The following are commonly asked questions regarding the Chenoa Fund, an affordable housing program provided through CBC Mortgage Agency, an FHA approved, federally chartered government agency.
- What is the Chenoa Fund?
- Does Chenoa Fund provide homebuyer education/counseling?
- Does Chenoa Fund offer any other programs?
- What kind of support do borrowers receive when using the Chenoa Fund?
- Why is homeownership important?
- What difference can homeownership really make to the Chenoa Fund borrower?
- Predictable monthly housing payments. Renters experience an average of 3.5% increase in rent each year. Landlords can raise rent whenever a lease expires. It’s not uncommon for renters to be priced out of rentals. As a homebuyer, you are able to secure a predictable mortgage payment (i.e., principle and interest) for up to 30 years. The principal payment builds equity.
- Savings and Equity. Most homeowners are more able to accumulate savings that are available for family emergencies to saving for a child’s education and ensuring a secure retirement. When you own your home, chances are your equity will grow over time. Conversely, families forced to sink a large proportion of their income into annually increasing rents, struggle to build savings, a reality that leaves many in a precarious financial situation.
- Tax benefits. Even with recent changes in tax laws, interest from a home mortgage is still deductible for the vast majority of new homeowners.
- Ability to make the home your own. As a homeowner, you are able to make the home uniquely yours. Paint a wall, change the carpet, add a cabinet, hang a picture where you want. With rentals, it is at the discretion of the landlord of what you can and can’t do.
- More affordable monthly payments. According to a 2017 RealtyTrac1 study, in 66% of the markets studied, it is more affordable to buy than to rent. Sure, there’s the upfront cost of the down payment and closing costs, but Chenoa Fund can help with the down payment, while a seller of a home can help with the closing costs.
- Community connections. When you own a home, you are more likely to become invested in the community, caring about how your taxes are invested in neighborhoods, schools and organizations. You plant roots, make friends, and share experiences cheering for your child’s teams or simply talking with your neighbor about the simple pleasures of the day. This sense of community results in healthier children, lower crime, and improved neighborhoods.
- Are there social benefits that come from owning a home?
- Homeowners are generally in a better health condition than those of renters.
- Increases in housing wealth were associated with better health outcomes for homeowners.
- Low-income people who recently became homeowners reported higher life satisfaction, higher self-esteem, and higher perceived control over their lives. For example, homeowners are more likely to believe that they can do things as well as anyone else, and they report higher self-ratings on their physical health even after allowing for age and socioeconomic factors.
Renters who become homeowners not only experience a significant increase in housing satisfaction but also obtain a higher satisfaction even in the same home in which they resided as renters.
- Social mobility variables, such as the family financial situation and housing tenure during childhood and adulthood, impacted one’s self-rated health.
- Homeowners have a significant effect on their children’s success. The decision to stay in school by teenage students is higher for those raised by home-owning parents compared to those in renter households.
- Students from low- and middle-income families are much more likely to enroll in college when their families experienced gains in housing wealth.
- What is the state of homeownership in our country today?
- How is Chenoa Fund connected with the Cedar Band of Paiute Indians?
- Is CBC Mortgage Agency (CBCMA) accountable to FHA?
- Does the Tribe benefit from these companies?
- How does the Chenoa Fund help buyers overcome the barrier of homeownership?
- Why can’t people just save for a down-payment and wait to buy?
- Is down-payment assistance a responsible option for homeownership?
- Is down-payment assistance risky?
- What does CBCMA offer which is different and unique?
- Can you provide an overview of the Chenoa Fund programs?
- Rate Advantage
- DPA Edge Repayable Second
- DPA Edge Forgivable Soft Second
- Minimum FICO 640
- Debt-to-Income ratio per AUS findings, not to exceed 50%
- At least one of the borrowers must be a first-time home owner
- Home must be located in a low-income census tract, otherwise borrowers must not exceed 100% of the area median income (AMI)
- One of the loan applicants must complete an approved homeowner education course
- Are Chenoa Fund loans seller funded?
- What is the quality of the Chenoa Fund loans?
Chenoa Fund is an affordable housing program provided by CBC Mortgage Agency (CBCMA), a federally chartered governmental entity. Our programs are designed to increase access to homeownership for credit-worthy families.
