Lender Frequently Asked Questions

Chenoa Fund™ is a national down payment assistance program provided by CBC Mortgage Agency, a federally chartered governmental entity. The Chenoa Fund™ program is designed to increase access to homeownership for creditworthy families.

At CBC Mortgage Agency, 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 the 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. CBC Mortgage Agency partners with reputable mortgage lenders on a correspondent basis to provide down payment assistance for qualified homebuyers in the form of second mortgages.

Homeownership isn’t for everyone—but housing is. While we have minimum credit scores and debt-to-income ratio restrictions that may put some borrowers out of the reach of our direct assistance, we believe that we can reduce the competition for rental housing by assisting creditworthy families to overcome barriers, which in turn helps to reduce the cost of renting and increase its availability for those we cannot assist directly.

The Chenoa Fund™ program has served the U.S. first-time homebuyer market in a significant way, having completed more than 40,000 mortgage transactions since 2013.

Under the Chenoa Fund™ 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 FNMA conventional loan. We believe that by helping responsible homebuyers 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 by 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% 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.

Chenoa Fund™ is a down payment assistance program provided by CBC Mortgage Agency. Under this program, buyers who meet certain eligibility criteria may receive a second mortgage to cover the minimum down payment requirement when purchasing an FHA-insured or FNMA conventional loan. By helping homebuyers responsibly meet the 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.

CBC Mortgage Agency is accountable to FHA. FHA has strict guidelines under which down payment assistance programs are administered. CBC Mortgage Agency carefully reviews every loan to ensure borrower success. All borrowers receive post-purchase counseling to ensure the transition to homeownership is successful.

¹ NCSHA Blog: Urban Institute Report Touts Importance of HFA Down Payment Assistance Programs, November 17, 2017.

Not when done correctly (although there is always risk involved when creating a loan). CBC Mortgage Agency, the provider of the Chenoa Fund™ program, is an approved governmental lender and strictly adheres to all FHA guidelines. The Chenoa Fund™ program is designed to assist borrowers who are qualified and capable of undertaking homeownership. For one thing, borrowers must meet our minimum credit score requirements, which are 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 eighteen months of homeownership. In addition, borrowers who use our program are better able to handle unexpected costs during the critical first years of homeownership because they are able to keep what savings they have.

Through the Chenoa Fund™ program, CBC Mortgage Agency offers one set of flexible guidelines across the nation, reducing the burden lenders currently face by administering multiple programs.

CBC Mortgage Agency also offers, generally speaking, better pricing, allowing better terms to the borrower. In addition, we have the ability to help more borrowers due to flexible income, geographic, 1st time homebuyer, and other restrictions in place with most programs.

Chenoa Fund DPA For FHA loans offers one product with a repayable and forgivable option. For all products the borrower will need to have a credit score of 600 or higher,

Repayable: This loan has a 10-year term with an interest rate matching the interest rate on the FHA first mortgage. This loan does require a monthly payment on the second mortgage.

Forgivable: This loan has a 30-year term with an interest rate of 0% (0% APR). This loan does not require a monthly payment on the second mortgage. Forgiveness is determined by the DPA amount:

• 3.5%: Forgivable after 36 consecutive, on-time payments on the FHA first mortgage. This forgiveness period resets if the borrower makes a late payment, but the borrower has the full 30-year term to meet the forgiveness conditions. This loan may also be forgiven at the end of the 30-year term if the previous forgiveness condition has not been met.
• 5%: Forgivable after the initial 120 consecutive, on-time payments on the FHA first mortgage. This forgiveness period is terminated if the borrower has a payment that is 60+ days late, but the loan will remain with a 30-year term, 0% interest rate (0% APR), and no monthly payment.

Both forgivable loan options may be forgiven at the end of the 30-year term if the previous forgiveness conditions have not been met, even if the borrower made late payments on the FHA first mortgage. The loan will need to be repaid upon transfer of ownership or refinance if it is not already forgiven.

No. Chenoa Fund™ down payment assistance is funded by CBC Mortgage Agency.

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 600 to qualify for several Chenoa Fund™ products, and other products have minimum requirements of 620 and 640.

A leading non-profit homebuyer counseling agency based in Houston, TX, known as Money Management International (welcome.moneymanagement.org) works closely with CBC Mortgage Agency on a QA and Homebuyer Education initiative. Money Management International (MMI) provides financial education for first-time homebuyers receiving Chenoa Fund™ down payment assistance to ensure that new homeowners understand the importance of making their mortgage payments on time. This education component is part of an overall lending strategy developed by MMI to help CBC Mortgage Agency’s borrowers sustain homeownership while simultaneously improving loan performance measures in an effort to maintain the financial soundness of the FHA insurance program.

The MMI/ CBC Mortgage Agency outreach and education program engages all new CBC Mortgage Agency homeowners each month during the first eighteen months of homeownership. Each homeowner receives financial advice targeted to their specific needs from a HUD-approved nonprofit housing counselor 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.

MMI also may counsel with borrowers with a credit score lower than 640 prior to purchase to ensure they are prepared for the challenges of homeownership. Borrowers with a FICO score lower than 620 are required to take an MMI counseling course prior to closing.

The Chenoa Fund™ down payment assistance program is not the only offering available from CBC Mortgage Agency. While the Chenoa Fund™ program helps lenders meet the needs of the low- to moderate-income segment in their communities and serves the first-time buyer market, CBC Mortgage Agency also offers another innovative solution designed to help banks meet CRA credit requirements.

