fhfc homebuyer tax credit program (mcc) - … partners/lenders... · fhfc homebuyer tax credit...

227 North Bronough Street, Suite 5000Tallahassee, Florida 32301

850.488.4197 • 850.488.9809 Fax

www.floridahousing.org

Comprehensive Lender Training for Loan Officers, Underwriters and Closers for the Florida Housing

Mortgage Credit Certificate Program

2017-2018

FHFC Homebuyer Tax Credit Program (MCC)

FHFC Homebuyer Tax Credit Program (MCC) 2017

We, at Florida Housing, have created this PDF training for you, the lender, to have a firm grasp on exactly what a Mortgage Credit Certificate is and the steps you take in originating an MCC with your first mortgage loan. Our team is dedicated to helping our lending partners in every way possible to ensure that each eligible Florida resident interested in the MCC program is able to receive it.

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The FHFC Homebuyer Tax Credit Program’s training is designed using a PDF format so that lenders may print the document and use continuously as a training aid. Please keep in mind that information may be updated as needed by Florida Housing Staff. All changes will be noted in the MCC Lender Guide.

Please allow 30-40 minutes to thoroughly review the material provided and to complete all requirements.

Today, you will …1) Review the 75 pages of PDF training materials to familiarize

yourself with the program and your role.2) Complete the required testing via the link provided on page

70. Results will be sent directly to Florida Housing for review.3) Upon completion of the testing, await confirmation from

Florida Housing regarding systems access prior to accessing the system. Please allow 24-48 hours for systems access to be finalized

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Training Agenda

What exactly is a Mortgage Credit CertificateYour role in the MCC Tax Credit Process

Resources and Need to Know InformationMCC Lender Quiz and User Registration

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What exactly is a Mortgage Credit Certificate?

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A Mortgage Credit Certificate (MCC) is a federal tax credit program which accompanies your lender first mortgage product. The Mortgage Credit Certificate is a tax “Credit” and not a tax

“Deduction” which results in a dollar for dollar tax benefit against the borrower liability.

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Will my borrower benefit from the MCC?

The MCC is a federal tax credit that borrowers claim when filing their annual taxes with the IRS. It is important to note that borrowers must have sufficient tax liability to claim the federal

credit.

Borrowers who do not have a sufficient tax liability would not claim the MCC tax credit annually.

Lenders are to look at each borrowers situation carefully to determine if the MCC will be a benefit. Using an MCC for a borrower with no tax liability will result in a “phantom income” and

would not assist in the borrower ability to repay.

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How to calculate the amount of MCC benefit?

The amount of the credit is determined by the loan amount as indicated below.

Lenders will multiply the credit rate by the mortgage interest paid by the borrower for that given tax year to determine the MCC Credit Amount. Florida Housing offers the lender a tool to

assist in calculating this amount.

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How to calculate the amount of MCC benefit?Example 1: Consider a borrower with a loan amount of $95,000

This borrower would receive the full $2,000 benefit in their federal tax returns towards their liability.

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There is no cap on the 20% credit rate. Borrowers who have a loan amount of greater than $200,000 receive a slightly greater benefit because of the lack of benefit cap.

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The Florida Housing MCC Tax Credit should not be confused with any of the below.

A down payment assistance program.A housing grant program.

A mortgage loan of any type.

Remember, the MCC is a federal tax credit.

Borrowers will claim the MCC when filing their federal tax returns on an annual basis by completing the IRS Tax Form 8396 with the assistance of their tax professional.

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What is the role of the Processor and Loan Officer?

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Processors/Loan Officers are responsible for verifying that the borrower is initially eligible for the Mortgage Credit Certificate Program.

Borrowers must meet 4 requirements in order to be eligible for the program.

1) Total Household Income must meet the program allowable limits.2) Property purchase price must meet the program allowable limits.

3) Borrowers must be First Time Home buyers. **4) Borrowers must complete HUD approved homebuyer education **

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MCC Program – Allowable Income Limits

The Florida Housing MCC Program maintains strict income limits which must be adhered to in determining borrower eligibility.

