CHFA just rolled out its new CT Families Program which is now self-insured, unlike the previous program that followed FHASecure Guidelines.  This new version of that program might finally make this a viable program for those who are in trouble on their mortgage, because of it being an Adjustable Rate Mortgage (ARM).

The previous program was basically a:

• Refinance program for subprime borrowers
  
• And it was Insured by FHA.

The new programs main differences are:

• Refinance program for families experiencing or having experienced hardships
  
• Self-insured by CHFA

The main thing that still remains common between the two is that only Adjustable Rate Mortgages qualify, but CHFA is trying to get legislation passed that would extend the new program to Fixed Rate Mortgages as well.

The New CT Families Program primary goal is to help families that have found themselves in a financial hardship because of the increased monthly payment when their Adjustable Rate Loan adjusted or:

• Temporary unemployment during hardship (currently-employed)
  
• Temporary loss of overtime or reduction in work hours
  
• Unanticipated temporary loss of child support or alimony
  
• An unanticipated expense such as a funeral or an un-insured medical emergency or procedure
  
• An unforeseen housing repair expense not covered by insurance

Besides the previous main changes to the program that I mentioned above, there are also these changes:

• Max LTV 97%; Max CLTV 108% with CT FAMILIES 2nd mortgage; or 120% with non-CHFA 2nd
  
• Points are 1.50%
  
• Pre-closing and post-closing counseling are required
• Credit underwriting

Guidelines for Credit Underwriting:

• Underwritten to CHFA guidelines – no delegated underwriting
  
• No minimum FICO
  
• All credit “blemishes” must be documented and explained. Borrowers must demonstrate a willingness and ability to manage financial obligations.
  
• Ratios 31%/43% although exceptions up to 50% are allowed with compensating factors on a case-by-case basis.
• Mortgage Payment History:
  
  • Current 6 months prior to reset OR
    
  • No more than 3 late payments in last 12 months
    
• Cannot refinance if meets the guidelines of available conventional or government insured fixed rate mortgage

As I previously mentioned the Borrower can also do a Second Loan (piggy back loan). The second loan can be up to a Max of $15,000 with a Max CLTV of 108%, and can be applied to cover these additional expenses:

• Closing costs
  
• Arrears/late fees
  
• Water, Sewer, Taxes, liens, etc.
  
• Appraisal Gap (difference between appraisal, and loan balance)
  
• Prepayment penalties on a case-by-case basis
  

Must exhausted their other financial resource before they can apply for the additional money that will be provided by the second loan.

This is a lot of information at one time, but I did not have a good way of breaking it up into two blogs, so sorry for the length of this blog.  Please feel free to ask me any questions you may have on any of these points, and I will try to further explain.

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com