Apr 15, 2014 14-05

Revised Program Compliance Requirements and Procedures

• Revised Program Compliance Requirements and Procedures
• Definition of “Household Income”
• Definition of “Ownership Interest” for the 3 year requirement
• Compliance File documentation requirements
• Revised Program Checklists
• NEW - Program Compliance Manual

In an effort to simplify and streamline the Compliance Review process within the single-family loan program, Housing NM has revised the following program guidelines to more closely align with current mortgage lending qualification and documentation requirements:

Definition of “Household Income”

Income that is considered “Household Income” includes:

• All forms of income from the mortgagor (Borrower) or co-mortgagor (Co-Borrower) will be considered as Household Income for the purposes of qualifying for the single-family loan program.
• All forms of income from the spouse of the mortgagor (borrower), if the spouse is not also the co-mortgagor (co-borrower).

Income that is not considered “Household Income” includes:

• All forms of income earned by a family members or household member that do not have ownership interest in the property and are not liable for the mortgage debt.

In other words:

• Only the borrower or co-borrowers income will be included in the income calculation for Compliance Review.
• If the borrower is married, the income of that spouse must be included in the income calculation for Compliance Review.
• Income from any other person living in home (family member, significant other, etc.) will not be included in the income calculation for Compliance Review.

However, the definition of “Household Income” remains “all household members age 18 or over” for the Payment$aver and Helping Hand Programs because of the Federal HOME Guidelines.

Definition of “Ownership Interest” for the 3-year Requirement

For purposes of documenting the 3-year requirement, (i.e. no ownership interest in a principle residence at any time during the 3 year period prior to the date the mortgage is executed),

“Ownership Interest” is defined as including the following:

1. A fee simple interest;
2. A joint tenancy, a tenancy in common or tenancy by the entirety;
3. The interest of a tenant-shareholder in a cooperative;
4. A life estate;
5. A land contract (i.e. a contract pursuant to which possession and the benefits/burdens of ownership are transferred, although legal title is not transferred until some later time); and
6. An interest held in trust for the mortgagor, whether or not it was created by the mortgagor.

Prior “Ownership Interest” by the spouse of the borrower is considered prior “Ownership Interest” of the borrower, regardless of when the borrower and spouse were married.

Compliance File Documentation Requirements

Housing NM had revised and simplified the documentation requirements the following:

• One year, most recent Verification of Rent (VOR)
• One month most recent bank statement from each bank account
• NEW – Income Disclosure Letter to be signed by all borrowers at application

Revised Program Compliance Checklists

Housing NM has redesigned and simplified the Compliance File Checklists, which includes relocating descriptions of the required items to a Compliance Manual.

NEW-Program Compliance Manual

Housing NM has created a Program Compliance Manual that details the program qualification guidelines, income calculation requirements, documentation requirements and checklist definitions.

The Compliance Manual is the one-stop single family program reference guide. Over the next few months, the manual will be updated frequently and the updates will be communicated via a lender memo.

Thank you for participating in Housing NM’s program. Should you have any questions, please contact an Housing NM Homeownership Representative at 1-800-444-6880 or 505-843-6880.