The income limits are considered the total gross annual household income.The limits for the MCC Program can be found on our webpage at

WWW.FloridaHousing.Org/MCC

Remember, this information should be verified as a first step.

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http://www.floridahousing.org/MCC



MCC Program – Purchase Price Limits

The Florida Housing MCC Program also maintains strict purchase price limits which must be adhered to in determining borrower eligibility.

The purchase price limit is the final acquisition amount and not the loan amount.

The purchase price limits for the MCC Program can be found on our webpage at WWW.FloridaHousing.Org/MCC

Remember, this information should be verified as a second step.

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MCC Program – First Time HomebuyersBorrowers looking to receive the Florida Housing MCC Tax Credit must be First Time

Homebuyers. The definition of a First Time Homebuyer is a person who has not owned and occupied their

primary residence within three (3) years of the projected closing date. Borrowers who may own investment properties are eligible for the program. This requirement is for borrowers and

spouses (if applicable).

** Exceptions to the First Time Homebuyer requirement are made for military veterans (with a valid DD-214) and those borrowers who may be looking to purchase a home located in a HUD

designated targeted area.

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MCC Program – First Time Homebuyers

Lenders are to review and provide the most recent three (3) years tax documents to ensure the borrowers first time homebuyer eligibility.

Borrowers must not have owned and occupied their primary residence within 3 years of the anticipated closing date.

Borrowers are allowed to have rental property or vacation homes.

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MCC Program – Targeted AreasOne of the exceptions to the MCC first time homebuyer rule is for those borrowers purchasing a

home in a targeted area. Targeted areas are neighborhoods or city blocks that HUD has designated for revitalization. Borrowers purchasing in these areas do not have to be first time homebuyers and are eligible for higher purchase price and household income requirements.

In order to determine if a property is designated as targeted, the lender will review the census tract data from the property appraisal and compare the number to the list of census tracts

provided on the Florida Housing webpage, lender guide or program Wizard.

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MCC Program – Homebuyer Education

Once it has been determined that your borrower is eligible to participate in the Florida Housing MCC Program, they will need to complete a HUD approved Homebuyer Education Course.

A list of approved Homebuyer Education Providers can be found on the WWW.HUD.GOV website as this list is not maintained by Florida Housing.

Borrowers may also choose to complete the Homebuyer Education Courses with approved mortgage insurance companies or online providers such as eHomeAmerica or MGIC. These educators may require additional fees.

The completion certificate for the education course must be provided by the borrower to the lender before the closing of the loan.

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http://www.hud.gov/



MCC Program – Using the MCC with other products.

Remember, the MCC is a federal tax credit that is attached to a qualified first mortgage product. Making sure that it is used correctly is vital in its approval and issuance.

Florida Housing MCC uses the same funding source as the government bond programs. As such, the MCC may never be used with any other Florida Housing government/military programs.

The Florida Housing MCC may be used in conjunction with all lender offered conventional and government products as well as the Florida Housing HFA Preferred/PLUS conventional products so long as you are adhering to the more stringent MCC income

requirements.

The MCC can also be used with other agency DPA and grant programs provided that you are following agency guidelines when doing so.

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MCC Program – New Construction.

Lenders may choose to pair the Florida Housing Mortgage Credit Certificate with new construction properties. Due to the extendedtimelines generally included with new construction homes, Processors and Loan Officers must reserve the MCC to as close to the closing

date as possible.Lenders must also then email Florida Housing at [email protected] so that the file may be documented. Failure to do so

may result in the timeline expiration and subsequent cancellation of the MCC reservation

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mailto:[email protected]



Once it has been determined that your borrower is eligible for the program, you will reserve the MCC for the borrower in the Florida Housing MCC reservation system.

Steps to accessing the reservation system are included towards the end of this training.

Keep in mind: Reserve the MCC for your borrower as close to the actual closing date as possible. This will ensure that your lending team can meet the program timelines required for issuance.

The Florida Housing MCC Program has a 60 day timeline.

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Processors/Loan Officers: Landing PageUpon logging in to the Florida Housing reservation system, you will be brought to a landing

page. From here you will be able to perform two very important functions.1) You will have the ability to create new reservations by selecting the applicable light gray

button to the far right of the page.2) You will have the ability to manage your individual/lender pipeline and keep up to date with

the status of your particular reservations.

