MMP Compliance Manual

COMPLIANCE MANUAL FOR

THE MARYLAND MORTGAGE PROGRAM,

THE DOWNPAYMENT AND CLOSING COST

ASSISTANCE PROGRAM, AND

THE MARYLAND HOMECREDIT PROGRAM

Updated on July 1, 2024

(The information in this document is current at the time of publication. Please check with all the

third parties involved in your transaction for any updates at the time you are reserving an MMP

loan to ensure the loan fully complies with all the applicable requirements.)

 
2 
 
Table of Contents 
PURPOSE  ……………………………………………………………………………………………...5 
MARYLAND MORTGAGE PROGRAM WEBSITE ...................................................................... 5 
PROFESSIONAL PORTAL .......................................................................................................... 5 
MASTER SERVICER – U.S. BANK ............................................................................................. 6 
APPROVAL OF PARTICIPATING LENDERS ............................................................................. 6 
LENDER MINIMUM ACTIVITY ..................................................................................................... 7 
INTEREST RATES ....................................................................................................................... 7 
RESOURCES – WEBSITES ........................................................................................................ 8 
SECTION 1 - LOAN APPLICATION AND RESERVATION PROCEDURES .............................. 9 
1.1  APPLICATION REQUIREMENTS .......................................................................... 9 
1.2  LOAN RESERVATION ......................................................................................... 10 
1.3  DEADLINES .......................................................................................................... 10 
1.4  RESERVATION PIPELINE REPORT ................................................................... 10 
1.5  RESERVATION RESTRICTIONS ......................................................................... 11 
SECTION 2 - COMPLIANCE REQUIREMENTS ........................................................................ 13 
2.1  GENERAL BORROWER ELIGIBILITY ................................................................ 13 
2.2  TAKING TITLE ...................................................................................................... 14 
2.3  FIRST-TIME HOMEBUYER AND PRESENT OWNERSHIP INTEREST ............. 14 
2.4  PROHIBITED OWNERSHIP INTERESTS IN CERTAIN PROPERTY .................. 15 
2.5  TARGETED AREAS, PRIORITY FUNDING AREAS, SUSTAINABLE 
COMMUNITIES .......................................................................................................................... 16 
2.6  PURCHASING IN A “NON-TARGETED AREA” ................................................. 17 
2.7  UNDERWRITING .................................................................................................. 19 
2.8  ELIGIBILITY INCOME .......................................................................................... 20 
2.9  ASSETS ................................................................................................................ 28 
2.10  PROPERTY REQUIREMENTS ............................................................................. 30 
2.11  INELIGIBLE USE OF LOAN PROCEEDS............................................................ 35 
SECTION 3 - COMPLIANCE REVIEW AND SUBMISSION ...................................................... 36 
3.1  PRE-CLOSING COMPLIANCE ............................................................................ 36 
3.2  ESCROW HOLDBACKS ...................................................................................... 38 
3.3  CLOSING INSTRUCTIONS .................................................................................. 39 

 

 
4  POST-CLOSING COMPLIANCE .......................................................................... 40 
3  ELECTRONIC SIGNATURES .............................................................................. 42 
SECTION 4 - MORTGAGE INSURANCE/GUARANTY ............................................................. 44 
1  CONVENTIONAL UNINSURED (LTV RATIO OF 80% OR LESS) AND INSURED 
(LTV RATIO OF 80% OR GREATER) ....................................................................................... 44 
2  LOANS WITH LTV RATIOS GREATER THAN 80% ............................................ 44 
SECTION 5 - HOMEBUYER EDUCATION ................................................................................ 46 
1  MANDATORY ....................................................................................................... 46 
2  REQUIREMENTS ................................................................................................. 46 
SECTION 6 – DOWN PAYMENT ASSISTANCE LOANS AND GRANTS ................................ 47 
1  ELIGIBLE JURISIDICTIONS ................................................................................ 47 
2  ELIGIBLE SETTLEMENT EXPENSES ................................................................ 47 
3  ELIGIBLE FIRST MORTGAGES .......................................................................... 47 
4  LOAN RESERVATION ......................................................................................... 47 
5  LIEN POSITION .................................................................................................... 48 
6  TITLE INSURANCE .............................................................................................. 48 
7  FEES ..................................................................................................................... 48 
8  DOWN PAYMENT ASSISTANCE PROGRAM FUNDS ....................................... 48 
9  PARTNER MATCH PROGRAMS ......................................................................... 49 
10  PARTNER MATCH PROGRAM UTILIZATION .................................................... 50 
11  DPA/PARTNER MATCH MORTGAGE TERM ..................................................... 50 
12  INTEREST RATE .................................................................................................. 50 
13  ASSUMPTION ...................................................................................................... 50 
14  LOAN CLOSING – FEES ..................................................................................... 50 
15  GRANT ELIGIBILITY ............................................................................................ 51 
SECTION 7 – 97% LTV CONVENTIONAL REFINANCE PROGRAM ....................................... 52 
1  PURPOSE ............................................................................................................. 52 
2  SUBORDINATE LIENS ........................................................................................ 52 
3  CASH OUT ............................................................................................................ 52 
SECTION 8 – RECAPTURE TAX REIMBURSEMENT .............................................................. 53 
1  PURPOSE ............................................................................................................. 53 
2  PROCESS ............................................................................................................. 53 

 

 
SECTION 9 – MARYLAND HOME CREDIT PROGRAM .......................................................... 55 
1  PURPOSE ............................................................................................................. 55 
2  ELIGIBILITY / DOCUMENTATION ....................................................................... 55 
3  MORTGAGE CREDIT CERTIFICATE .................................................................. 56 
4  MCC-ONLY – NON-MMP FIRST MORTGAGE .................................................... 56 
5  MCC FEE SCHEDULE ......................................................................................... 56 
6  ISSUANCE OF MORTGAGE CREDIT CERTIFICATE ......................................... 56 
7  RE-ISSUANCE OF AN EXISTING MCC............................................................... 56 
8  REPORTING AND RECORDKEEPING REQUIREMENTS .................................. 57 
9  CDA REPORTING REQUIRMENTS ..................................................................... 57 
 
 
   

PURPOSE

The main objective of the Maryland Mortgage Program (the Program) is to provide

homeownership opportunities to eligible homebuyers in the State of Maryland. This objective is

accomplished through the issuance of Single-Family Program bonds and notes and/or by

purchasing securities backed by complying mortgage loans that originated through a network of

approved lenders. The Program provides financing for single family residences located within

the State, occupied principally by first-time homebuyers who meet income limits established by

the Community Development Administration and satisfy certain other criteria. The houses

acquired through the Program must be occupied as the homebuyers’ principal residence.

This program is offered pursuant to Title 2, Subtitle 4 of the Housing and Community

Development Article of the Maryland Annotated Code (“the Act”). It is further governed by

Program regulations contained in COMAR 05.03.02, as amended. All loans will be made in

conformance with the Act, Program regulations, applicable federal tax law, and Community

Development Administration (CDA) bond documents.

This manual is also an Exhibit of the Mortgage Origination Agreement executed by CDA and

each lender partner. In that document, the lender agrees to comply with the requirements set

forth in this manual. CDA must rely upon all participating lenders to comply with the

requirements when making mortgage loans to be purchased by U.S. Bank Home Mortgage, the

Master Servicer.

Mortgage loans that do not comply with these requirements may not be purchased by the

Master Servicer. Originating lenders will be responsible for loans that don’t meet the

requirements of CDA, insurers, Master Servicer, and/or investors, IRS etc.

MARYLAND MORTGAGE PROGRAM WEBSITE

The Maryland Mortgage website offers information and resources for potential borrowers and

real estate professionals. Homebuyers can be referred to a top producing loan officer, find

homebuyer education providers and find information about available products. Lenders and

realtors can access additional information through the Professional Portal.

Maryland Mortgage Program Home Page

PROFESSIONAL PORTAL

The Professional Portal section provides the documents, links and data that lenders need to

work with homebuyers to apply for a Maryland Mortgage program loan, as well as training

materials, compliance manuals and fact sheets to help lenders understand the details of the

program. Some documents can only be accessed through Lender Online after loan approval.

MMP Lenders Pages

MASTER SERVICER – U.S. BANK

The Master Servicer for the Maryland Mortgage program is U.S. Bank Home Mortgage (“U.S.

Bank”). U.S. Bank is responsible for ensuring that the loan application adheres to industry-

acceptable underwriting standards and for funding the loans. U.S. Bank’s website provides

manuals, checklists, bulletins, documentation, and other information if you scroll down to the

“HFA guidelines” link on their home page.

US Bank Correspondent and HFA Home Page

APPROVAL OF PARTICIPATING LENDERS

All lenders must be approved by U.S. Bank. Interested lenders should contact U.S. Bank’s

Lender Help Desk by phone at 800-562-5165, option 4.

In addition to U.S. Bank approval, the lender must be approved by CDA. This includes providing

CDA with a contact list, Maryland origination branch list, Opinion of Counsel, Resolutions, and

executed Mortgage Origination Agreement (the Agreement), which form the contractual

relationship governing participation in the Program by the lender and CDA.

After a lender has provided the necessary documentation, it is required to have its staff

participate in Maryland Mortgage Program training before it is approved to reserve loans under

the program. Requirements, forms, and templates for becoming an approved Program lender

are located on MMP website in Lender Resources here:

Becoming an Approved Lender (maryland.gov)

By signing the Mortgage Origination Agreement, the Lender agrees to process loans in

compliance with the Lenders Manual and fact sheets, U.S. Bank’s Closing & Delivery

Guidelines, and to use the Program documents as specified.

Upon approval, the lender’s designated “Administrative Contact” will be issued a username and

password that will permit access to the Lender Online system. The Administrative Contact is

responsible for setting up user accounts and managing passwords for the lender’s staff. They

are the primary contact for all program issues and must authorize any changes.

Lenders with questions concerning this process can e-mail:

singlefamilyhousing.dhcd@maryland.gov or ceci[email protected]

LENDER MINIMUM ACTIVITY

Under the Lender Minimum Activity Policy, lender activity will be assessed on a quarterly basis.

Lenders not meeting the Lender Minimum Activity Level with an average of three loans

purchased by the master servicer per quarter will be notified and offered training to help bring

production up to the required level. A lender who does not meet the Lender Minimum Activity

Level for two consecutive quarters may be removed from approved participating lender status

and deactivated in the Lender Online system. New lenders will have a six-month grace period

before the first quarterly assessment takes place.

If a lender would like CDA to reconsider a decision, they can send a letter stating their grounds

for reconsideration to Single Family at singlefamilyhousing.dhcd@maryland.gov, and the

request will be reviewed and decided on a case-by-case basis. Only one request for

reconsideration will be granted; after that it will be 12 months before a lender can request to be

re-approved and re-activated in the program, and additional documentation and training will be

required at that time.

INTEREST RATES

Interest rates are set when the funds are reserved in the Lender Online system. The interest

rate cannot be changed after it is locked in at registration.

LENDERS ARE RESPONSIBLE FOR OBTAINING A RESERVATION NUMBER AND THE

ASSIGNED INTEREST RATE BEFORE COMMITTING TO A BORROWER.

Interest rates are subject to change daily or more frequently. Current interest rates may be

obtained here: MMP Interest Rates

Please use the SUBSCRIBE button in the middle of the page to sign up to receive the

Program’s interest rate notifications.

RESOURCES – WEBSITES

Lender Online (LOL)

Lender Online

Maryland Mortgage

Program (MMP)

Maryland Mortgage Program (Home Page)

MMP Professional

Portal – Lenders Pages

MMP Lenders Pages

Interest Rates

MMP Interest Rates

Program Fact Sheets

MMP Program Fact Sheets

Loan Documents

MMP Lender Resources - Loan Documentation

Directives

MMP Directives & Notifications

The Mapper

MMP Mapper

Income and Purchase

Price Limits

Income and Purchase Price Limits (maryland.gov)

MMP Loan Calculator

Maryland Mortgage Program (MMP) Loan Calculator

MMP Program

Information Links

Program Information (maryland.gov)

Payoff Request

Information for existing

MMP loans

Payoff Request Information - Existing MMP Loans

Homebuyer Education

Information

Homebuyer Education

Eligible Mortgage

Insurers

Eligible Mortgage Insurers

US Bank

US Bank Correspondent and HFA Home Page

SECTION 1 - LOAN APPLICATION AND RESERVATION PROCEDURES

1.1 APPLICATION REQUIREMENTS

A. Preliminary Interview

1. The lender must interview the borrower(s) to determine eligibility for the program. The

lender must also pre-qualify to Agency (FNMA, FHLMC, FHA, VA, or RHS/USDA),

Investor/Master Servicer (US Bank) and the Private Mortgage Insurance Companies

guidelines as applicable.