It’s our core belief that everyone in America deserves access to affordable housing and it’s our mission to help make that happen. We provide tools that open doors to home ownership for individuals who have the income and credit history to afford a home, but may lack the ability to accumulate a down-payment. CBCMA partners with reputable mortgage lenders on a correspondent basis to provide down payment assistance for qualified home buyers in the form of second mortgages.
Home ownership isn’t for everyone—but housing is. While we have minimum credit scores and debt/income ratio restrictions that may put some borrowers out of the reach of our direct assistance. We believe that by assisting credit-worthy families to overcome barriers, we can reduce the competition for “rental” housing, which in turn helps to reduce its cost and increase its availability for those we cannot assist directly.
The Chenoa Fund has served the U.S. first-time homebuyer market in a significant way, having completed more than 10,000 mortgage transactions since 2013.
A leading non-profit homebuyer counseling agency based in Baltimore, MD, known as Hope Loan Port (HLP.org) works closely with CBC Mortgage Agency on a QA and Homebuyer Education initiative. HLP provides financial education for first-time homebuyers receiving Chenoa DPA funds, to ensure new homeowners understand the importance of making their mortgage payments on time. This education component is part of an overall lending strategy developed by HLP to help CBC’s borrowers sustain homeownership, while simultaneously improving loan performance measures in an effort to maintain the financial soundness of the FHA insurance program.
The HLP/CBC outreach and education program engages all new CBC homeowners each month during the first year of homeownership. Each homeowner receives financial advice from a HUD-approved nonprofit housing counselor targeted to their specific needs, with the goal of helping them make their mortgage payments on time. The counselor will also teach customers how to build a budget, save money for home repairs and other steps needed to maintain responsible homeownership.
HLP also counsels with all borrowers with a credit score less than 640 prior to purchase to ensure they are prepared for the challenges of homeownership
Chenoa Fund DPA program is not the only offering available by CBC Mortgage Agency (CBCMA). While Chenoa Fund helps lenders meet the needs of the low-to-moderate income segment in their communities, and serves the first-time buyer market, CBC also offers another innovative solution designed to help banks meet CRA credit requirements.
CBCMA offers a web-based marketplace known as the CRA Note Exchange. The CRA Note Exchange facilitates the sale of second mortgage loans, created to provide down payment assistance, to depository institutions seeking to augment their CRA loan portfolio. The CRA Note Exchange is open to all providers of down payment assistance, including State HFA’s who seek liquidity for their second mortgage paper. This solution creates a secondary market for down payment assistance loans, which may enable lenders to reduce costs to the consumer.
Depositories, or buyers of the CRA-eligible paper, may access the marketplace through the portal, CRANoteExchange.com. The site is searchable by census tract and other criteria relevant to a lender’s CRA performance and is intended as a portal for all holders of CRA-eligible notes to create liquidity.
This is a first of-its-kind program offering innovation to the industry, opening new opportunities for banks in need of CRA credits.
As a governmental entity, CBCMA is invested in the success of the borrowers utilizing its Chenoa Fund program. CBCMA takes great care in not just making sure that borrowers can qualify for a home, but that they become successful long-term homeowners. Borrower’s needing extra support receive pre-purchase counseling and all borrowers are given outreach and counseling for the first 12 months after the purchase of their new home to help them to successfully navigate the challenges of owning a home, many for the first time.
Forbes1 has reported that only 61.3% of U.S. households were homeowners. The National Association of Realtors2 survey showed that 87% of those surveyed said that homeownership is an essential part of the American dream. Eighty percent of today’s millennials who are renting now want to buy a home.
That said, there is an acute shortage of affordable homes in the U.S. which will continue over the coming year, according to a majority of property market analysts polled by Reuters. The shortage is driving prices up faster than inflation and wage growth. Annual average earnings growth has remained below 3 percent even as house pricing rises have averaged more than 5 percent over the last few years. The prices of homes are exceeding the ability of many first-time homebuyers to save enough for the down to purchase their American Dream. This economic gap is real and can delay the purchase of a home by two decades. Only 33% of millennials will be able to save for a new home in the next five years. That is dramatically different than it looked for their parents and grandparents.
It’s no secret that the differences between buying and renting are massive. Per Forbes1, the Federal Reserve in 2013, a typical homeowner’s net worth was $195,400, while that of renters was $5,400. Conservative projections show a homeowner’s net worth growing to $225,000 to $230,000 with renters declining to $5,000. That means that a typical homeowner will be ahead of a typical renter by a multiple of 45 on a lifetime financial achievement scale.