Keep in mind: There is not an assumption of approval for the Florida Housing MCC Program. You will want to monitor this landing page to view the most current status of the MCC.

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Processors/Loan Officers: MCC Reservation StatusesIt is imperative that each Processor/Loan Officer monitor their reservation pipeline. Florida

Housing MCC reservations go through four total stages.

Reserved – Once the Processor/Loan Officer has reserved the MCC the status will appear as reservedUnderwriter Certified – Once the Underwriter has reviewed and certified the information presented the status will appear as underwriter certified. Florida Housing must receive the compliance file within 20 days of the underwriter certification date.Florida Housing Review Initiated – Once Florida Housing receives the compliance file from the closing team, the status will appear as Florida Housing Review Initiated.MCC Issued/Cancelled – Once the compliance review process has been completed by Florida Housing, the status will appear as MCC Issued or Cancelled. Files must be approved by day 60 of the reservation or risk cancellation.

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Processors/Loan Officers: Reserving the Mortgage Credit Certificate for you borrowerFlorida Housing has created an MCC reservation form which collects all of the required loan

information from the lender in which to provide your borrower this benefit.Do not attempt to complete this form until all loan data is available. Remember: The 60 day

timeline begins the day the reservation is made.The Florida Housing MCC reservation form will also serve as a confirmation form that you may

keep for your records to document that the MCC has been reserved.

Keep in mind: This is not a confirmation that the MCC has been approved or issued. This merely confirms that the reservation has been made.

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MCC Program 2017 – Reservation Form Example

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Quick Quiz: What determines the MCC Credit Rate?


What is the role of the Processor and Loan The loan amount determines what the MCC Credit

Rate will be for your borrower.

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Once the Processor/Loan Officer has completed the reservation by selecting the “reserve this loan” button at the bottom of the page, you will be brought to the borrower reservation page.

The reservation will be in the Underwriter Queue.

This reservation page allows the Processor/Loan Officer to print and review the Recapture Brochure and Reservation Form with the borrower. Forms such as the Tax Credit Worksheet

and Income Calculation Worksheet are made available as tools to assist the lender.

Loan Officers can also make changes to existing reservations by selecting the dark gray tab that reads “Edit Reservation”. Once edits are made, Loan Officers can resave the information and

regenerate forms as needed.

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MCC Program 2017 – Borrower Reservation Screen

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Processors/Loan Officers: Reissuing a Refinanced Loan with MCCEffective October 1, 2015, borrowers who have previously been issued a Florida Housing

Mortgage Credit Certificate can now maintain the certification in the event that they refinance their first mortgage loan.

This option is reserved for refinances only.There is a reissuance fee of $250 made payable to Florida Housing Finance Corp. which must

accompany the documents illustrated on the Refinance Checklist which will generate in the reservation forms field once reserved.

Please refer to the MCC Program Guide as to the very specific requirements that must be adhered to in order for the reissuance to be approved.

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MCC Program 2017 – Reservation Form Example

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Processors/Loan Officers: Reissuing a Refinanced Loan with MCCWhen reserving a reservation to reissue an existing MCC, the Processor/Loan Officer must have

the borrower original Mortgage Credit Certificate in hand. The reissuance can be correctly reserved by selecting the radio button that reads

“This is for a re-issue of an existing Certificate”Processors/Loan Officers will then be instructed to provide the previous reservation number

which they will pull directly from the borrower certificate.

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Processors/Loan Officers: Notice to Buyer/ Recapture TaxWhen the MCC reservation has been made and confirmed for your borrower, it is important to

discuss the Recapture Brochure and the potential of Recapture Tax.

As an overview, all of the following conditions must be in effect to activate the Recapture Tax.• The home is sold within nine years of the original mortgage loan closing date.

• The borrower has a net gain on the sale of the property• The borrower annual adjusted gross income exceeds the federal threshold limit as prescribed

by the federal tax code

All Recapture Tax details can be found in the MCC Program Lender Guide.