2. Lender or borrower(s) can utilize the MMP Loan Calculator tool to identify potentially

eligible MMP loan products based on basic criteria.

PLEASE NOTE: The monthly loan payment is only an estimate and does not include

insurance, taxes, and other amounts that vary per property. Varying lender costs can

also change the financing amount. This tool is best used for identifying applicable

products and not for hard estimates of monthly payments.

B. Application Documents

Prior to requesting a reservation of funds through Lender Online (LOL) the lender must

complete an application and have the required documentation. In addition to presenting

information concerning income, assets, debts, etc., at the time of application, borrower(s) must:

1. Present an eligible, Ratified Contract of Sale; if the property is involved in a short

sale transaction, current lender/servicer approval of the transaction is required to

meet the fully ratified sales contract requirement (see Section 2.11 below “Ineligible

Use of Loan Proceeds” for further information on contracts of sale).

2. Complete initial Buyer’s Affidavit.

3. Complete a Uniform Residential Loan Application (Fannie Mae Form 1003/ Freddie Mac

Form 65).

4. Provide documentation meeting ownership status as identified in Section 2.3 below,

“First-Time Homebuyer and Present Ownership Interest”. Reminder: Borrower(s) and

their spouses may not own any other real property at time of closing.

C. Limitation on Points, Fees, and Charges

1. Lender may not charge any fees at time of application other than the amounts needed

for a credit report, until the borrower(s) have received the disclosures as required by the

Truth in Lending Act.

2. Lenders who charge an Origination Fee are required to provide a detailed summary of

the Origination Fee. Lenders are strongly encouraged to reflect this on the Closing

Disclosure (Preferred Method) or by including a separate sheet with the components of

the Origination Fee calculation. The Origination Fee may only contain charges that are

deemed customary and common, and no portion of the fee may be used to buy down

the interest rate. Additional information on Fees can be found in 6.7 and 6.14 in Section

6 of this manual.

3. The Lender may NOT charge points, unless the transaction is MCC-ONLY. (See Section

9.3 MORTGAGE CREDIT CERTIFICATE)

1.2 LOAN RESERVATION

Lenders must submit reservations for Program funds through LOL. A fully ratified sales contract

is required prior to submitting the reservation request. If the property is involved in a short sale

transaction, lender/servicer approval of the transaction is required to meet the fully ratified sales

contract requirement. Instructions for reserving funds are provided in the training materials on

the LOL & E-Docs Training Guide.

Your complete and eligible request will be processed by LOL and assigned a reservation

number. MMP loan amounts should be the full amount, including any financed MIP, VA Funding

Fee, Guarantee Fee, or MI. Further DPA loan calculations are based on full loan amounts. All

loan amounts are always rounded down to the nearest dollar ($). Do not round up.

A sample reservation number would be: 123-456-007890. The first three digits designate the

Bond Series and indicate that funds have been reserved under that series. The next three digits

of the reservation number are the Lender Number and then the next six digits of the reservation

number are the sequential loan number.

1.3 DEADLINES

When Pre-Closing Compliance Submissions are received, they are reviewed on a first-received,

first-reviewed basis. Any conditions/exceptions will be listed in LOL. When new supporting

documentation is provided, it will be reviewed on a first-received, first-reviewed basis and any

additional conditions listed. Turnaround time is generally within 1-3 business days.

To ensure sufficient time for compliance approval and maximum compensation to the Lender,

the Pre-Closing Compliance Submission should be submitted to MMP within 30 days of the

reservation date for all loans.

1.4 RESERVATION PIPELINE REPORT

The Lender can access information on LOL about its loan pipeline under the reports tab. It is

each Lender’s responsibility to reconcile its loan pipeline and cancel its inactive loans using the

Attachment R.

1.5 RESERVATION RESTRICTIONS

A. Changes

1. Once a loan has been reserved, major changes are prohibited except in unusual

circumstances approved by CDA, in its sole discretion. Examples of prohibited changes

include, but are not limited to:

a. Substitution or deletion of a household member from the Buyer’s Affidavit, when

inclusion of that household member’s income would have resulted in the household

income exceeding the Program’s income limit for that jurisdiction.

b. Substitution of another property, except as a result of an unsatisfactory home

inspection or failure of the seller to proceed with the sale.

Lenders should be careful when pre-qualifying a Borrower to provide accurate income

and loan amount information on LOL. Any requests for a change in interest rate or loan

amount are subject to the availability of funds.

2. To request a change to a reserved loan, complete the Request for Change to

Reservation of Funds form (Attachment R) and submit it with all necessary

documentation to CDA via the Attachment R mailbox. The request will be reviewed, and

a response returned to the Lender by e-mail.

B. Duplicate Reservations

A. Different Interest Rates. LOL will accept the first reservation received for the

Borrower(s). Subsequent attempts to input another reservation for the same Borrower(s)

will not be accepted.

B. Different Lenders. If a Borrower has applied at two different Lenders, LOL will only

accept the first reserved loan. It will be left up to the Lenders to determine who should

proceed with the application (see D. Assignments below).

C. Cancellation of Funds

1. If a Borrower wishes to withdraw their application from the Program after funds have

been reserved, they should be informed that they would be prohibited from

obtaining another reservation of funds for 6 months after the date they initially

reserved the funds. The Lender requests the cancellation of a reservation by

completing a Request for Change to Reservation of Funds form (Attachment R) within

five business days after the Borrower’s withdrawal from the Program.

2. Property inspection problems or refusal by the Seller to make necessary repairs or

complete the sale should be handled as a substitution of property. Upon receipt of a

Request for Change to Reservation of Funds form (Attachment R) with “Substitute New

Property” selected, along with a release from the original contract of sale and the reason

for the release, the lender either requests that the original reservation be:

a. deleted and the lender then reserves a loan on the new property (compensation to

lender based on the new reservation date); or

b. retained and the lender provides corrected information on the new property (address,

purchase price, loan amount, etc.) under “Other” (compensation to lender based on

the original reservation date).

3. If a Borrower’s loan request is declined due to eligibility issues, the reservation should

not be canceled until all reconsideration processes have been completed. Within five

business days after the final denial, the Lender must request the cancellation of the

reservation using the Request for Change to Reservation of Funds form (Attachment R).

D. Assignments

Lenders may assign open (not canceled) reservations to other participating lenders. The new

lender would complete a Request for Change to Reservation of Funds form (Attachment R) and

submit it to CDA with a copy of the assignment letter from the first lender. The original

reservation for the loan will be deleted by CDA and the new lender will then be instructed to

reserve the loan as a new loan at the current interest rate.

E. Additional Restrictions

1. Extensions are not offered.

2. Relocks are not an option.

3. Buydowns are not allowed.

SECTION 2 - COMPLIANCE REQUIREMENTS

MMP Compliance guidelines follow. If not specifically addressed in the

guidelines, requirements, and overlays of FNMA, FHLMC, FHA, VA, RHS/USDA,

Master Servicer (US BANK) and the mortgage insurance companies are

applicable. Lenders are strongly encouraged to reach out to the entities above

should any questions arise.

2.1 GENERAL BORROWER ELIGIBILITY

A. Applications will be accepted with no discrimination as to race, color, religion, creed,

national origin, sex, marital status, physical or mental disability or sexual orientation.

Citizenship of the United States is not required; however, borrower must have a social

security number and be eligible to work in the United States.

B. Each single borrower and at least one person of a married couple must be eighteen years of

age or older.

C. If married, spouses are not required to apply, but documentation will be required of a non-

borrowing spouse.

NOTE: The lender may not require the signature of a Borrower’s spouse or other person (other

than a co-borrower) on any credit instrument if the borrower qualifies under the lender’s

standards of creditworthiness for the amount and terms of the mortgage.

D. If a non-borrowing occupant(s) takes title to the property and appears on the Deed and

Deed of Trust, the following must occur:

1. The borrower(s) and non-borrowing occupant(s) must execute the Buyer’s Affidavit and

Buyer’s Confirming Affidavit.

2. If the property is located within a non-targeted area, borrower(s) and non-borrowing

occupant(s) must meet the “first-time homebuyer” definition or qualify for an exception

(see Section 2.3 below).

3. The Tax-Exempt Financing Rider must be executed by the borrower and non-borrowing

occupant at closing; and

4. The title policy must show the title vested in both occupants without exception for the

rights of the non-borrowing occupant.

E. If separated, a Separation Affidavit (Attachment A) must be completed by the borrower.

F. Borrower(s) must be named on all the closing documents.

G. Co-signers are not permitted.

H. Borrower(s) must intend to occupy the property as their principal residence within 60 days of

the closing of the mortgage loan.

2.2 TAKING TITLE

A. Single Person – SOLE OWNER (can be listed just as the Borrower’s name – does not have

to reflect sole owner.

B. Husband and Wife – TENANTS BY THE ENTIRETY and can be stated in the following

ways:

➢ John Doe, sole owner (if taking title alone)

➢ John Doe and Mary Doe, his wife.

➢ John Doe and Mary Doe, husband, and wife.

➢ John Doe and Mary Doe, tenants by the entirety.

➢ John Doe and Mary Doe, married.

C. Two or more Unmarried Borrowers – JOINT TENANCY with Right of Survivorship.

D. TENANTS IN COMMON are NOT ALLOWED.

E. Borrowers must meet the applicable underwriting standards of insurer/guarantor.

2.3 FIRST-TIME HOMEBUYER AND PRESENT OWNERSHIP INTEREST

Federal law defines a “first-time homebuyer” as someone who has not had a “present ownership

interest” in a principal residence anywhere in the world at any time during the three years

immediately preceding the date of the mortgage application.

A. The requirement is waived if:

1. One of the borrowers is a veteran or active-duty military and provides the lender with a

copy of their DD-214 or if currently serving provides the lender with a current Statement

of Service Letter (This exemption may only be used once).

2. Location of subject property is in a Target Area.

B. MMP requires that the borrower(s) and non-applicant spouse sell or transfer their interest in

any real property they own prior to approval on the Program loan, regardless of whether the

property is their principal residence. If an existing real property is deeded in the name of the

spouse/non-borrower, it must still be sold or transferred prior to Program approval.

MMP must meet its obligation under federal tax law which requires the new home to be the

principal residence of the Borrower. If the husband and wife own separate homes, it cannot

be assumed that the new home will be the Borrower’s principal residence.

C. Individuals who are separated or divorced and had an interest in real property during the last

three years may be eligible for the Program if they can document that they did not live in the

property during the last three years. In addition, they must no longer have title to the

property or divest themselves of title to the property before the closing of the Program loan.

D. Ownership of a co-op unit occupied as a Borrower’s principal residence will disqualify the

Borrower.

E. Exclusions

1. A “present ownership interest” in a principal residence excludes:

a. An ordinary lease, with or without a purchase option.

b. The interest of a buyer under a standard residential purchase contract.

c. An expectancy to inherit property.

d. A remainder or reverted interest.

2. A mobile home occupied as a Borrower’s principal residence may not disqualify the

borrower unless the mobile home is/was permanently attached to real property owned

by the Borrower.

2.4 PROHIBITED OWNERSHIP INTERESTS IN CERTAIN PROPERTY

A. State regulation requires that, at the time of closing on the Program loan, Borrower(s) and

their spouse may not have any ownership interests in certain types of property, anywhere in

the world.