CBC Mortgage Agency 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 HFAs, 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, CBC Mortgage Agency is invested in the success of the borrowers utilizing the Chenoa Fund™ program. CBC Mortgage Agency takes great care in not just making sure that borrowers can qualify for a home but that they become successful long-term homeowners. Borrowers needing extra support receive pre-purchase counseling and all borrowers are given outreach and counseling for the first 18 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. A National Association of Realtors² survey showed that 87% of those surveyed said that homeownership is an essential part of the American dream. 80% 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 Reuters³. The shortage is driving prices up faster than inflation and wage growth. Annual average earnings growth has remained below 3% 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, a typical homeowner’s net worth was $195,400 in 2013, 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. In addition, 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
³CNBC: US house prices are going to rise at twice the speed of inflation and pay: Reuters poll

Homeowners may experience benefits such as:

• 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. Homebuyers are able to secure a predictable mortgage payment (i.e., principal and interest) for up to 30 years. In addition, the principal payment builds equity.
• Savings and Equity. Most homeowners are better able to accumulate savings that will be available when needed, such as family emergencies, saving for a child’s education, and ensuring a secure retirement. When a homebuyer owns a home, chances are the homebuyer’s 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. Homebuyers should consult their investment advisor to determine whether there may be financial advantages for them.
• Tax benefits. Even with recent changes in tax laws, interest from a home mortgage is still deductible for the vast majority of new homeowners. Homebuyers should consult their tax professional to determine whether there may be tax benefits for them.
• Ability to make the home your own. Homeowners are able to make the home uniquely theirs. Paint a wall, change the carpet, add a cabinet, hang a picture where they want. With rentals, it is at the discretion of the landlord of what they 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 the Chenoa Fund™ program can help with the down payment (and a portion of the closing costs, in some instances), while a seller of a home may help with the closing costs.
• Community connections. Homebuyers are more likely to become invested in the community when they own the home, caring about how taxes are invested in neighborhoods, schools, and organizations. Homebuyers plant roots, make friends, and share experiences cheering for their children’s teams or simply talking with their neighbors about the simple pleasures of the day. This sense of community results in healthier children, lower crime, and improved neighborhoods.

¹Attom Data Solutions: Buying More Affordable than Renting in 66 Percent of U.S. Housing Markets

Yes. In 2017 the National Association of Realtors¹ released a study entitled, “Social Benefits of Homeownership and Stable Housing.” The findings revealed that:

• Homeowners are generally in better health than 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 previously 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.

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.

CBC Mortgage Agency is accountable to FHA. FHA has very strict guidelines under which down payment assistance programs are administered. CBC Mortgage Agency has the responsibility to carefully review every loan and take every step necessary 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.

CBC Mortgage Agency 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.

Definitely. The 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.

Note that we only require borrowers to receive HBE counseling through Money Management International if their FICO score is below 620, but for all other borrowers we will accept any HUD-approved pre-purchase counseling course to meet the homebuyer education requirement. Also note that we only require homebuyer education for borrowers with a FICO score lower than 640 and that are getting an FHA first mortgage. (Fannie Mae may require homeownership education for borrowers using a FNMA conventional loan program.)

The loan must first be registered in the Correspondent Lender Login. If you would like a step-by-step process on how to register a loan, please visit the Chenoa Fund Training Series, sub-topic Using the Lender Portal.

If you have questions regarding this registration process, please contact your account executive or email submissions@chenoafund.org.

How do I schedule my client’s required Chenoa Fund™ pre-purchase counseling session, as offered by Money Management International?

This course is only for borrowers and co-borrowers who have a FICO score of 600–639. (Borrowers are not required to use Money Management International unless their FICO score is below 620, but CBC Mortgage Agency will pay for the course if the course is through Money Management International and if the borrower has a FICO score of 600–639.)

It is recommended that you start working on this process at least 10 days before close, right after you soft pull the borrower’s credit report.

1. Before you can schedule a pre-purchase counseling session, you must register the loan in the Correspondent Lender Portal. More information on that process can be found in training the Chenoa Fund Training Series, sub-topic Using the Lender Portal
2. Once the loan is registered with CBC Mortgage Agency, you should secure a confirmation from CBC Mortgage Agency with a CBC Mortgage Agency loan number
3. You will then need to wait 24 hours to schedule an appointment as the registration makes its way over to Money Management International’s system
4. The client or loan officer may then schedule an appointment by going to this link
   1. A CBC Mortgage Agency loan number is necessary to schedule an appointment

If you have questions regarding this process, please contact your assigned account executive or email info@chenoafund.org.

When should I schedule my client’s required Chenoa Fund™ pre-purchase counseling session, as offered by Money Management International?

At the very latest, counseling should be scheduled and completed a minimum of three (3) days prior to closing. However, sometimes the schedule is so full that Money Management International may not have an opening for up to a week away; make sure you get your borrower scheduled as soon as possible after registration.

Immediate sessions by phone are not guaranteed due to call volume and scheduling conflicts.

It is the borrower and/or lender’s responsibility to schedule an appointment. Counselors do not schedule appointments for clients.

If you have questions regarding this process, please email your assigned account executive. If you don’t know your account executive, please reach out to info@chenoafund.org.

What should I expect from a Chenoa Fund™ pre-purchase counseling session, as offered by Money Management International?

The session is completed by phone and any borrowers or co-borrowers with a FICO score of 600–639 must be present.

The counselor will call the borrower for the scheduled appointment.

The counselor will complete the pre-purchase session and provide the required certificate.

If you are not able to find an appointment that meets your needs, or if you have questions regarding this process, please email info@chenoafund.org.