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Role Checklist for Processors/Loan OfficersConfirm Borrower Eligibility by reviewing the following

Purchase PriceTotal Household IncomeFirst Time Homebuyer Eligibility

Enter all required loan data into the Florida Housing MCC Lender Portal and Reserve the MCC

Review Recapture Tax information with the borrower.

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What is the role of the Underwriter?

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Underwriters are the overriding authority regarding the Florida Housing MCC Program from the lender perspective.

Underwriters are responsible for reviewing all data entered into the MCC reservation system and confirming accuracy.

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Underwriters: First Steps

The first step of the Underwriter is to review the information entered by Processor/Loan Officer. This information can be found on the Reservation Form located in the Reservation

forms field.

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Underwriters: Keep in mind.Has the total gross annual income been calculated correctly? Income which is consistent and

likely to continue should be considered towards the programs total household income.A detailed breakdown of how to view income from self employed borrowers is available in the

MCC Program Lender Guide and is a valuable asset when calculating income.All persons over the age of 18 and taking residence in the home must have their income counted

towards program qualifying.

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Underwriters: Options

Ultimately, the Underwriters have 4 options they can chose from once they have reviewed the data entered into the system by the loan officer.

1) Certify this Reservation2) Return to Originator

3) Edit Reservation4) Cancel Reservation

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Underwriters: Certify this Reservation

Once the underwriter has reviewed the information on the reservation form and is ready to approve the file, the “Certify This Reservation” button should be selected.

Upon certification, the Mortgagor Affidavit, Seller Affidavit, Notice to Buyer and MCC Compliance File Checklist will appear in the reservation forms field. These documents are pre

populated with the loan data entered by the loan officer. The underwriter certification form will also be electronically signed once the reservation is certified. These documents are to be

generated by the closing team and executed at closing.

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Underwriters:

Once the reservation has been certified by the Underwriter, the file will move into a “Underwriter Certified” stage. During this stage, Florida Housing is awaiting the lender closed

loan file. Florida Housing will move forward with the compliance review process only after the closed

loan file has been submitted.

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Underwriters: Return to Originator

Underwriters also have the option to return MCC reservations to the origination queue in the event that reservation edits need to be made.

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Underwriters: Edit this Reservation

In the event that changes are needed to an MCC reservation, underwriters may also choose to make the edits themselves by selecting the Edit Reservation tab near the top of the page.

This option will bring the underwriter back to the initial reservation form. Changes can be made and resaved. After the reservation is resaved, all changes will be reflected to the required

program documents.

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Add new Underwriter queue edit tab option once completed by IT. CJ

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Underwriters: Cancel this Reservation

Underwriters may determine that a borrower is not eligible to participate in the Florida Housing MCC Program. When this occurs, underwriters can cancel the reservation by selecting the

applicable tab.Once cancelled, the MCC reservation will no longer appear on the Florida Housing MCC

reservation landing page.

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Add new slide with updated UW queue images once completed by IT. CJ

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Quick Quiz: The Florida Housing MCC Program reviews only the borrower net income for qualifying. True or

False?



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False! Remember, the Florida Housing MCC Program requires that total household gross annual income be

reviewed to determine borrower eligibility.


What is the role of the closing team?

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What is the role of the closing team?

The closing team is directly responsible for the document submission portion of the MCC compliance process. The final role of the lender is to submit all completed and required loan documents and Florida Housing MCC program documents to the address noted below in Acco-Bound folders within 20 days of the underwriter certification.

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Closing Team – How to Generate/ Pull FHFC Program Documents

The closing team will be provided access to pull all required documents only after the underwriter has certified the MCC reservation and the status reads “Underwriter Certified.”

Each document below will be prefilled and populated into the reservation forms field.Mortgagor Affidavit

Sellers AffidavitNotice to Buyer

Underwriter CertificationMCC Compliance File Checklist

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Closing Team – How to Generate/ Pull FHFC Program Documents

It is imperative to follow the guidelines detailed below. 75% of the pended MCC compliance reviews are due to the deficiencies indicated below.