B. Property prohibited from ownership at the time of loan closing includes:

1. Any mobile home on a permanent foundation.

2. Raw land.

3. A building lot (except for the lot on which the house being financed has been built).

4. Any principal residence.

5. A vacation home.

6. A rental property.

7. An inherited property.

8. Commercial property.

9. Any jointly held property.

10. A cooperative.

11. Any other real property.

C. Property which may be owned at the time of loan closing includes:

1. A cemetery plot.

2. A recreational vehicle lot.

3. A 1/20th (2.6 weeks) or less interest in a time-sharing unit.

D. In order to be eligible for a mortgage loan under the Program, any Borrower who has an

ownership interest in any type of property listed in paragraph A must either:

1. Provide a contract of sale for the property at the time of application and submit

documentation, i.e., settlement sheet, title for mobile home, verifying the sale of the

property prior to closing of the Program loan; or

2. Provide a copy of a recorded deed showing that the Borrower has divested ownership of

the property.

2.5 TARGETED AREAS, PRIORITY FUNDING AREAS, SUSTAINABLE

COMMUNITIES

A. Targeted Areas are established by the U.S. Census Bureau and are geographic zones

inside of which there are fewer restrictions for homebuyers using the Program. Maryland's

Counties fall into three categories when it comes to Targeted Areas.

1. Fully Targeted – All properties in these counties are in a Targeted Area.

2. Partially Targeted – Some properties are in a Targeted Area

3. Non-Targeted Counties – No properties are in a Targeted Area.

B. Priority Funding Areas are existing communities or locally designated growth areas where

State and local governments already have a significant financial investment in the existing

infrastructure and want to concentrate their efforts to conserve natural resources and

farmland while encouraging and supporting sensible economic and residential growth.

These include:

1. Every Maryland municipality, as they existed in 1997.

2. Areas in Maryland that are inside the Washington Beltway and the Baltimore Beltway.

3. Areas that have been designated as enterprise zones, neighborhood revitalization areas,

heritage areas and existing industrial land.

C. Sustainable Communities are regions across the state where governments, business and

communities coordinate investments to achieve sustainable growth, good jobs and thriving

neighborhoods. Additionally, many Sustainable Communities are historically or culturally

significant, with a local or national historic district designation.

In Sustainable Communities, local governments work with the State to build on assets and

create opportunities where public and private investments and partnerships can achieve:

1. A healthy local economy.

2. Protection and appreciation of historical and cultural resources.

3. A mix of land uses.

4. Affordable and sustainable housing, and employment options.

D. Determine Location of Subject Property

To determine if a property is located within one of the geographic areas noted above, utilize

the Program Mapper tool: MMP Mapper

Print the screen confirming the Priority Funding Area status shows “YES” and include it in

the Pre-Closing Compliance submission. For more information about using The Mapper,

there is information on our website here: Maryland Mortgage Program Mapper Guide

Also a training Video on using MMP Mapper can be found here: MMP Mapper Training

Video

2.6 PURCHASING IN A “NON-TARGETED AREA”

A. If property is located in a non-targeted area, one of the following five options must be

submitted to document being a first-time homebuyer for all borrowers:

1. Occupancy and Ownership Data Verification Report (ex: Drive, FraudGuard); or

2. Federal signed income tax returns for the preceding three years substantiating

borrower’s status as a “first-time homebuyer”; or

3. Federal signed income tax transcripts for the preceding three years substantiating

borrower’s status as a “first-time homebuyer”; or

4. A tri-merge credit report that reflects a three-year rental history or

5. Verification of Rent (VOR) from a management company, leasing office and/or private

landlord that reflects a three-year rental history (Note: Family member is not acceptable).

B. Up until the current year’s filing deadline, the borrower must submit signed tax returns with

all schedules for the two years prior to last year plus an executed Affidavit in Lieu of Current

Year’s Tax Returns (Attachment J) for the current year’s tax return which has not yet been

filed. If the current year's tax return has been filed, it should be submitted. For example, if

the borrower applies on January 30th and last year’s tax return was not filed, he will provide

tax returns for the two years prior to last year, as well as an executed Affidavit in Lieu of

Current Year’s Tax Returns (Attachment J) for last year.

C. After the current year’s filing deadline, the borrower must submit signed tax returns for last

year plus the two years prior to last year. For example, if during the current year, the

Borrower applies after the IRS filing deadline, he would provide tax returns for last year plus

the two years prior to last year.

D. After the current year’s filing deadline, if the borrower filed an extension, then the borrower

must provide a copy of the extension filed along with acceptance from the IRS, plus the two

years prior to last year’s tax returns. Also, as an executed Affidavit in Lieu of Current Year’s

Tax Returns (Attachment J) for last year is required in this scenario.

E. All tax returns must be signed by the borrower, including electronic returns and

computerized summaries from the IRS. In addition, the top portion of the return (name,

address, and social security number) must be completed.

F. Most types of returns filed with the IRS, including electronic returns, are acceptable;

however, the return must:

1. Be the type of return (e.g. the 1040EZ or 1040A) which does not allow for the deduction

of mortgage interest or real estate taxes, OR

2. Be a return which includes information which would enable MMP to determine that the

borrower claimed the standard deduction (e.g. 1040 showing a standard deduction). If

the information on the return indicates that the borrower did not claim a standard

deduction, then a full copy of the return with all schedules must be provided.

3. If the tax returns have been reconstructed, a notarized affidavit from the borrower must

be provided stating that the returns are a true and correct reconstruction.

NOTE: Electronic Filing Summary, IRS Form 8453 is not acceptable because it does not

provide the necessary information.

G. IRS Form 4506-C, Request for Transcript of Tax Return can be used by the lender to

request a transcript of the Borrower’s tax return(s). Make sure that all schedules are

included and the borrower signs and dates the transcripts.

H. If the borrower(s) was not required to file a tax return based on the IRS requirements, they

must provide an executed Affidavit Regarding Not Being Required to File Tax Return(s)

(Attachment S) stating that they were not required to file and the reason why they were not

required to file. Documentation to support the reason for not filing along with tax transcript

confirming not filed may be required.

I. Only when exemption to the “first-time homebuyer” for a veteran requirement is being

requested the following is required:

1. Attachment V – Veteran’s First Time Homebuyer Exemption Certification fully

completed, dated and signed; and

2. A copy of the DD-214 if borrower is a veteran or a Statement of Service Letter if

currently serving and using the exemption for the first time.

Note: The DD-214 or Statement of Service is only required if an exemption to the first-

time homebuyer requirement is being requested. They are not required just because

the loan type is a VA, or the borrower is a veteran.

J. If a non-borrowing occupant is taking title to property in a non-targeted area, federal income

tax returns for the preceding three years must also be provided unless a tri-merge credit

report or Verification of Rent or are provided, and they reflect a 3-year rental history or

Occupancy and Ownership Data Verification Tool Report (ex: Drive, FraudGuard).

2.7 UNDERWRITING

MMP DOES NOT CREDIT UNDERWRITE AND QUALIFY THE LOAN. IT IS THE LENDER’S

RESPONSIBILITY TO ENSURE THE LOANS RESERVED WITH MMP SUBMITTED TO U.S.

BANK FOR PURCHASE MEET U.S. BANK’S GUIDELINES. MMP HAS ONLY THE

RESPONSIBILITY OF ITS OWN GUIDELINES/REQUIREMENTS AND IT CANNOT BE HELD

RESPONSIBLE IF AN MMP LOAN IS NOT MEETING ANY OF THE THIRD PARTY’S

REQUIREMENTS THAT MAY AFFECT THE LOAN.

A. MMP Credit Report and Credit Score Requirements

1. MMP requires at least one borrower to have a credit score.

2. Minimum credit score requirements per the corresponding product and program fact

sheet must be met for all borrowers who have a credit score.

3. A full complete credit report must be provided for all borrowers.

4. Manual underwritten loans must follow and meet agency and US Bank additional

requirements.

B. DPA Secondary Financing Information

1. MMP EIN number is 52-6002033.

2. DPA loans are entered as secondary financing in FHA Connection.

3. DPA loans are entered as secondary financing on loan documents.

a. FHA Underwriting Transmittal 92900LT – with Source and EIN completed and Gov’t

box checked.

b. Conventional Underwriting Transmittal 1008 – with information listed in subordinated

financing.

c. URLA Form 1003 – Section 4b completed to reflect and amount reflected in L4-J.

C. Power of Attorney (POA)

1. All Powers of Attorney used to sign any documents required for MMP pre-closing or

post-closing packages require approval from the underwriter prior to closing.

2. It is the lender’s responsibility to include the required documents listed below when

submitting the initial pre-closing package for review.

3. This is required of both buyer and seller signed documents.

4. Required documents for approval:

a. Letter from the title attorney stating that attached POA for buyer/seller was reviewed

and found to be acceptable for the transaction, and

b. Complete copy of the POA referenced.

2.8 ELIGIBILITY INCOME

A. Total Projected ANNUAL Household Income may not exceed applicable Income Limit.

1. Total projected ANNUAL gross income from all household members occupying the

property being purchased, except for dependents less than 18 years old, may not

exceed the applicable income limit for the Program. Income Limits may be found at:

Income and Purchase Price Limits

2. Income for household members who are 18 years old or older and enrolled full-time in

high school or college should not be included in the total projected annual household

income unless that individual is a borrower on the loan. To document student status

provide a copy of a recent transcript.

B. Household Members

1. All Borrowers on loan application and any non-applicant going on title.

2. “Other household members” includes any person who is not a borrower on the loan:

a. A spouse or partner not listed as a borrower or going on title.

b. A child or children of the borrower(s) living with the borrower(s). (Also see below

scenarios)

c. Parents, grandchildren, and unrelated children are included if currently living with the

borrower(s) and will continue to after closing.

d. An unborn child can be treated as an “individual” (household member) when the birth

of the child will change the household size and result in an increase in the applicable

Income Limit. A Certification of Pregnancy (Attachment T) must be completed and

executed by the pregnant Borrower’s physician.

3. Children (under 18) not living with borrower full time per legal court document:

a. If listed as dependent on tax returns provided, then can be listed as a household

member.

b. If full custody per legal court document, then can be listed as a household member.

c. If joint custody per legal court document, then can be listed as a household member.

d. If no custody but partial visitation to the borrower's household, and the borrower pays

child support per legal court document, then can be listed as a household member.

4. If NO custody and NO child support, then CANNOT be listed as a household member.

C. Projecting Eligibility Income at Time of Reservation

1. As of the date of reservation in Lender Online, the lender is to project the eligibility

income for the year following the date of the loan closing for all household members,

using the Income Eligibility Worksheet and Lender Certification (Attachment D) and

information on income calculation in this Manual, as well as standard industry

underwriting standards established by FNMA, Freddie Mac, FHA, VA, or RHS/USDA.

2. This information should then be provided to the Borrower to complete the Buyer's

Affidavit.

D. Verification of Income

1. The lender will verify all sources of income (including part-time jobs, overtime, bonuses

and commissions etc.) for each household member who is 18 years old or older (except

the income of full-time high school or undergraduate students unless that individual is a

borrower on the loan) and then project the anticipated household income for a period of

12 months from the date of the loan closing. The lender will then prepare a final Income

Eligibility Worksheet and Lender Certification - (Attachment D) with the verified

information and submit it in the Pre-Closing Compliance Submission.

2. If a household member 18 years or older has no income, they must complete the Zero

Income Statement.

3. Provide documentation to substantiate receipt of child support and/or alimony income by

any household member.

4. Income may be documented by a standard written Verification of Employment (VOE)

with detailed income information, an Income and Employment Verification Report from

an agency approved third party vendor with detailed income information, or by

Alternative Documentation (e.g. verbal VOE, one month’s paystubs and previous one

year’s W- 2(s)).

E. Calculating Non-Self Employment Income

Income from all applicable household members must be included in the eligibility income

calculation. Any household member who is 18 years of age or older, and not a full-time high

school or undergraduate student (unless a borrower), must provide documentation supporting

their income. This documentation may include a standard written Verification of Employment

(VOE) with detailed income information or by Alternative Documentation (e.g. verbal VOE, one

month’s paystubs and previous one year’s W- 2(s)).

