Maryland Department of Housing and Community Development

HOME OWNERSHIP FOR INDIVIDUALS WITH DISABILITIES PROGRAM MARYLAND HOME FINANCING PROGRAM

The Home Ownership for People with Disabilities Program is offered through the Maryland Department of Housing and Community Development (DHCD) and sponsored by the Maryland Center for Community Development (MCCD). For additional information, please call the Maryland Center for Community Development at 410-752-6223 or 1-800-949-6223.

PROGRAM HIGHLIGHTS

Eligible Borrower(s): At least one borrower must be disabled (a disabled borrower will be required to provide to one of the approved housing counseling agencies a "Certificate of Disability" completed by a health, mental health, or disability professional). All borrowers must meet program eligibility guidelines and the loan must conform to all underwriting criteria. Cosigners: Not permitted. Eligible Jurisdictions: Available statewide in priority funding areas only. Homebuyer Counseling: A home ownership counseling certificate must be received prior to execution of a contract of sale for properties that will be purchased under this program (contracts of sale that are executed prior to completion of homeownership counseling will not be eligible). Home Inspection: Required. Annual Percentage Rate: 10.25%, reduced to a rate between 0% - 5% (determined by affordability) so long as household income does not exceed Maximum Current Annual Household Income; Borrower must respond to income monitoring during the term of the loan; rate may increase after closing if Borrower’s household income exceeds Maximum Income Limit. Maximum Current AnnualHousehold Income: The total combined rate of all members of the household must be below $36,795. Maximum Purchase Price: $100,000 Disabilities Highlight Sheet Page 2. May 18, 2000

Maximum First Mortgage Amount: $100,000 (based on lesser of purchase price or appraised value + eligible closing costs) Ratios: The maximum acceptable underwriting ratios are 32% and 40% on the front and back end, respectively. Credit: Flexible credit standards allow for consideration of six months previous credit history (with limited exceptions). Borrowers having "no credit history" are not eligible. However, acceptable forms of alternate credit include rental references; automobile insurance payments; life insurance payments; utility payments, etc. Term: 30 years (up to 40 years determined by affordability) Points: Not applicable. Processing Fee: $600.00 (may be financed in first mortgage) Minimum Cash Contribution: $500.00 (entire amount can be gifted) Mortgage Insurance/Guarantee: Not required. ______________________________________________________________________________

PARRIS N. GLENDENING, Governor                                RAYMOND A. SKINNER, Secretary

The Maryland Department of Housing and Community Development pledges to foster the letter and spirit of the law for achieving equal housing opportunity in Maryland.

http://www.dhcd.state.md.us/Disablhs.doc  05/18/00 STEPS TO ACCESSING STATE DISABILITIES MORTGAGE PRODUCT

STEP 1: CALL THE MARYLAND CENTER FOR COMMUNITY DEVELOPMENT (MCCD) HOMEOWNERSHIP HOTLINE AT 1-888-949-6677, TO BE LINKED WITH A HOUSING COUNSELING AGENCY IN THE AREA IN WHICH YOU ARE LOOKING TO PURCHASE YOUR HOME.

STEP 2: ATTEND ONE-ON-ONE HOMEOWNERSHIP COUNSELING SESSIONS TO RECEIVE EDUCATION ON THE HOMEBUYING PROCESS. YOU SHOULD ALSO RECEIVE INFORMATION ON OTHER PRODUCTS AND PROGRAMS THAT MAY BE AVAILABLE TO YOU. ONCE YOU HAVE COMPLETED HOUSING COUNSELING YOU SHOULD RECEIVE A CERTIFICATE OR LETTER OF COMPLETION FROM YOUR COUNSELOR.

STEP 3: AFTER COMPLETING HOMEOWNERSHIP COUNSELING AND MEETING THE QUALIFICATIONS FOR THE STATE DISABILITIES MORTGAGE PRODUCT, YOUR COUNSELOR WILL THEN LINK YOU WITH A STATE ASSIGNED LOAN PACKAGING AGENCY TO HAVE YOUR APPLICATION PROCESSED. AT THIS POINT, YOU WILL ALSO WANT TO BE WORKING WITH A REALTOR TO LOCATE A HOME.

STEP 4: ONCE YOUR LOAN APPLICATION HAS BEEN PACKAGED BY THE LOAN PROCESSOR, IT IS THEN DELIVERED TO STATE UNDERWRITERS FOR APPROVAL OR DENIAL. ONCE THE STATE UNDERWRITERS RECEIVE YOUR APPLICATION PACKAGE, THE REVIEW PROCESS MAY TAKE ANYWHERE FROM 60-90 DAYS.

NOTE: THIS IS A VERY TIME INTENSIVE PROCESS AND NOT A GOOD OPTION FOR THOSE IN NEED OF IMMEDIATE HOUSING SITUATIONS.

Underwriting Guidelines

Disability Hotline — 410-514-7513 or 7514

If borrowers will have less than 2 months PITI in reserves after closing, the State will pay for the appraisal and home inspection.

No fee for the mortgage credit report.

The interest rate can only be adjusted if the front ration exceeds 32%. We can no longer lower the interest rate because of debts. If the back ratio is more than 40% and front ratio is 32% or less, the client is not eligible for this loan.

The borrower must wait one year after a bankruptcy is discharged.

The borrower must show six months of cleared credit after resolving open collecitons, judgements, etc. If delinquent account is an isolated situation, and all other credit is good, the borrower may be eligible for the financing immediately after the debt is paid in full.

All qualifying income should continue for a minimum of three years.

All income that is expected to continue for another 12 months is considered when determining eligibility.

All borrowers must have a minimum of one-year employment.

The underwriters will consider any open account that is being paid by another party, if they can document the payments. Program for Individuals with Disabilities

The Program for individuals with Disabilities is funded through the State of Maryland’s Department of Housing and Community Development. Although this program has made purchasing ah ome possible for those who may otherwise not be in a position to buy, it is a difficult and time-consuming process. I believe that because this loan product is probably one of the most high-risk loans on the market today, the underwriting is extremely conservative.

The major problems we have encountered are related to credit issues or the lack of credit. Borrowers must be able to demonstrate the ability to repay monthly obligations as agreed. The lender wants to see twelve months of good credit and evidence that all credit concerns are in the past. If the borrower does not have a credit history, the borrower must produce other documentation to support the credit portion of the application.

The other concern regarding this program is the time involved to close the deal. To assist you in preparing both seller and buyer for the program, I have outlined the process and estimated the time needed to complete each task.

– Application & loan processing – 3 - 4 weeks – Loan underwriting - 3 - 5 weeks – Commitment letter mailed and returned – 1 week – Legal instructions sent to title company – 1 week – Title work returned to the State – 1 week – State’s review and approval – 1 week – Check ordered and delivered – 5 days

It is everyone’s intention to settle each loan within 90 days of the contract date. However, most settlements occur within 120 days.

To expedite the processing of the loan package, the following items are needed at application:

– Application fee of $353.00 to pay for the appraisal and credit report – W-2 forms and tax returns for the past 3 years (if applicable) – Bank statements for the past 2 months – Name and address for landlord and employer for the past two years – Verification of other income (award letters, statements, etc.) – Contracts and addendums

Please contact Denise Hairston at 410-235-5770, ext. 220 should you have any questions or concerns.