1) Manual edits on any Florida Housing documents will not be accepted.2) Lender typed data on any Florida Housing documents will not be accepted.

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Closing Team – Original Submissions.

The Florida Housing MCC Program requires that both the Mortgagor Affidavit and Seller Affidavit contain original “pen to paper”/ “wet” signatures.

Photocopies, electronic signatures and “certified signatures” will not be permitted and will result in delayed/cancelled MCC reservations.

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Closing Team – Original Submissions

Both the Mortgagor Affidavit and Seller Affidavit can be pulled directly from the

reservation forms field.

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Post Closers – Compliance File Checklist

Post Closers are required to gather all loan documents and MCC program documents to

submit via Acco-bound folder. The MCC Compliance File Checklist gives a detailed

breakdown of which documents are required.

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Closing Team – Compliance File Checklist

Each document noted on the Compliance File Checklist is required for approval and issuance of the Florida Housing MCC.

Remember, the highlighted documents require original, pen to paper signatures and

notary execution.

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Closing Team – Warranty Deed

The Warranty Deed is the governing document for the MCC Program. The closing

team will want to ensure that physical address/legal parcel number is accurate and

matches the sales contract.Each person listed on the deed must execute

all Florida Housing MCC affidavits, regardless of loan status.

Files submitted with missing signatures will be pended and subject to cancellation.

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Closing Team – Appraisal

During the compliance review, Florida Housing will review the Appraisal to verify the

property census tract.

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Closing Team – Compliance Review Fee

The MCC Compliance Review Fee should be made payable to Florida Housing Finance

Corp in the amount of $500.Lenders will want to ensure that this

compliance review fee is noted on the Closing Disclosure.

The compliance review fee can be submitted from the lender, borrower or title company.

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Closing Team – Notice to Buyer

The Notice to Buyer is a Florida Housing MCC Document that should be pulled directly from the reservations system. The document should

be executed by all persons noted on the Warranty Deed, regardless of loan standing.

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Closing Team – Underwriter Certification

The Underwriter Certification must be generated directly from the reservation

system. The document itself will be electronically signed by the underwriter upon

certification. No physical signature is required.

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Closing Team – 3 Years Tax Documents

Florida Housing requires 3 years tax documents to be included in the compliance file submission. These 3 years tax documents

are used to verify non homeownership and must be submitted for both the borrower and

spouse (if applicable) regardless of loan status.

Florida Housing will accept any combination of tax transcripts or tax returns for the 3 year

time period.

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Acceptable Proof of Non HomeownershipAcceptable

3 years Borrower Tax Returns3 years Borrower IRS Transcripts

Verification of Rent(Only accepted from a verified rental management company)

Not AcceptableLetter from the Borrower

Letter from the UnderwriterBorrower W2s or 1099

Borrower State Tax Documents

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Closing Team - Timeline

Once the underwriter has certified the MCC reservation in the lender portal, the closing team has 20 days in which to generate the program documents from the system and submit them to Florida Housing for final review.

Remember, these documents should be executed at closing to avoid any confusion.

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Closing Team – Acco Bound Folder

The closing team is directly responsible for the document submission portion of the MCC compliance process. The final role of the lender is to submit all completed and required loan documents and Florida Housing MCC program documents to address noted below in Acco-Bound folders within 20 days of the underwriter certification.

All documents noted on the compliance file checklist should be sent to the belowFlorida Housing Finance Corporation

Attention: MCC Program227 N. Bronough St. Suite 5000

Tallahassee, FL 32301

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Quick Quiz: Once compiled, the MCC compliance package will be submitted to eHousing for review. True or False?



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False! Remember, all MCC compliance files should be sent to Florida Housing directly for final review.


What’s Next?

Remember, there is no assumption of approval. Lenders are recommended to review the Florida Housing MCC Pipeline regularly to ensure that all steps have been taken towards the approval

of the Mortgage Credit Certificate.The reservation statuses in the MCC Lender Portal are up to the minute and provide the most

accurate information.

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What’s Next?

Reservations that have been reviewed by the Florida Housing Compliance Review Team will have one of three statuses.