NOTE: Lender should exclude income from sources listed under the "Exclusions from

Income" section.

1. Calculating a Base Income

Take the base income from the most recent paystub or the VOE and annualize it. For

example, if the borrower is paid a base income of $1,150 biweekly, the biweekly amount

should be multiplied by 26 to determine the borrower’s annual base income of $29,900.

NOTE: If there is a significant discrepancy in the base income calculated above and the

year-to-date base income, a written explanation must be obtained from the employer in

order to make an appropriate calculation.

The base income amount must be placed on the “Wages, Salaries, etc.” line on the

Income Eligibility Worksheet and Lender Certification (Attachment D).

2. Documented Future Pay Raises

Because of their arbitrary nature, it is not necessary to include future pay raises in the

calculation of the eligibility income.

3. Non-traditional Receipt of Income

If a borrower is a teacher, it must be determined whether the borrower is paid over nine,

ten or twelve months. For example, if the borrower is paid over nine months and the

income is $2,000 per month, multiply the monthly amount by nine to determine the

annual income of the borrower.

4. Income of Union Workers (where the borrower had numerous jobs)

The income from all the borrower’s employers for the last full calendar year is totaled

and used to determine the borrower’s average annual income. If YTD shows a

significant increase those totals may need to be averaged in.

5. Overtime and Commissions

This type of income must be projected in an amount consistent with the earnings history

of the household member. Typically, this type of income may be averaged (if VOE

obtained) by totaling the last year plus year-to-date and then dividing by the total number

of months this period represents and then multiplying by 12 to calculate an annual

income. For example, if the year-to-date overtime is $400 and it is as of March 8th and

the overtime for last year was $2,150 and, the total overtime of $2,550 is divided by

14.26 (which is the total of 12 months for the previous year plus 2.26 months for the

year-to-date overtime), which equals $178.82 per month or $2,145.84 per year.

NOTE: IF THERE IS A SIGNIFICANT INCREASE OR DECREASE IN OVERTIME,

THEN AVERAGING MAY NOT BE ACCEPTABLE.

If the VOE shows current year-to-date overtime which is significantly (+/-25%) higher or

lower when annualized than previous years, it would NOT be consistent to average.

Instead, overtime must be based on the current year to date overtime unless the

employer documents that it is seasonal or a single occurrence.

If the VOE combines base pay with overtime, the base pay and overtime must be

calculated separately. A copy of the most recent paystub must be provided and must

confirm the VOE information. If it doesn’t, an explanation must be obtained from the

employer to make an appropriate calculation. The projected overtime amount must be

placed on the “Overtime, etc.” line on the Income Eligibility Worksheet.

If using alternative documentation (paystubs, W2s), take the year-to-date overtime figure

and annualize it. Compare this amount (added to base and other sources of income) to

last year’s W2 income figure. If there is a significant increase or decrease (+-25%), then

either additional documentation must be obtained from the employer explaining the

discrepancy, or the higher of the current year annualized income or previous year W2

income must be used.

6. Bonus income

This type of income must also be projected in an amount consistent with the earnings

history of the household member. The lender must first determine how this type of

income is paid; it normally is earned in one year and paid at the beginning of the

following year. If the VOE or alternative documentation is not self- explanatory, obtain a

written explanation from the employer. Bonus income must be placed on the “Overtime,

etc.” line on the Income Eligibility Worksheet.

F. Business Income/Self-Employed Borrower

Total the NET income plus the depreciation and depletion from the most recent tax year

AND, after the first three months of the current year, also include the net income plus

depreciation and depletion from a year-to-date profit and loss (P&L) statement and divide by

the total number of months covered by the tax returns and the P&L statement. If the

calculations above result in a loss DO NOT reduce the borrower’s annual compliance

income by this amount.

G. Interest, Dividends and Trust Income

If a borrower has a pattern of receiving Interest, Dividend, or Trust Income as evidenced by

his/her tax returns or a Trust agreement an average annual amount is calculated by totaling

the Interest, Dividend, or Trust Income received for the last year and Year to Date based on

the most recent month account statement(s) and dividing this amount by total number of

months covered by the tax return and the account statement(s) and then the result should

be multiplied by 12 to arrive at an annual income. If the income is a set Annual amount per a

Trust agreement use that annual amount. Place the total amount of compensation on the

“Interest, Dividends, etc.” line on the Income Eligibility Worksheet.

H. Insurance, Pensions, Social Security, Workman's Compensation and Other Periodic

Payments.

This includes all periodic payments received from social security, annuities, insurance

policies, retirement funds, pensions, disability or death benefits, or other similar periodic

payments including lump sum payments for the delayed start of a period payment;

payments in lieu of earnings, such as unemployment and disability compensation; workers

compensation; and severance pay (see Exclusions from Income section).

I. Unemployment Compensation

If a borrower has a pattern of receiving unemployment compensation as evidenced by

his/her tax returns or annual unemployment compensation statements, an average annual

amount is calculated by totaling the unemployment compensation received for the last year.

Place the total amount of unemployment compensation on the “Insurance, Pensions, etc.”

line on the Income Eligibility Worksheet.

J. Alimony and/or child support

If no alimony or child support is received – $0 (zero) must be entered on line 3.6 of the

Buyer’s Affidavit.

If court ordered and received consistently - Include the full amount in the Household Income

Calculation.

Alimony and/or child support received by any household member MUST be annualized and

the total amount placed on the “alimony/child support” line on the Income Eligibility

Worksheet, unless it is substantiated that scheduled payments have not been received. If no

alimony and/or child support is received, enter "$0" in the appropriate blank.

If court ordered and received consistently - Include the full amount in the Household Income

Calculation.

If court ordered and inconsistently received (Not sent monthly or with different dollar

amounts) - Obtain the total amount received for the previous 12 months and include in the

Household Income Calculation.

If court ordered and not received - Do not include in the Household Income Calculation.

Not court ordered - Do not include in the Household Income Calculation.

K. Public Assistance

This includes the maximum amount of public assistance where such payments include

amounts specifically designated for shelter and utilities that are subject to adjustment.

1. Gifts/Grants

Includes periodic and determinable payments and/or regular contributions received from

someone not residing in the dwelling.

2. Allowances, etc.

Includes all regular pay, special pay, and allowances of a member of the Armed Forces

(whether or not living in the dwelling) who is head of family or a spouse.

3. Tax Credits

Includes any earned income tax credit in excess of income tax liability.

L. Exclusions from Income

Exclude income from the following sources from the total household income calculation:

1. Casual, sporadic, or irregular gifts.

2. Amounts which are reimbursements for the cost of medical expenses.

3. Lump sum additions to family assets, such as inheritances, insurance payments

(including payments under health and accident insurance and workers compensation),

capital gains and settlements for personal property losses (but see Subsection 1.e.

“Income to Be Included” section).

Amounts of educational scholarships paid directly to the student or the educational

institution, and amounts paid by the government to a veteran for use of such

scholarships (Note: Amounts which are available for subsistence are to be included

in income).

4. Hazardous duty-pay to a serviceman, away from home and exposed to hostile fire.

5. Relocation payments made pursuant to Title II of the Uniform Relocation Assistance in

Real Property Acquisition Policies Act of 1970.

6. Foster childcare payments (unless formerly adopted and receiving foster subsidy).

7. Income of a live-in aide providing necessary support services for elderly, disabled or

handicapped persons.

8. Payments to volunteers under the Domestic Volunteer Service Act of 1973.

9. The value of the allotment to an eligible household for coupons under the Food Stamp

Act of 1977.

10. Income from employment outside the home of dependent children (including foster

children) under the age of 18 years.

11. Payments or allowances made under the Low-Income Energy Assistance program.

12. Payments received from the Job Training Partnership Act.

M. Income Eligibility Worksheet and Lender Certification

1. Complete a new Income Eligibility Worksheet and Lender Certification (Attachment D)

with the verified information and submit it to the Pre-Closing Compliance File.

2. If, upon verifying income, the borrower’s annual household income exceeds the income

limit, the lender must reject the loan application. The borrower has the right to request a

reconsideration of your decision. See "Eligibility Reconsideration" section.

3. Reductions in Income. The following household income reductions will make a loan

ineligible for the Program:

a. Borrower taking a voluntary reduction in pay or voluntarily terminating a job within six

months of the date of application when that prior income would have made the loan

ineligible for the Program.

b. Deletion of a borrower from the loan application or a household member from the

Buyer’s Affidavit when that person’s income would have made the loan ineligible for

the Program.

N. Pre-Closing Compliance Review of Income

1. The eligibility income for an RHS/USDA guaranteed loan is the lesser of the applicable

Program or RHS/USDA income limit.

2. The Income Eligibility Worksheet and Lender Certification (Attachment D) indicates that

the income is within the income limit for the Program. The Lender will also certify that the

loan has been underwritten for all other requirements of the Program and that the loan is

an eligible loan under the Program.

3. Applications for which the eligibility income exceeds the income limit for the Program will

not be approved at the pre-closing compliance review and will not be purchased by the

master servicer. If incomes are determined to be ineligible during quality control reviews,

the affected loans must be the responsibility of the Lender.

O. Confirming Income at Settlement

The borrower will complete the Buyer’s Confirming Affidavit at settlement and indicate

whether the anticipated eligibility income or any other eligibility information has changed.

2.9 ASSETS

MMP DOES NOT CREDIT UNDERWRITE AND QUALIFY THE LOAN. IT IS THE LENDER’S

RESPONSIBILITY TO ENSURE THE LOANS RESERVED WITH MMP SUBMITTED TO U.S.

BANK FOR PURCHASE MEET U.S. BANK’S GUIDELINES. MMP HAS ONLY THE

RESPONSIBILITY OF ITS OWN GUIDELINES/REQUIREMENTS AND IT CANNOT BE HELD

RESPONSIBLE IF AN MMP LOAN IS NOT MEETING ANY OF THE THIRD PARTY’S

REQUIREMENTS THAT MAY AFFECT THE LOAN.

A. Borrower’s Required Investment in the Property

A borrower’s required investment in the property is the minimum required by the insurer or

guarantor. A borrower’s sweat equity investment which meets the requirements of the

insurer/guarantor is acceptable under the Program.

B. Asset Test Procedure

1. The Asset Test Worksheet is only completed for Borrowers whose liquid assets equal or

exceed 20% of the purchase price of the property. Included in liquid assets are gifts in

the form of cash or equity. The lender will complete the Asset Test Worksheet and

submit it to MMP for review regardless of a Pass or Fail result. MMP then reviews

the worksheet and will either approve, deny, or consider an exception as noted in

Section F below.

2. A “Gift of Equity” is defined as the difference between the loan amount and the

appraised value in a “non-arm’s length” transaction (i.e., parent to child, employer to

employee).

3. Borrowers with liquid assets equal to 20% or more of the sales price may not be eligible

for the Program if they can afford a mortgage at the applicable asset test interest rate.

The weekly asset test rates are published on the daily rate sheet in the top left corner or

may be obtained by e-mailing Single Family Housing at

singlefamilyhousing.dhcd@maryland.gov.

4. The Lender will verify all assets (see below) for each Borrower and include them when

completing Attachment D.

5. The Asset Test Worksheet will indicate if the loan application is eligible or an exception

has been pre-approved by CDA on fails. The Worksheet must be completed, signed,

and dated by the Lender’s authorized representative (this may be the underwriter, loan

officer, processor, etc., as approved by the Lender).

C. Calculating a Borrower’s Assets

All assets are to be considered, including but not limited to the following:

1. Items paid outside of closing (examples include but are not limited to the appraisal,

credit report, home inspection and deposit on property).

2. Savings accounts.

3. Checking accounts.

4. Certificates of deposit.

5. The total balance of joint accounts.

6. Money market or mutual fund accounts.

7. In trust for accounts (amount accessible).

8. Chapter S corporate bank accounts (where borrower is an owner of the Chapter S

corporation).

9. Any other bank accounts.

10. Any stocks or bonds.

11. Cryptocurrency, digital currencies, or altcoins (i.e., Bitcoins, Litecoin, Ethereum, etc.)

NOTE: If the borrower intends to use these funds for settlement expenses, all agency

and US Bank guidelines must be followed and met, and the amount documented and

liquidated to US Currency.

