All policy changes and updates are referenced below to the appropriate section of the CLG. These policy changes are effective 08/25/2021 unless otherwise noted.
To review the program guidelines changes made August 12, 2021, or earlier, please follow this link to the archived Correspondent Lending Guides.
These updates apply to everyone using the Chenoa Fund program—correspondents and TPO.
Update to Chenoa Fund™ DPA for Fannie Mae™ Conventional Loans
To-date, Chenoa Fund’s down payment assistance for Fannie Mae™ Standard Conventional (90–95% LTV) loans and Conventional 97 loans has been referred to as the “Conventional 97” product. To clarify this product’s use, and to alleviate correspondent confusion, this Chenoa Fund product has been renamed the Standard Conventional. The Guidelines have been clarified to reflect that this DPA product applies to both the Fannie Mae™ Standard Conventional (90–95% LTV) loan type and the Conventional 97 loan type.
This change affects the following sections:
5.2 (Conventional Offerings):
CBC Mortgage Agency offers down payment assistance for 90–97% LTV conventional mortgage financing under Fannie Mae’s HomeReady® program for low- to moderate-income borrowers. For those borrowers who do not fit the HomeReady® criteria, CBC Mortgage Agency also offers down payment assistance for the Fannie Mae™ Standard Conventional (90–95% LTV) and Conventional 97 programs.
Chenoa Fund™ down payment assistance is provided in the form of a second mortgage under Fannie Mae™’s Community Second® program for HomeReady®️, Standard Conventional (90–95% LTV), and Conventional 97 loans. (The HomeReady®️ first mortgage is a registered trademark of Fannie Mae™.) Conventional second mortgages may be 3% or 5% of the lower of the purchase price or appraised value, regardless of the actual minimum down payment required and regardless of which first mortgage the DPA is paired with. Chenoa Fund™ down payment assistance may apply toward the down payment, closing costs, or prepaid items, or any combination of the three, regardless of the actual down payment amount required. The rate on the second mortgage is 2% higher than the rate on the first mortgage. The term is ten (10) years.
Except for overlays noted under the Product Matrix or within this Correspondent Lending Guide (CLG), adhere to Fannie Mae’s Selling Guide and all DU® findings for borrower underwriting and property eligibility requirements.
5.4 (Product Comparisons):
- All Conventional Programs—Applicable to all 2nd mortgages paired with Fannie Mae™ conventional mortgages (HomeReady®, Standard Conventional [90–95% LTV], and Conventional 97)
- Standard Conventional—Applicable to Chenoa Fund’s 2nd mortgage that is attached to either a Standard Conventional (90–95% LTV) or Conventional 97 1st mortgage
5.5 (Program Notes and Disclaimers):
Standard Conventional: Neither CBCMA nor Chenoa Fund™ and any of its products are approved by or affiliated with Fannie Mae™. Originating lenders are responsible for ensuring that their use of CBCMA second mortgages and conventional first mortgages is compliant with Fannie Mae’s requirements (for the Standard Conventional [90–95% LTV] or Conventional 97 first mortgage, respectively). All other posted program notes or guidelines are overlays of CBC Mortgage Agency and Chenoa Fund™.
5.6 (Brief Description of DPA Product Types):
All Conventional Programs: Down payment assistance in the form of a 10-year fixed rate mortgage with an interest rate 2% higher than the first mortgage. Please refer to our daily rate sheet for interest rates on FNMA first mortgages. Chenoa Fund™ program overlays are not affiliated with Fannie Mae™. Offers 3% or 5% assistance based on the lower of the sales price or appraised value.
Down payment assistance product overlays for the HomeReady®️ first mortgage are referred to as “HomeReady®️” in these guidelines. Down payment assistance overlays for both the Standard Conventional (90–95% LTV) and Conventional 97 first mortgages are referred to as “Standard Conventional.”
5.7 (Borrower Income Limits)
Standard Conventional: Per FNMA guidelines.
5.20 (Homeownership Education):
Standard Conventional: CBCMA does not require homebuyer education on this second mortgage product. However, Fannie Mae™ requires homebuyer education on most loans with an LTV of 95% or greater. Even though CBCMA may not require it, you will need to include the completion certificate demonstrating that at least one of your buyers completed an acceptable course if your AUS approval requires it.
5.25 (Non-occupant Borrowers):
Standard Conventional: Not allowed.
5.30 (Mortgage Insurance [MI] Coverage)
Standard Conventional: Per FNMA guidelines. The standard MI coverage requirement is 35% for LTV ratios of 95.01–97.00. Minimum MI coverage may be used, subject to LLPA for Minimum MI.
Standard Conventional: DU®/DO only.
5.34.13 (Additional Properties Owned):
Standard Conventional: Not allowed.
Section 5.12 (Undisclosed Debt Monitoring and Soft-pull Credit Refreshes) had the following paragraph added to it:
All Programs: In community property states, a soft-pull credit refresh will be required for non-borrowing spouses with debt consideration.
Section 5.38.2 (North Carolina) was updated to better reflect state law:
All Programs: In North Carolina, per state law, origination fees are capped at 1% for loans under $300,000. For loans equal to or above $300,000, lenders may exceed the 1.5% origination fee cap if there are no fees charged in the origination section of the CD (Section A) other than the origination fee. Loans must comply with QM guidelines (i.e. the 3% points and fees test).
Section 7.1.1 (Conventional First Mortgage Pre-Registration) has been updated to clarify that the Special Feature Codes will not be needed on standard Fannie Mae™ financing (90–95% LTV):
Under “Loan Information,” the following Special Feature Code codes should be entered: 127, 118. This does not apply to the Fannie Mae™ Standard Conventional (90–95% LTV) first mortgage.
At this time CBCMA is not approved for HFA products. We cannot accept loans with the special product code “HFA Preferred.” The down payment second mortgage should be run as a Community Second™.
It has been clarified that the life of loan flood certificate for each loan file must be ordered from ServiceLink or CoreLogic. A $5 fee to pull a flood cert will be assessed at the time of loan purchase if a flood certificate is not included in a file or if the flood cert is not from ServiceLink or CoreLogic. This affects the following sections:
5.34.4 (Flood Certificate):
All Programs: Only a life of the loan flood certification from CoreLogic or ServiceLink is acceptable. If the correct flood certificate is not present in the loan file, a CoreLogic flood certificate will be ordered and a $5 fee will be assessed on the Purchase Advice.
7.22 (Documentation—General Requirements):
- A Life of Loan flood certificate
- Life of the loan flood certificates must be provided by CoreLogic or ServiceLink
- If a life of the loan flood cert is not provided, or if the flood cert provided is not life of the loan, or if the flood cert provided comes from a vendor other than CoreLogic or ServiceLink, a $5 fee will be assessed at time of loan purchase and a qualifying flood cert will be ordered.