Most American homeowners who buy a starter home will sell and trade up after 7-10 years. For empty nesters, it may mean downsizing. Homeowners are likely to purchase multiple homes. With each sale, homeowners usually enjoy improving equity throughout a lifetime. With home sales and purchase transactions, there are additional economic expenditures which range from lawn care to home remodeling, new furniture to moving expenses, which contribute to the economic development of their communities.
1Forbes: Why Homeownership Matters, August 12, 2016
2NAR: First-time Buyers Stifled by Low Supply, Affordability: 2017 Buyer and Seller Survey
As a homeowner, you may experience benefits such as:
1Attom Data Solutions: Buying More Affordable than Renting in 66 Percent of U.S. Housing Markets
Yes. In 2017 the National Association of Realtors 1 released a study entitled, “Social Benefits of Homeownership and Stable Housing,” findings revealed that:
1 National Association of Realtors: Social Benefits of Homeownership and Stable Housing, November 17, 2017
Unfortunately, homeownership rates fell precipitously over the last ten years, and the decline was steepest among minority households, young adults and single-parent households. Overall, the national homeownership rate dropped from a peak of 69% in 2004 to just over 63% in 2016. One key factor was the loss of 9.4 million homes in the foreclosure crisis from 2007 through 2015. Following the crisis, many lenders dramatically tightened access to safe and affordable mortgages, restricting households with moderate credit scores from buying homes. Another key factor influencing lower homeownership rates has been the rise in student debt, which has eroded the home-buying power of young people. Minorities are hardest hit, with homeownership rates significantly lower than the majority population, which leads to increased wealth disparity. We aim to reverse these trends by lifting minority communities out of poverty into homeownership.
Chenoa Fund is operated by the CBC Mortgage Agency, which is a subsidiary of the Cedar Band Corporation. Cedar Band Corporation is federally chartered and wholly owned by the Cedar Band of Paiutes, a constituent band of the Paiute Tribe of Utah.
CBCMA is accountable to FHA. FHA has very strict guidelines under which down-payment assistance programs are administered. CBCMA has the responsibility to carefully review every loan and take every step to make sure the borrower meets guidelines.
Not everyone will qualify for down-payment assistance. Generally, approval is based on income, credit score and how much home the borrower is buying. In some cases, homebuyers must attend special training where they learn about the mortgage process and the financial responsibilities that go along with owning a home. All borrowers receive post-purchase counseling to ensure the transition to homeownership is successful.
CBCMA ensures that the borrowers fit within acceptable levels of loan performance and take the necessary steps to mitigate undue risk to the FHA insurance pool.
In addition, CBCMA has a responsibility to the investors who purchase the loans. If the loans do meet predetermined criteria, investors will return the loan to CBCMA.
Definitely. Cedar Band Corporation is an important source of revenue for the Cedar Band tribal government, allowing it to perform essential governmental functions. Because of the Cedar Band Corporation, the Cedar Band is able to provide a wide range of socioeconomic programs such as anti-drug education programs in schools, elder care programs, scholarships to help with college tuition, housing and books, support for tribal members’ medical and dental care, grants to help tribal members purchase homes, and job opportunities for tribal members.
Under our program, buyers who meet our eligibility criteria may receive a second mortgage to cover their 3.5% minimum down payment requirement when purchasing an FHA-insured home or the 3% minimum down payment required on a conventional loan. We believe that by helping responsible home buyers meet that minimum investment required for a mortgage, we create healthier communities by improving the balance between homeownership and other housing types.
Most first-time buyers manage to purchase a home by saving for a down payment over a period of years, or perhaps receiving gifts from parents or other family members. But increasing home prices and stagnant or low wages can make this process difficult, and many Americans lack the earning power to reach that home buying mark. As a result, they have no way to break into homeownership and reap its economic benefits for themselves and for their children.
Studies reveal that many would-be buyers have the income and credit history to qualify for a loan, but they lack sufficient savings for a down payment. This barrier is often the most significant economic obstacle for families seeking to transition from renting to sustainable homeownership, and the consistent availability of down payment assistance programs can make all the difference for more U.S. families.
Homeownership rates have decreased over the last ten years, and this decline was most dramatic among minority households, millennials and single-parent households. The need for down payment assistance is greater than ever.
We believe in helping people buy now (if they credit qualify), so they can begin building up equity today.
In a 2017 survey taken by the Urban Institute and the Federal Reserve1 53 percent of renters stated that they continued to rent because of their inability to afford a down-payment.