12. Funds documented by gift letters.

13. Any funds derived or to be derived from the sale of real property, any mobile home or

other property prior to loan closing. Documentation showing net proceeds from any such

sale is required.

14. Amount used or borrowed from a life insurance policy, IRA, or 401K (less penalty).

15. Gifts of equity (per paragraph B above; the appraised value is listed on line 1 of the

Asset Test Worksheet).

D. Verification of Assets

1. The lender will verify all assets as noted above by obtaining written Verification(s) of

Deposit (VOD), Asset Verification Report from an agency approved third party vendor, or

alternative documentation (one month's most recent bank statement for each account as

of the date of reservation).

2. Earnest Money Deposit (EMD) must be verified if it has been given and cleared the

verified asset accounts.

3. Any gifts given or to be given must be documented with a gift letter.

4. Source of funds for large deposit(s), transfer(s) from other accounts not provided and

additional income from other employment not disclosed must be explained and

documented accordingly.

E. Exclusions

1. The cash surrender value of a life insurance policy, IRA account, 401k account, or 529

College Saving Plan may be excluded from the liquid assets as well as from the Income

Eligibility Worksheet unless the borrower intends to use or borrow against these funds

for settlement expenses. In this situation, only the amount being used or borrowed, less

any penalty, is to be included in the liquid assets.

2. The value of a lot on which the borrower is building a home to be financed by the

Program loan.

3. Proceeds from any secondary financing or grant used for the purchase of the home.

4. Relocation benefits under the Federal Uniform Relocation Act in connection with

condemnation proceedings (to be substantiated by a letter in the Pre-Closing

Compliance Submission).

F. Exceptions to Asset Test

All FAIL results are required to be reviewed by the CDA operations and/or underwriting

team for consideration of a possible exception in conjunction with, but not limited to, the

requirements below:

1. The borrower’s household income is at or below 55 percent of statewide median

income for a family of four, as published by HUD.

2. The regular income is fixed, such as pension or social security.

3. The interest, dividend, or trust earnings on the assets equal at least 50 percent of the

total household income.

2.10 PROPERTY REQUIREMENTS

A. New Construction – Priority Funding Areas

New Construction must be located in a Priority Funding Area ONLY

Lenders need to validate that the property location is acceptable. Identify this using The

Mapper: - Maryland Mortgage Program Mapper

Print the screen confirming the Priority Funding Area status shows “YES” and include it in

the Pre-Closing Compliance submission. For more information about using The Mapper,

there is information on our website here: Maryland Mortgage Program Mapper Guide

If the property is too new to show on The Mapper, e-mail Christina James at the Maryland

Department of Planning (MDP) for confirmation at [email protected]. For an

official determination, MDP requires that each PFA request provide the following real

property information for the parcel(s) in question:

➢ Map Number

➢ Grid Number

➢ Parcel Number

➢ Full Premise Address (Including County and ZIP Code)

➢ Vicinity Map

This real property information allows MDP to accurately locate and assess the parcel(s) or

subdivision in question and then generate a thorough PFA Determination.

You can locate this information through the State Department of Assessment and Taxation

(SDAT) using the following instructions:

Click on the "Real Property Search" Link below to begin this process. You will need to

select the county where the parcel in question is located and then input the premise number

(not required) and premise name. No premise type is needed (i.e., St., Rd., Ln., etc.).

MD State Department of Assessments and Taxation (SDAT)

Include the required real property information as listed above in the e-mail to Christina

James. You may either copy and paste the link for the Real Property Search Results into an

e-mail or carefully note the requested details.

B. Residences over one year old that have not been previously occupied are considered

existing units.

C. Residences less than a year old are considered new.

D. Occupying the Residence

Buyers must intend to occupy the residence within 60 days of settlement. However, a post

settlement rental agreement with the seller is permitted if the seller is waiting for completion

of a new home and the completion is expected to be within 120 days.

E. Eligible residences include single-unit residences that are:

1. Detached, one-half of a duplex (semi-detached), attached (townhouse) units, or single-

family unit with an accessory dwelling unit (ADU) meeting Servicer/GSE guidelines.

2. Modular homes that have the State seal of approval.

3. Condominium units approved by and meeting Servicer/GSE guidelines.

a. Must follow US Bank condominium guidelines and be approved.

b. Condominium Project Review (Section 800) of the US Bank HFA Lending Guide can

be found at the following link: US Bank HFA Lending Guide

4. Manufactured Housing meeting Servicer/GSE guidelines.

a. US Bank and the insurer standard underwriting guides and overlays.

b. US Bank requires approved/recorded MVA form VR-451.

F. Ineligible Residences – Housing types excluded from the Program: Housing types excluded

from the Program are:

1. Manufactured (Mobile) Homes that are not permanently based and are not registered in

Land Records.

2. Cooperatives.

3. Rental homes or any home a portion of which is to be rented.

4. Investment homes.

5. Properties from which a trade or business is conducted in the principal structure or

outbuildings without the prior written CDA approval of the proposed business use. Refer

to the Additional Buyer’s Affidavit Relating to Business Use of Residence (Attachment

N), and paragraph G below.

6. “Like Kind” exchange properties under Section 1031 of the Internal Revenue Code

UNLESS PRE-APPROVED BY CDA (See Section 2.9H).

7. Properties purchased through the sale of contract rights.

8. Properties with two separate lots and tax IDs. MMP Loan cannot be used to purchase

the adjoining lot even if it is not buildable and currently listed on the same deed. Lots

would need to be consolidated by the county to one lot and one tax ID before the

property would be acceptable collateral.

9. See INELIGIBLE USE OF LOAN PROCEEDS (Section 2.11) for further information.

G. Proposed Business Use of Residence

1. The Additional Buyer’s Affidavit Relating to Business Use of Residence (Attachment N)

must be submitted to and approved by the Program prior to the submission of the Pre-

Closing Compliance submission.

2. For all business use, other than daycare services, the applicable percentage is the

Percent of the Area. For daycare services, the applicable percentage of the residence

that will be used for daycare is the Use Percentage. If the applicable percentage

calculated under 4(c) or 4(d)(ii) in the Additional Buyer’s Affidavit Relating to Business

Use (Attachment N) exceeds 15%, the business use will not be approved.

3. The Additional Buyer’s Affidavit Relating to Business Use of Residence (Attachment N)

approved by the Program must be included in the Pre-Closing Compliance Submission.

H. Maximum Lot Size

The maximum lot size under the Program is 4 acres; however, exceptions may be requested

from the Program, by the Lender, for septic and/or zoning considerations that require

specific parcel sizes. The maximum exception will not exceed 10 acres. The Lender will

request the exception from the Program’s Single Family Housing Underwriting or Operations

Manager listing the reason(s) why the exception should be made. Provide the primary

borrower’s name, address, and loan number plus any pertinent documentation from the

property locality or county with your request. Contact the county’s Office of Planning and

Zoning for assistance in obtaining the required documentation. This should be requested as

soon as the Lender is made aware of the situation.

I. Maximum Loan Amount

The maximum loan amount under the Program is determined annually and can be located at

the following link - MMP Income and Purchase Price Limits

J. Maximum Acquisition Cost

Acquisition cost for the purpose of this Program is defined in accordance with the Internal

Revenue Code of 1986, as amended, and is to be reflected in the initial Buyer’s Affidavit.

1. The total acquisition cost of the property must not exceed the limit established by the

Program for the applicable jurisdiction. These limits may change from time to time in

accordance with requirements of the Program and the federal government. Total

acquisition costs can be found at the following link - MMP Income and Purchase Price

Limits

2. If, prior to loan closing, there is an increase in the total acquisition cost of the property

and the new total exceeds the applicable limit, the property is no longer eligible, and the

loan cannot be purchased and should not be closed.

3. Exclusions from the acquisition cost calculation are:

c. Customary closing costs.

d. Prepaid expenses.

e. Points and origination fees.

f. Any financed FHA UFMIP, RHS/USDA Guarantee fee, or VA funding fee.

4. The calculation for the acquisition cost must include:

a. The contract sales price less the cost of personal property (the cost of fixtures is not

deducted) included in the price.

b. Any capitalized ground rent, the amount of which is to be calculated using a ground

rent factor of 200. The capitalized ground rent is determined by multiplying 200 times

the monthly ground rent. (EXAMPLE: Yearly ground rent of $120 divided by 12

equals a $10 monthly ground rent. Monthly ground rent of $10 times 200 equals

$2,000, which is the amount of the capitalized ground rent to be listed in the Buyer’s

Affidavit).

c. Any additional costs to complete the dwelling not included in the sales contract, such

as options, well and septic systems, other site development costs, any

contemporaneous arrangement for other work or services in completing or adding to

the dwelling, and/or the cost of replacing fixtures removed by the seller.

d. Any other financial consideration between the buyer and the seller in connection with

the property such as UDAG/CDBG grants, site completion, etc.; and

e. The appropriate value of a lot owned by the borrower for two years or less on which

the dwelling is to be built.

K. Value for Buyer’s Affidavit

When a dwelling is to be built on a lot owned by the borrower for two (2) years or less, the

greater of the cost or current appraised fair market value of the lot must be included in the

Buyer’s Affidavit for determining the acquisition cost.

1. Financing Criteria

When a dwelling is to be built on a lot owned by the borrower for two years or less, either

free and clear or by a mortgage having an initial term and any subsequent term not

exceeding two years, it may be mortgaged through the Program up to an amount equal

to the payoff of any lot loan and closing costs.

2. Mortgage Loan Limit

The mortgaged value attributable to the lot may not exceed the lesser of its cost to the

borrower or its current appraised value. The borrower, in either of these circumstances,

must submit evidence of the cost of the land and the term(s) of any temporary financing.

3. Not Financeable

A lot owned by the borrower for more than two years may not be mortgaged through the

Program and the home being built is eligible only if the lot is currently owned free and

clear.

4. Maximum Appraised Value

The appraised value of the property may not exceed 125% of the current Maximum

Acquisition Cost for the applicable jurisdiction.

5. Property Appraisal

A current appraisal is required, with the origination lender as the “client.”

2.11 INELIGIBLE USE OF LOAN PROCEEDS

A. Except as authorized in writing by CDA in its sole discretion, no portion of the proceeds of a

Program loan may be used to enrich the borrower, nor refinance, directly or indirectly, an

existing mortgage loan or loans of the borrower on the residence other than:

1. a qualified lot loan [see 2.7 I, 4 e (2) & (3)]; and

2. a construction loan or a bridge loan or other similar temporary initial financing: or

3. a loan refinanced using the MMP 97% Conventional Refinance Program

B. Pay any financing or settlement costs (except for any financed FHA UFMIP, VA funding fee,

RHS guarantee fee or Conventional single premium mortgage insurance) or any other

adjustments.

C. Pay the cost of any items deducted from the sales contract price by computing the

acquisition cost of the residence as identified in the Buyer’s Affidavit.

D. Finance a land installment contract.

E. Finance a wrap-around mortgage.

F. Facilitate the selling of contract rights; or

G. Finance a “like-kind” exchange of properties under Section 1031 of the Internal Revenue

Code (“1031 exchange”), when an intermediary or other entity is executing the deed

transferring the home to the buyer UNLESS A CDA LEGAL REVIEW IS PERFORMED

PRIOR TO THE CLOSING. To be approved, the lender must submit a copy of the

Intermediary/Exchange Agreement between the seller and the intermediary entity, along

with a complete copy of the contract of sale and Seller’s Affidavits completed by the seller

and the intermediary, to CDA prior to submitting the Pre-Closing MMP/MBS Compliance

Submission. The Confirming Seller’s Affidavits completed by the Seller and the Intermediary

must be included in the Post-Closing MMP/MBS Compliance Submission (Attachment EE).

However, if the seller, who is holder of legal title to the home, executes the deed transferring

the home to the buyer, a loan that involves a 1031 exchange may be purchased WITHOUT

A LEGAL REVIEW of the real estate exchange agreement and other documentation in

connection with the 1031 exchange.

