rule on October 3, 2015 requires MFA to revise the process and procedure for the funding of all types of DPA.

Effective October 1, 2015, MFA will no longer table fund down payment assistance. Participating Lenders will directly fund all types of DPA at closing as well as close DPA second mortgage loans in the name of the Participating Lender and assign/endorse to MFA when the loan is purchased

Revised Down Payment Assistance Funding Process:

On behalf of MFA, Participating Lenders will directly fund both DPA second mortgage loans and DPA grants at closing. Second mortgage DPA loans will be closed in the name of the Participating Lender and assigned to MFA at the time the second mortgage loan is purchased. In a similar fashion, DPA grant funds will be reimbursed to the Participating Lender at the time the first mortgage loan is purchased. 

Under the new process, the Master Servicer (“Idaho Housing”) will purchase both first mortgage and second mortgage loans from Participating Lenders. First and Second mortgage closed loan packages will be delivered/uploaded to Idaho Housing via Lender Connection.

In addition, Participating Lenders can utilize the Mortgage Electronic Registration System (“MERS”) to register and transfer the ownership interest and servicing rights on second mortgage DPA loans to MFA. As is current practice, Participating Lenders will continue to register and transfer MFA first mortgage loans to Idaho Housing.

The new process will also allow Participating Lenders to use a standard FNMA security instruments (MERS or non-MERS) on second mortgage DPA loans as well as the ability to print borrower/loan specific checklists and closing documents (“doc sets”) from the online reservation/document imaging system. 

Documentation of DPA funding:

In addition, MFA will be providing a revised DPA funding/commitment form that complies with FHA/HUD regulations regarding the funding of DPA by an FHA approved mortgagee on behalf of a Government Entity and FNMA requirements regarding gift funds and community second mortgages.

MFA will be publishing a training schedule for the new process in the next few days. Program documents will be distributed in the next few weeks.

Thank you for participating in MFA’s program.  Should you have any questions, please contact a member of the MFA Homeownership Department at 1-800-444-6880 or 505-843-6881.