Another Urban Institute survey, conducted with Fannie Mae reports that down-payment assistance and lower down payment mortgages have become increasingly critical to the health of the housing market. Minorities are especially in need of assistance, as many do not have family who can help them buy their first home. Without assistance, most will not become homeowners.
The Chenoa Fund is a down-payment assistance program provided by CBC Mortgage Agency. Under the program, buyers who meet certain eligibility criteria may receive a second mortgage to cover the 3.5% minimum down payment requirement when purchasing an FHA-insured or conventional loan. By helping home buyers responsibly meet that minimum investment required for a mortgage, we create healthier communities by improving the balance between homeownership and other housing types. Homeownership is the number one creator of household wealth.
CBCMA is accountable to FHA. FHA has strict guidelines under which down-payment assistance programs are administered. CBCMA carefully reviews every loan to ensure borrower success. All borrowers receive post-purchase counseling to ensure the transition to homeownership is successful.
1NCSHA Blog: Urban Institute Report Touts Importance of HFA Down Payment Assistance Programs, November 17, 2017.
Not when done correctly. The CBC Mortgage Agency, which offers the Chenoa Fund program, is an approved government lender and strictly adheres to all FHA guidelines. The Chenoa Fund also seeks to work with borrowers who are qualified and capable of undertaking homeownership. For one thing, borrowers must meet our minimum credit score, which is higher than the credit score allowed by FHA. In an effort to minimize risk to the FHA insurance fund, we also provide pre-purchase homebuyer education to those who need it and education and counseling for all borrowers during their first year of homeownership. In addition, because borrowers who use our program are able to keep what savings they have, they are better able to handle unexpected costs during the critical first years of homeownership.
CBCMA offers one set of more flexible guidelines across the nation, reducing the burden lenders currently face by administering multiple programs.
Generally speaking, better pricing, allowing better terms to the borrower. We have the ability to help more borrowers due to income, geographic, 1st time homebuyer, and other restrictions in place with most programs.
The Chenoa Fund offers three second lien products that are issued in conjunction with first mortgages that are either FHA-insured or conventional loans. They include:
Chenoa Fund Down Payment Assistance 2nd liens can be used in conjunction with either an FHA-insured 1st mortgage or conventional 1st mortgage financing so long as the first mortgage adheres to applicable underwriting guidelines.
CBCMA provides a second mortgage in an amount of 3.5% to meet the down payment requirement and assist with some of the closing costs for borrowers that qualify for a 97% LTV Conventional Loan. Borrowers receiving this assistance must meet the guidelines outlined for the conventional standard 97% LTV loans or HomeReady®1* program.
*Neither the Chenoa Fund, CBCMA nor any of their products are approved by or affiliated with Fannie Mae. It is the originating lender’s responsibility to ensure that the use of a CBCMA second mortgage in conjunction with the originating lender’s 1st mortgage are compliant with Fannie Mae requirements.
CBCMA can only offer CBCMA 2nd mortgages in conjunction with a lender’s conventional 1st. mortgage loan when the lender is FNMA approved and has the ability to run DU®2.
In order to qualify for a CBCMA 2nd mortgage with conventional 1st mortgage financing, the borrower must meet program criteria (for the 2nd lien) including the following:
Additional qualifications for the conventional standard 97% LTV program:
*There are no income limits under the conventional standard 97% LTV program
Additional qualifications for the HomeReady®3 program
1HomeReady® is a registered trademark of Fannie Mae.
2DU® is a registered trademark of Fannie Mae.
3CBCMA’s correspondent guidelines include additional overlays to the HomeReady® program.
No. Chenoa Fund DPA programs are NOT seller-funded. Chenoa Fund DPA’s most popular program provides second mortgages, which may be forgivable depending on the borrower’s income. If the borrower’s income exceeds 115% of median income for the area, the second mortgage has repayment terms. If the borrower’s income level is below the area’s median income benchmark, the second mortgage is forgivable and does not need to be repaid as long as the borrower makes on-time first mortgage payments for 36 months.
CBC Mortgage Agency adheres to FHA underwriting guidelines to ensure all borrowers are capable of undertaking the financial commitment of homeownership. Borrowers must have a minimum credit score of 620.
If you would like more information about this program, please contact our program development team.
CBCMA Does Not Originate Mortgage Loans. This is not an offer to lend money nor a solicitation of a mortgage application by CBCMA.