SECTION 3 - COMPLIANCE REVIEW AND SUBMISSION

3.1 PRE-CLOSING COMPLIANCE

A. Mandatory Review

Prior to closing, Program staff will complete a compliance review of all loans.

B. Delivery of Pre-Closing Compliance Packages

Participating lenders shall submit to the Program the appropriate Pre-Closing Compliance

checklist and complete package for the first mortgage loan and second mortgage loan if

applicable, for compliance review/approval after their underwriter has approved the file.

The checklist lists the documents required for submission of a Pre-Closing Compliance

package to the Program for approval. The package must be submitted with ALL the

required documents in the order shown on the checklists before CDA will approve the

loan for Pre-Closing Compliance. Loan packages must be complete based on the checklist

being used and submitted in a PDF file using eDocs on Lender Online:

MMP Lender Online (LOL)

When submitting a loan package per the checklist make sure to click on “Submit” once you

have uploaded the complete package for the submission to be seen and assigned to an

underwriter.

Program staff will review each complete file to verify that all documentation is complete and

that the loan file meets the terms and conditions of the Program.

All applicable affidavits must be accurately completed and included in the file submitted to

the Program. Fannie Mae, VA, HUD, Freddie Mac are not required to execute a Seller’s

Affidavit or Seller’s Confirming Affidavit in connection with the selling of their Real Estate

Owned (REO) single family homes. Neither CDA nor U.S. Bank has the authority to alter or

waive any applicable affidavits.

The Pre-Closing Compliance package will be reviewed on a “first-submitted, first-

reviewed” basis. Program staff will post deficiencies (“Compliance Conditions”) on Lender

Online and notify the lender by e-mail. It is the Lender’s responsibility to review and respond

promptly to any documentation requirements for Pre-Closing Compliance approval.

Documentation to fulfill compliance conditions is to be submitted using eDocs on Lender

Online. If there are conditions, please submit all required conditions together in one re-

submission. The most current attachments and loan documents are posted on Lender

Online and/or downloadable as part of the closing package from Lender Online. The lender

should always use the current downloadable documents to ensure the most current version:

MMP Lender Online (LOL)

C. Compliance Package Review

It is the lender’s responsibility to certify that each borrower and the property submitted for

compliance review meets the eligibility requirements as stated in this Manual.

1. The lender must thoroughly investigate each area of eligibility and collect sufficient

documentation to establish compliance with the requirements.

2. The lender must sign the Income Eligibility Worksheet and Lender Certification

(Attachment D), which contains a Lender Certification section, for each loan.

3. Once the Underwriting Compliance Review status is listed as “APPROVED” in Lender

Online, the lender may download the closing package and close the loan.

D. Pending

Pending status indicates that the loan has been assigned and is pending review.

E. Incomplete

Incomplete status indicates that the loan has been reviewed and there are outstanding

conditions that are needed for an approval.

F. Approval

If the pre-closing compliance file is complete and meets all of the eligibility criteria for

Program compliance, CDA will approve the pre-closing compliance file and the approval will

be listed on Lender On-Line as “UW/Compl Review/APPROVED on [the date of approval].”

The “UW/Compl Review/Approved” status in Lender Online indicates that a pre-closing

compliance review of the loan has been performed, and the loan is in compliance as of the

time of the pre-closing compliance review. Once the “UW/Compl Review” status is listed as

“APPROVED” in LOL, the lender may close the loan. It is recommended that the Lender

print the LOL Loan Status page for their records.

IMPORTANT: BORROWERS MUST MEET THE ELIGIBILITY REQUIREMENTS NOT

ONLY AT THE TIME OF THE PRE-CLOSING COMPLIANCE REVIEW BUT ALSO AT

THE TIME OF THE LOAN CLOSING.

IT IS THE LENDER’S RESPONSIBILITY TO ENSURE THE LOANS RESERVED WITH

MMP SUBMITTED TO U.S. BANK FOR PURCHASE MEET U.S. BANK’S GUIDELINES.

MMP HAS ONLY THE RESPONSIBILITY OF ITS OWN GUIDELINES/REQUIREMENTS

AND IT CANNOT BE HELD RESPONSIBLE IF AN MMP LOAN IS NOT MEETING ANY

OF THE THIRD PARTY’S REQUIREMENTS THAT MAY AFFECT THE LOAN.

Events that may occur after the pre-closing compliance review which would make the loan

ineligible for purchase by CDA include but are not limited to:

• an increase in household income,

• an increase in the acquisition cost of the property,

• failure to sell other real property before closing the Program loan, and

• failure to obtain the necessary documents at loan closing.

The borrower(s) and seller (s) must sign a Confirming Affidavit at closing either to affirm that

the representations contained in the initial Affidavit are true and correct as of the date of the

closing or to reflect any changes occurring subsequent to the initial Affidavit.

G. Eligibility Reconsideration

Should the lender or CDA determine that a borrower is not eligible for the Program pre-

closing, the borrower should be informed of his right to request a reconsideration of the

denial.

1. Each reconsideration request must be made in writing by the borrower, be submitted

through the lender within 30 days of the denial notice, and contain all the following

information:

a. a cover letter from the lender requesting consideration of the borrower’s request.

b. a copy of the letter from the lender rejecting the borrower’s application.

c. the borrower’s signed reconsideration request.

d. a copy of the loan application.

e. documentation describing the basis for the request.

f. a copy of all the information and documentation submitted by the borrower

supporting the basis of the reconsideration request.

g. a copy of the Income Eligibility Worksheet and income documentation when

income is the issue.

2. All reconsideration requests are to be sent to CDA via e-mail to:

singlefamilyhousing.dhcd@maryland.gov

3. The committee will review each reconsideration request and will notify the lender and the

borrower of the final decision. Any questions concerning a reconsideration request

should be directed to CDA at: [email protected]ov

4. The financing of any mortgage loan upon successful reconsideration is subject to the

availability of Program funds at the time of approval.

3.2 ESCROW HOLDBACKS

A. The escrow holdback cannot be rolled into the loan amount.

B. The escrow holdback may not exceed $2000.00 max.

C. The escrow holdback cannot be for any item that impacts safety, a hazard, or affect livability.

D. The lender must follow Agency (FNMA, FHLMC, FHA, VA, RHS/USDA) and Investor (US

Bank) as well as the PMI guidelines for escrow holdback.

E. MMP does not need to review escrow holdbacks but, lender must comply to above so loan

can be purchased by Investor (US Bank).

3.3 CLOSING INSTRUCTIONS

A. Once the pre-closing compliance first (and second, if applicable) loans have received Pre-

Closing Compliance Approval in Lender Online (LOL), the lender can download the Closing

Package, which will include the pertinent documents: Closing Instructions, Award Letter,

Commitment Letter, DPA Deed of Trust and Note, and/or other applicable documents.

B. It is the lender’s responsibility to follow all the instructions on the package Closing

Instructions pages.

C. Fire and Extended Coverage Insurance

1. The endorsement should have a standard mortgagee payee clause and the Loss Payee

clause should read:

U.S. Bank National Association

Its Successors and Assigns as Their Interest May Appear

c/o U.S. Bank Home Mortgage

P.O. Box 961045

Fort Worth, TX 761961-0045

2. The policy must be for the full insurable value of the property written through companies

acceptable to the first mortgagee.

D. Servicing Transfer Notice Address and Information

U.S. Bank Home Mortgage

Attn: Customer Service

PO Box 21948

Eagan, MN 55121-4201

Phone - 1-800-365-7772

Hours: 7:00 AM - 8:00 PM Central (Monday-Friday)

E. Document Submission

Master Servicer: The fully executed Deed of Trust Notes along with a

Certified Copy of the Deeds of Trust, and the Commitment Letters with the

borrower’s original signature, are to be forwarded to U.S. Bank along with

all other necessary documentation via U.S. Bank’s electronic imaging

system, DocVelocity. Additional information on purchase file submission

can be obtained on U.S. Bank’s HFA Division website, located under the

following link: US Bank HFA Lending Guide

F. Lenders Do Not return any original documentation to DHCD.

1. The original fully executed Deed of Trust Notes (1st and 2nd) should be sent to:

U.S. Bank Home Mortgage

ATTN: Note Vault

5th Floor

9380 Excelsior Blvd

Hopkins, MN 55434

2. After recording, the original and one certified copy of the Deeds of Trust (1st and 2nd)

should be sent to:

U.S. Bank Home Mortgage

ATTN: CIC Final Docs EP-MN-X3CI

Hopkins Excelsior Blvd

9380 Excelsior Blvd, 3RD Floor

Hopkins, Minnesota 55343

3.4 POST-CLOSING COMPLIANCE

A. Delivery of Post-Closing Compliance Files

Immediately after closing, the lender must submit a Post-Closing Compliance Submission

package for the first and second, if applicable, mortgage loan to MMP for compliance

review/approval before the loan will be considered for purchase by the Master Servicer.

Submit package in PDF using eDocs on Lender Online.

MMP Lender Online (LOL)

Post-Closing Compliance packages will be reviewed on a “first-submitted, first-reviewed”

basis. Program staff will post any deficiencies (“Compliance Conditions”) on Lender Online.

It is the lender’s responsibility to review and respond promptly to any documentation

requirements for Post-Closing Compliance approval.

Compliance Conditions are to be submitted using eDocs on Lender Online.

MMP Lender Online (LOL)

B. MMP Post-Closing Compliance Approval

If the Post-Closing Compliance file is complete and meets all of the eligibility criteria for

Program compliance, MMP will approve the Post-Closing Compliance file and the approval

will be listed on LOL as “Commit/Complian/APPROVED” on [the date of approval].” The

“Commit/Complian/ APPROVED” status in LOL indicates that a Post-Closing Compliance

review of the loan has been performed, and the loan is in compliance as of the time of the

Post-Closing Compliance review. It is recommended that the Lender print the LOL Loan

Status page for their records.

The information that goes on the top right corner of the MMP DPA Deed of Trust is the

Property Tax ID Number (aka the Account Identifier) or the Parcel Number. One or the

other is required, not both. This information can be obtained on the Maryland Department of

Assessments and Taxation website by using their Real Property Data Search tool:

MD State Department of Assessments and Taxation (SDAT)

C. MMP Compliance Approval Commitment

Compliance approval Commitment shows as “Commit/Compliant” stage status and is listed

as APPROVED in LOL. Master Servicer US Bank is notified electronically within 24 hours of

commitment and the lender must meet all US Bank requirements for purchase.

NOTE: If the post-closing file is not approved by MMP or purchased by US Bank and it

includes a down payment assistance lien (DPA), the lender will have to return the down

payment assistance funds to MMP (in case CDA has paid for the DPA) and provide the

following documents to MMP, to enable CDA to release the DPA lien:

1. Certificate of Satisfaction (release of mortgage) or

2. Assignment of deed of trust and note (assignment).

3. Alonge (same as assignment #2)

Refer to the Section 6 - Down Payment Assistance Loans and Grants for further information

on DPA liens.

D. Eligibility Reconsideration

Should the Lender or MMP determine that a borrower is not eligible for the Program post-

closing, the borrower should be informed of his right to request a reconsideration of the

denial.

1. Each reconsideration request must be made in writing by the borrower, be submitted

through the lender within 30 days of the denial notice, and contain all the following

information:

a. a cover letter from the lender requesting consideration of the borrower’s request.

b. a copy of the letter from the lender rejecting the borrower’s application.

c. the borrower’s signed reconsideration request.

d. a copy of the loan application.

e. documentation describing the basis for the request.

f. a copy of all the information and documentation submitted by the borrower

supporting the basis of the reconsideration request.

g. a copy of the Income Eligibility Worksheet and income documentation when income

is the issue.

2. All reconsideration requests are to be sent to CDA via e-mail to:

singlefamilyhousing.dhcd@maryland.gov

3. The committee will review each reconsideration request and will notify the lender and the

borrower of the final decision. Any questions concerning a reconsideration request

should be directed to CDA at singlefamilyhousing.dhcd@maryland.gov

4. The financing of any mortgage loan upon successful reconsideration is subject to the

availability of Program funds at the time of approval.