1) Approved2) Cancelled

3) FHFC Staff Review

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What’s Next: Approval

Lenders will be notified via email of MCC reservations that have been approved. Borrowers will be mailed a Mortgage Credit Certificate via USPS and specified lender points of contact will

receive a copy of the certificate for their records.Borrowers will present this certificate to their tax professional when filing their federal taxes to

claim the credit.

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What’s Next? Deficiencies Found

If a file submitted from the lender and found to have deficiencies, Florida Housing staff will contact the lender points of contact via email.

Files in FHFC Staff review will be have detailed notes available instructing lenders of how to resolve the deficiencies.

All deficiencies must be resolved prior to the reservation expiration date or risk cancellation.

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What’s Next? Deficiencies Found

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What’s Next? Cancellation

On occasion, Florida Housing will conduct a compliance review and determine that a Mortgage Credit Certificate cannot be issued to a borrower because the core requirements have not been

met.

In such cases, the reservation will be cancelled in our system and an email will be sent out notifying the lender of the final determination.

Notices will also be mailed via USPS to the borrower indicating the final status of the reservation.

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MCC Process – Start to FinishProcessor/Loan Officer• Confirm Borrower Eligibility• Reserve MCC in Lender Portal• Review Recapture Tax with Borrower

Underwriter• Confirm Loan Data • Verify Borrower Liability• Certify MCC in Lender Portal

Closing Team• Generate required documents from the Lender Portal• Ensure Original documents are executed• Submit Compliance File to Florida Housing for review

Florida Housing Compliance Team• Review Compliance File submitted by lender• Approve and Issue MCC reservation• Mail Copy to Borrower and Lender


Resources and Need to Know Information

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New User Registration

Please keep in mind, users should only register after they have received the approval notice from Florida Housing.Access to the Lender Portal will not be approved prior to

completion of the training.Systems access must not be shared. Each person playing a role in the program must have their own specific log in

information.

Lender may return to the homepage and submit a password reset request in the event that the initial

password is forgotten.

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Florida Housing Webpage

Not only is the Florida Housing webpage where you will log in to the Lender Portal, but you will also find

valuable information here pertaining to the program.

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Florida Housing MCC Lender Portal

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Lender Guide

The Florida Housing Lender Guide is the first stop for all details regarding the Florida Housing Homebuyer Tax

Credit Program (MCC). Topics discussing income qualifying to property requirements are all reviewed to ensure complete

clarification regarding the program requirements.

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Income Limits and Purchase Price Requirements

Quick reference links such as the total household income limits and purchase

price limits allow you to access the program requirements quickly with no

hassle.

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MCC Flyers

Program Flyers are also made available on the MCC webpage.

Lenders may print these and use them as valuable marketing tools for eligible

and perspective borrowers.

Flyers are also made available in Spanish.

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Program Updates

Important Program Updates are also made available on the MCC Webpage so that all lenders have access to the

most up to date program information. Guidelines are updated as needed and

the link provided is the best way to stay educated.

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MCC Lender Quiz & User Registration

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Systems Access

Systems Access for the Florida Housing MCC Lender Portal is divided into two specific segments.

1) MCC Lender Quiz2) Lender Portal Registration

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MCC Lender Quiz

The Lender Quizzes are provided via links and are broken down specific to the role of the individual (Processor/Loan Officer, Underwriter, and Closing Team.)

A passing score of 80% is required for approved. Results of the MCC Lender Test will be forwarded directly to Florida Housing.

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User Registration

Florida Housing staff will receive your quiz scores directly from the site and contact you within 24-48 hours regarding your next steps.

When the user receives the approval notice, they will then “register as a new user” in the Florida Housing Lender Portal located on the Florida Housing

webpage at www.FloridaHousing.Org/MCC

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User Registration

Remember, you will not be able to register as a new user until you have completed the MCC Lender Quiz and Florida Housing has received your quiz

results.

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Systems Access

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Systems Access

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MCC Lender Training

The link below will take you to the required MCC Lender Quiz. Please take the quiz as defined by your role with the MCC Process.

Begin Here

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https://apps.floridahousing.org/StandAlone/MCCReservations/MCCTraining/