3.3 ELECTRONIC SIGNATURES

A. Maryland Mortgage Program (MMP) implemented an Electronic Signature Policy.

B. Pre-Closing Compliance Documentation – First Mortgage following MMP Documentation

may be Electronically Signed:

➢ Buyer’s Affidavit

➢ Notice to Borrowers

➢ Seller’s Affidavit

➢ Attachment A - Separation Affidavit

➢ Attachment F – Asset Test

➢ Attachment J – Affidavit in Lieu of Current Year's Tax Return(s)

➢ Attachment N - Additional Buyer's Affidavit Relating to Business Use of Residence

➢ Attachment S - Affidavit Regarding Not Being Required to File Tax Return(s)

➢ Attachment T - Certification of Pregnancy

➢ Attachment V - Veteran First Time Homebuyer Exemption Certificate

➢ Borrower's Affidavit for Refinance Loans

➢ CDA Certificate of Disability

➢ No Income Letter

C. Pre-Closing Compliance Documentation – Second Mortgage following MMP Documentation

may be Electronically Signed:

➢ DPA Borrower's Application and Affidavit

➢ Builder Developer Incentive Program (BDIP) - Verification of Contribution

➢ Community Partner Incentive Program (CPIP) - Verification of Partner Contribution

➢ DPA Attachment D - Request for Lien Exception

➢ House Keys 4 Employees (HK4E) - Verification of Partner Contribution

D. Post-Closing Compliance following MMP Documentation may be Electronically Signed:

➢ Buyer's/Borrower's Confirming Affidavit

➢ DPA Closing Instructions

➢ DPA Commitment Letter

➢ Notice to Borrower for Calculating Potential Recapture Tax

➢ Seller's Confirming Affidavit

E. Post-Closing Compliance following MMP Documentation is not included in this exemption

and still requires a live, original signature:

➢ DPA Deed of Trust

➢ DPA Deed of Trust Note

➢ All Applicable Riders including the Tax-Exempt Finance Rider (required for all MMP first

mortgages).

SECTION 4 - MORTGAGE INSURANCE/GUARANTY

4.1 CONVENTIONAL UNINSURED (LTV RATIO OF 80% OR LESS) AND

INSURED (LTV RATIO OF 80% OR GREATER)

NOTE: Please refer to each fact sheet specific to each of the MMP products for complete

and specific underwriting criteria.

IT IS THE LENDER’S RESPONSIBILITY TO ENSURE THE LOANS RESERVED WITH

MMP SUBMITTED TO U.S. BANK FOR PURCHASE MEET U.S. BANK’S GUIDELINES.

MMP HAS ONLY THE RESPONSIBILITY OF ITS OWN GUIDELINES/REQUIREMENTS

AND IT CANNOT BE HELD RESPONSIBLE IF AN MMP LOAN IS NOT MEETING ANY

OF THE THIRD PARTY’S REQUIREMENTS THAT MAY AFFECT THE LOAN.

A. Must be underwritten to current Fannie Mae HFA Preferred or Freddie Mac HFA Advantage

underwriting guidelines.

B. “HFA Preferred” or “HFA Advantage” depending on which loan type is being used must be

selected when loan is run through automated underwriting.

C. Secondary financing must meet Fannie Mae’s or Freddie Mac’s guidelines for “Community

Seconds”.

D. Automated and Manual Underwriting is allowed however, all loans must meet Insurer and

Servicer guidelines. Makes sure all US Bank Overlays have been met.

E. See the 30 Year Purchase Loans Fact Sheet, for current Maximum Loan to Value Ratios

and Maximum Debt to Income Ratios

Standard 30 Year Purchase Product Fact Sheet

4.2 LOANS WITH LTV RATIOS GREATER THAN 80%

A. Must be insured or guaranteed by one of the following:

1. Federal Housing Administration (FHA).

2. Veterans Administration (VA).

3. Rural Housing Services (RHS).

4. A participating private mortgage insurance company (MI company), as defined in

Section B below.

B. Private Mortgage Insurance

In order to be eligible for purchase by U.S. Bank, the loan must be insured by an MI

company that meets the following requirements:

1. Name of the MI company must appear on CDA’s “Participating Private Mortgage

Insurance Companies” list.

2. The originating lender must ensure the following:

a. The MI Company is a duly organized and existing entity authorized to issue

mortgage insurance in the State of Maryland; and

b. The MI company is a “qualified mortgage insurer” as defined and approved by

Fannie Mae/Freddie Mac and Master Servicer U.S. Bank.

C. Private Mortgage Insurance Coverage

Mortgage Insurance premiums are determined by Area Median Income (AMI). Current

reduced MI coverage chart can be found on the Fannie Mae and Freddie Mac’s Websites:

➢ FNMA HFA Preferred Fact Sheet (see Mortgage Insurance section)

➢ FHLMC HFA Advantage Fact Sheet (see Mortgage Insurance section)

D. Continuous Coverage

To the extent permitted by the Homeowners Protection Act, the policy must provide for

continuous insurance coverage to US Bank, as long as US Bank is the mortgagee, and the

premium is being paid.

E. Private Mortgage Insurance Premium Structure

The structure of the mortgage insurance premium/payments must meet both Agency and

Master Servicer requirements and guidelines:

➢ Fannie Mae or Freddie Mac

➢ Master Servicer US Bank.

F. Homeowners Protection Act

Lender shall provide the borrower with notices and disclosures required by the Homeowners

Protection Act at the time of closing.

G. Cancellation of Private Mortgage Insurance

Borrower(s) will have termination and cancellation rights available under the Homeowners

Protection Act.

If the borrower does not request private mortgage insurance cancellation, U.S. Bank will

automatically cancel private mortgage insurance on these loans when the LTV ratio is

scheduled to reach 78 percent, based on the value of the home at loan origination, provided

the loan is current at that time.

SECTION 5 - HOMEBUYER EDUCATION

5.1 MANDATORY

Homebuyer education is MANDATORY for all purchase money mortgages, and ALL borrowers

must complete the requirement whether or not they are first-time homebuyers. Borrowers are

required to receive homebuyer education that meets at least the minimum FNMA, FHLMC, or

FHA standards. See additional requirements in 5.2 below.

A. Homebuyer Education is required prior to loan approval.

B. Certification can be no more than 12 months old at the time of closing.

5.2 REQUIREMENTS

A. If the borrower is utilizing funds from an external source, the homebuyer education

requirements established by the funding source must also be met, in addition to any

requirement by the Insurer or Master Servicer.

B. Certificate(s) must be included in pre-closing submission for ALL borrowers.

C. Homebuyer education classes can be any class approved by HUD, Fannie Mae, Freddie

Mac, or private mortgage insurers. Classes can be online or in-person, but a dated

completion certificate must be issued.

D. The class must be completed within 12 months prior to closing. All pre-contract restrictions

have been eliminated.

E. Homebuyer education completion certificates are transportable across Maryland

jurisdictions; a certificate earned in one jurisdiction will qualify for purchase in another

jurisdiction.

PLEASE NOTE: When using funds from another source, the borrower must still align

with all the source’s applicable requirements and guidelines.

More information about homebuyer education choices can be found on our website:

Homebuyer Education

SECTION 6 – DOWN PAYMENT ASSISTANCE LOANS AND GRANTS

6.1 ELIGIBLE JURISIDICTIONS

Available statewide.

6.2 ELIGIBLE SETTLEMENT EXPENSES

DPA loans and grants may be used to fund settlement expenses and/or down payment subject

to the requirements of the insurer/guarantor. Included are settlement expenses that are

associated with a home purchase, such as:

A. Fees or premiums for title examination, title insurance or similar expenses.

B. Fees for preparation of a deed, settlement statement, or other documents.

C. Payments owed at the time of settlement for property taxes or hazard insurance coverage.

D. Escrows for future payments of taxes and hazard insurance.

E. Fees for notarizing deeds and other documents.

F. Transfer and recordation taxes and fees.

G. Fees for premiums for mortgage insurance or guarantee.

H. Up to 30 days of prepaid interest.

I. Appraisal and credit report fees.

J. Home inspection fees.

K. Home warranty fees.

L. Other reasonable and customary expenses.

6.3 ELIGIBLE FIRST MORTGAGES

A. Must be a purchase money mortgage loan originated under CDA’s Maryland Mortgage

Program (MMP); fact sheet for first mortgage must allow DPA.

NOTE: Please refer to each fact sheet specific to each of the MMP products for

underwriting criteria in addition to general programs guidelines.

B. May not be used in conjunction with a refinance loan.

6.4 LOAN RESERVATION

DPA funds are reserved in Lender Online when the MMP First Mortgage is reserved. Check the

product fact sheet if DPA loan amount is calculated off the first mortgage, use the full loan

amount include any financed MIP, VA Funding Fee, MI or Guarantee Fee rounded down the

nearest dollar ($). Do NOT round up.

6.5 LIEN POSITION

If borrower is receiving MMP and assistance loans (either MMP DPA or other):

A. MMP first mortgage loan must be recorded in the first lien position.

B. DPA/Partner Match Program loan must be recorded in second lien position.

C. MMP will consider approval of DPA loan in third lien position if the loan in second lien

position is a loan from a federal, state or local government agency or a nonprofit agency

considered an instrumentality of government. For subordinate lien position exceptions, a

DPA Attachment D – Request for Lien Exception must be submitted.

6.6 TITLE INSURANCE

A. Title insurance is not required on a DPA Loan

B. DPA/Partner Match Program loan must be shown on the title policy as being in second (or

third, with MMP approval) lien position.

6.7 FEES

A. No settlement fees may be charged to close the DPA/Partner Match Program loan.

1. Any standard doc prep, processing or underwriting fees charged may not reference

MMP, DPA, CDA or any other bond program terminology. The fees should not appear

to be charged by the Program.

2. Any Master Servicer required fee that can be passed on to the buyer cannot reference

MMP, DPA, CDA or any other bond program terminology and must note being paid to

the servicer. (ex: Funding Fee paid to US Bank)

B. The only fee that may be charged on a DPA/Partner Match Program loan is the Deed of

Trust recording fee.

6.8 DOWN PAYMENT ASSISTANCE PROGRAM FUNDS

Lenders are responsible for funding the Down Payment Assistance loans and Grants at closing.

The Community Development Administration will reimburse the lender in the month following

the MMP loan purchase according to the published schedule. Email notification is sent to the

Administrative Contact of record prior to the funds being wired.

6.9 PARTNER MATCH PROGRAMS

Partner Match Programs offer additional down payment and/or closing cost assistance for

qualified borrowers utilizing a Maryland Mortgage Program (MMP) loan.

A. Participating partners provide this assistance to borrowers who meet the criteria established

by the partner.

B. MMP matches the funds dollar-for-dollar up to a maximum of $2,500 in the form of a 0%

deferred loan which is repayable when the home is sold or transferred, or when the first

mortgage is paid off or refinanced.

C. Partner Match funds may be combined with MMP down payment funds or layered with

assistance from other non-MMP programs or jurisdictions (unless the fact sheet restricts

that).

D. Partners establish the eligibility criteria and terms for their contribution, which can be a loan

or a grant.

E. A list of partners and information about each program can be found on the Maryland

Mortgage Program website: MMP Partner Match Programs

➢ HOUSE KEYS 4 EMPLOYEES (HK4E). Partners are participating employers.

➢ SMART KEYS 4 EMPLOYEES (SK4E) PROGRAMS. An add-on for HK4E loans, it

allows a $1,000 additional amount from MMP, under the same terms, for borrowers

purchasing in a Priority Funding Area and within 10 miles or in the same jurisdiction of

their employment.

➢ BUILDER/DEVELOPER INCENTIVE PROGRAM (BDIP). Partners are participating

builders and/or developers.

➢ COMMUNITY PARTNERS INCENTIVE PROGRAM (CPIP). Partners are participating

community organizations, not-for-profits, and government entities.

F. Eligible Maryland State employees may get the maximum partner match benefit of $2,500,

in the same terms. State employees do not submit a Verification of Partner Contribution; the

POSC paystub serves in place of that.

1. Employees receive employment compensation through the Maryland POSC payroll

system.

2. Quasi- and independent agencies of the State of Maryland are not considered Maryland

state employers under this program. They can sign up separately as employers but

must provide the employer contribution.

3. Education systems that do not utilize the Maryland POSC payroll system do not qualify

as Maryland state employers under this program. They can sign up separately as

employers but must provide the employer contribution.

6.10 PARTNER MATCH PROGRAM UTILIZATION

A. Partner must sign up using the Participation Agreement forms. These are found on the

website with the partner listing for each of the Partner Match programs.

MMP Partner Match Programs

B. Borrower and Partner complete the Verification of Partner Contribution form (unless the

borrower is requesting State of Maryland HK4E per Section 6.9 E. above) and submit it to

the Lender. Verification forms are available on the Loan Documentation page under Second

Mortgage Pre-Closing: Documents That Are Sometimes Required.

C. Partner must provide contribution at closing for MMP Partner Match funds to be utilized.

6.11 DPA/PARTNER MATCH MORTGAGE TERM

Same as MMP first mortgage.

NOTE: Please refer to each fact sheet specific to each of the MMP products for additional

underwriting criteria.

The DPA/Partner Match Program mortgage is a deferred loan, not a grant, and is due at the

earlier of maturity or prepayment of the first mortgage, sale or transfer of the property or default

under the DPA/Partner Match Program loan.

6.12 INTEREST RATE

The interest rate is currently 0% per annum.

6.13 ASSUMPTION

A DPA loan may not be assumed unless the property is transferred to a spouse, divorced

spouse, or child who resides in the mortgaged property, or the transfer is otherwise in

accordance with federal law and the written pre-approval of the insurer or guarantor of the first

mortgage and the Division of Credit Assurance is obtained. Send request to:

Department of Housing and Community Development

Division of Credit Assurance - Single Family

7800 Harkins Road

Lanham, MD 20706

6.14 LOAN CLOSING – FEES

A. No fee may be paid to lender over and above the fees charged on the first mortgage loan.

B. The only fee to be disclosed as a buyer’s closing cost on the DPA CD (if provided) is the

recording fee for the DPA Deed of Trust.

C. The DPA/Partner Match Program deed of trust is exempt from recordation and transfer

taxes pursuant to Sections 12-108 (a)(1), 13-207 (a)(1), and 13-402.1 (b)(2) of the Tax

Property Article of the Maryland Annotated Code.

6.15 GRANT ELIGIBILITY

From time to time, MMP offers one or more grant products. The grants are only available with

an MMP first mortgage purchase loan. Some grants have specific income restrictions, and

some can be layered with other assistance products; see product fact sheets for specifics.

Product fact sheets are available here: MMP Program Fact Sheets

SECTION 7 – 97% LTV CONVENTIONAL REFINANCE PROGRAM

7.1 PURPOSE

MMP offers a product called the 97% LTV Conventional Refinance Program. The 97% LTV

Conventional Refinance Program provides a 30-year fully amortized, limited cash-out refinance

loan.

NOTE: Please refer to each fact sheet specific to each of the MMP products for complete

underwriting criteria. Lenders should follow the respective guidelines of MMP, US Bank,

MIs and GSEs.

A. LTV and CLTV

The maximum LTV cannot exceed 97% for an automated underwritten loan or 95% for a

manual underwritten loan with or without the upfront mortgage insurance premium financed in

the mortgage; the maximum CLTV cannot exceed 105% with all second mortgages. The

maximum CLTV is subject to limitations of the mortgage insurer.

B. Appraised Value may not exceed Program Maximum Purchase Price.

C. This Program follows all guidelines of the Regular Maryland Mortgage Program.

D. Down Payment Assistance

➢ Not available for refinances.

E. Closing Costs

➢ May be included in the refinance subject to LTV/CLTV limitations.

7.2 SUBORDINATE LIENS

A. Must meet Fannie Mae’s and Freddie Mac’s guidelines for “Community Seconds”.

B. Existing DPA/Partner Match Program loans may be subordinated (must meet HFA

Preferred/Advantage and mortgage insurer CLTV requirements) and will retain 0% deferred

term.

C. Procedure for subordination of existing DPA can be found at MMP DPA Subordination

Procedure on the MMP website.

7.3 CASH OUT

A. No cashback allowed.

B. Any excess funds must be applied as principal curtailment.

SECTION 8 – RECAPTURE TAX REIMBURSEMENT

8.1 PURPOSE

Federal law provides for a possible Recapture Tax when some homeowners sell their home within

the first nine years after receiving a mortgage financed by proceeds of tax-exempt bonds issued

by CDA through its Maryland Mortgage Program (MMP). In order to alleviate the confusion and

worry about having to pay a recapture tax when the home is sold, CDA agrees to reimburse any

CDA homebuyer who settles on their home on or after July 1, 2005, the amount of any recapture

tax that the CDA homebuyer pays in connection with the sale of the home, if the mortgage was

financed by CDA with tax-exempt bonds issued through the MMP.

8.2 PROCESS

A. CDA will not calculate the recapture amount. Upon sale or disposition of the residence, the

Borrower(s) must consult a personal tax adviser or the IRS.

B. Please contact CDA by e-mail at [email protected] if you think you

owe recapture tax, to confirm this Notice is applicable to your loan.

C. If the borrower(s) has already paid recapture tax, they must send a written request for

reimbursement to CDA, by July 15th of the calendar year after the residence is sold,

accompanied by the following:

1. A copy of the signed Final Closing Disclosure from the sale or disposition of the

property.

2. Copies of the Borrower(s) filed tax returns or tax transcripts validating payment of the

Recapture Tax.

3. A completed IRS Form W-9 (IRS Form W-9).

4. The address to which the reimbursement should be mailed.

5. Any other documentation CDA may need to approve the reimbursement.

6. Submit requests for reimbursement to:

Maryland DHCD

Attn: CDA Single Family - Recapture Tax Reimbursement

7800 Harkins Rd., 3rd Floor

Lanham, MD 20706

D. CDA will not act on the request for reimbursement until all of the listed items above are

received.

E. CDA will only reimburse the Recapture Amount actually paid, and will not reimburse fees,

interest, expenses, or penalties incurred.

F. Be advised to comply with Federal tax reporting requirements, the State of Maryland may

issue an IRS Form 1099 so the amount of any recapture tax that CDA reimburses to the

borrower can be reported to the IRS as income.

SECTION 9 – MARYLAND HOME CREDIT PROGRAM

Note: New mortgage credit certificates are not currently being offered. Existing certificates may

be re-issued for eligible refinance transactions. See Section 9.7 below.

9.1 PURPOSE

The objective of the Maryland Home Credit Program (the "MHCP") is to provide homeownership

opportunities to eligible low to moderate income homebuyers in the State of Maryland. The

Community Development Administration ("CDA") accomplishes this objective by issuing

Mortgage Credit Certificates ("MCCs") to eligible mortgagors who may use the MCCs to claim a

credit on their federal tax returns for a portion of the interest they pay on mortgage loans to

finance the purchase of a principal residence. The tax credit percentage is 25% of the interest

paid on the mortgage each year up to a maximum $2000 credit per year – this is a dollar-for-

dollar reduction against the borrower's federal tax liability. The remaining portion of the

mortgage interest may continue to qualify as an itemized deduction. The annual amount the

borrower receives will change as the mortgage loan amount decreases, but the tax credit

percentage never changes. The mortgage loans in the MHCP are made by the Lenders

independently of CDA or in conjunction with one or more of CDA's mortgage loan programs.

Mortgage loans cannot be made with the proceeds of tax-exempt qualified mortgage bonds or

qualified veteran's mortgage bonds issued by CDA or any other entity. CDA does not give tax

advice; Borrowers needing this assistance should consult a tax professional.

This program is offered pursuant to Title 2, Subtitle 4 of the Housing and Community

Development Article of the Maryland Annotated Code (“the Act”). It is further governed by

Program regulations contained in COMAR 05.03.02, as amended. All loans will be made in

conformance with the Act, Program regulations, applicable federal tax law, and Community

Development Administration (CDA) bond documents. MCC will be issued only in conformance

with the ACT, Program Documents, and applicable federal tax law.

The lender agrees in the Mortgage Credit Certificate Agreement, of which this manual is a part,

to comply with the requirements set forth in this manual. CDA must rely upon all participating

lenders to comply with the requirements when making mortgage loans to be purchased by U.S.

Bank, the Master Servicer.

The link to the MCC Fact Sheet is:

Maryland Home Credit (MCC) Fact Sheet

9.2 ELIGIBILITY / DOCUMENTATION

Eligibility requirements for borrowers and properties in the MHCP align with requirements for

CDA's Maryland Mortgage Program ("MMP") and many of the documents to be used in

connection with the MHCP are the same as for MMP loans.

9.3 MORTGAGE CREDIT CERTIFICATE

The Certificate Credit Rate is 25%. This entitles the borrower to claim up to 25% of the interest

paid during the year on a mortgage loan up to a maximum of $2,000.00 as a dollar-for-dollar

reduction against the borrower annual federal tax liability.

9.4 MCC-ONLY – NON-MMP FIRST MORTGAGE

Borrowers have the option of taking the MCC-ONLY. The lender sets the interest rate, may

charge points and the first mortgage is a NON-MMP Product. There is no DPA available. The

loan is not sold to US BANK. Other MMP or agency/insurer requirements still apply, including:

• first-time homebuyer,

• not owning other property,

• principal residence, and

• income and purchase price limits

Minimum Credit Score of 640 is required.

Debt to Income Ratio – 45.00%. However, exceptions may be considered for Debt-to-Income

ratios between 45.01% to 50.00% on a limited basis.

Recapture Tax – The Department WILL NOT reimburse the borrower for any Recapture Tax.

Loan Approvals - Transactions must still be approved through CDA pre-closing and post-closing

compliance.

Homebuyer Education - Homebuyer education is not required but is still encouraged.

9.5 MCC FEE SCHEDULE

See the MCC Fact Sheet for the current fees for MCC, MCC-ONLY and MCC refinanced

transactions.

9.6 ISSUANCE OF MORTGAGE CREDIT CERTIFICATE

The MCC certificate is provided in the Closing Package when it is downloaded from Lender

Online after pre-closing compliance approval.

9.7 RE-ISSUANCE OF AN EXISTING MCC

Borrowers who are refinancing a loan with an existing MCC can have the MCC reissued, even if

they are refinancing into a non-MMP loan product. The refinance and reissue must be done with

an MMP lender approved to offer MCCs. The following applies to reissue transactions:

➢ Refinance with an MMP refinance loan: Use the regular first mortgage checklists (CC

and EE).

➢ Refinance with a non-MMP refinance loan: Use MCC-Reissue checklists (JJ and KK).

9.8 REPORTING AND RECORDKEEPING REQUIREMENTS

A. Lender Reporting Requirements

Any Lender that makes a mortgage loan in conjunction with the MHCP and provides a

certified indebtedness amount must submit file IRS Form 8329, annually, on or before

January 31 of the year following the calendar year to which the report relates.

A separate Form 8329 shall be filed for each issue of MCC with respect to which the Lender

made mortgage loans during the preceding calendar year.

A copy of Form 8329 must be submitted to CDA.

As a courtesy only, for MCCs issued with an MMP first mortgage loan, CDA will provide a

list of the year’s loans for use in filing the 8329. It is the lender’s responsibility to verify the

accuracy of the list before filing.

B. Failure to File

Failure to file Form 8329 could result in penalties imposed by the IRS.

C. Lender Recordkeeping Requirements

Lenders must retain certain information in their books and records for 6 years following the year

in which the loan was made.

With respect to each loan, Lenders must retain the following information:

➢ Name, address, and TIN of each holder of a qualified MCC with respect to which a loan

is made.

➢ Name, address, and TIN (526002033) of CDA; and

➢ The date the loan for the certified indebtedness amount is closed, the certified

indebtedness amount, and the Certificate Credit Rate of the MCC.

9.9 CDA REPORTING REQUIRMENTS

CDA shall file quarterly reports with the IRS on Form 8330 and annual reports of mortgagor

income and targeted area loans as required by Treas. Reg.