The CHFA Loan Process
CHFA loans are offered through the Connecticut Housing Finance Authority in the State of Connecticut for first-time home buyers, properties for sale in "targeted" census tracts and for other groups of qualified borrowers such as police, teachers and Section 8 recipients. Its loan origination is unique and the following is a step-by-step process of CHFA loans. It includes the new steps as required by the MDIA (Mortgage Disclosure Information Act of 2009.) The steps are written from the standpoint of a correspondent lender (broker) and if you are dealing with a direct lender, the steps may vary slightly.
1. Application. This step is not unique as all loans require that buyers fully complete an application and sign and date all paperwork. There is also a CHFA-specific application and CHFA disclosures to review and sign. At this time, the Loan Originator usually collects all necessary paperwork from the buyer including income and asset statements and may run a credit report to check for credit-worthiness. It is also customary for the loan officer to run the loan information through an online Automated Underwriting System to verify that the buyers qualify for the loan for which they are applying. (1-3 hours)
2. Generate the Lender's TIL (Truth-in-Lending form). The application, GFE (Good Faith Estimate) and a Mortgage Broker Fee Agreement is sent to the lender with a registration form. The lender generates a Truth-in-Lending form based upon the figures in the application and GFE. The buyer then has to sign this Truth-in-Lending form. At this point there is a 3-day waiting period before the appraisal fee can be charged to the buyer. (24-48 hours, then 3 days)
3. Reserve Funds with CHFA. During this time, an online registration form is completed that CHFA calls the "Reservation of Funds". It generates a loan number for CHFA and locks the interest rate for 120 days. It is important that the reservation of funds is completed PRIOR to the appraisal being done or it causes a problem later down the road which results in delays in processing. (5 minutes)
4. FHA Connection. Brokers and lenders use a website called FHA Connection for FHA-related activities. On FHA Connection, the broker generates an FHA Case Number through an online application. The case number appears on a number of forms, including the appraisal, and it is how FHA tracks the loan. The case number should be generated prior to the appraisal being ordered or it can cause delays later in the process. Also, the broker checks that the buyers, real estate agents, mortgage broker and loan officer are not on lists that preclude any of the above from using the FHA program. If the property is a condo, the broker verifies whether or not it is part of an approved complex. (15-60 minutes)
5. Order the appraisal. Once the 3-day period has concluded, the appraisal is ordered and the appraisal fee is collected from the buyers. The appraiser inspects the home and generates a report and statement of estimated value to be sent to the broker. (2-5 days)
6. The loan package is sent to the lender. Once the appraisal is received, the file is checked for completeness and submitted electronically, by overnight or via fax to the lender. (1 day)
7. Lender Underwriting. Once received by the lender, it is time-stamped, reviewed for completeness and placed in a queue where it waits to be underwritten. Underwriting is a process by where a person called an underwriter reviews the documentation in the file and checks it against the information that was uploaded into the Automated Underwriting System. In some cases, the underwriter reviews the credit worthiness of the buyers and other facets of the loan including gift documentation. This is the step that usually takes the longest during the process. (3-15 business days depending on how busy the lender is.)
8. Submission to CHFA. Once the loan has been underwritten by the lender, a Conditional Approval is issued by the lender. This approval, along with other paperwork, comprises a second file that is sent to CHFA for underwriting. This file is different from the one sent to the lender as CHFA is not only looking for information that was sent to the lender, but also other documentation from the buyers to verify that they qualify for the CHFA program and/or the DAP (Downpayment Assistance Program.) (2-7 business days depending on volume)
9. Clearing CHFA conditions. If the file submitted to CHFA is incomplete or is in need of further documentation as required by the CHFA underwriter, a "Missing Exhibits" letter is sent to the broker requesting this documentation. The broker submits the requested paperwork and CHFA issues its commitment to lend. (24-48 hours)
10. Clearing lender conditions. Upon receipt of the CHFA commitment, it and other documentation necessary to satisfy the lender's conditions, if applicable, are sent to the lender for review to clear conditions. (24-48 hours)
11. Clear to Close. If the documentation sent to the lender is sufficient to clear all of the lender's conditions, the file is "cleared to close" and the closing can be scheduled through the attorney's office. The closing would take place at least 48 hours AFTER the file is cleared to close. (48-72 hours.)
12. Closing. This is the fun part. At the closing, the buyers sign the loan closing paperwork and receive the deed to the property and THE KEYS! (1-2 hours)
Now, you may have noticed that there are a few extra steps involved when using a CHFA loan. These should be anticipated when specifying a time frame for mortgage commitment when completing a purchase and sale agreement. These steps should NOT be looked at as a deterrent from using the CHFA loan program because the rewards are worth the wait, especially if you don't have sufficient funds to purchase a home but have the ability to afford the monthly payment.
If you are a Real Estate Professional working in Connecticut, you need to be aware of these time frames as well. CHFA and the lenders can vary several days or even a week in underwriting time depending upon the volume of loans that they have been receiving.
When dealing with CHFA, you want to make sure that you are working with someone who understands the program and the time element involved. I have made it a point to be well-versed in this loan program as it is essential if I am to be an expert in no-money down and low-money down financing programs.
Please contact me with any questions regarding CHFA or other no-money down and low-money down mortgage loan programs at eric@righttracfg.com or 860-647-7701 x13. I will be happy to answer any of your questions.
When it comes to No Money Down Financing, we are the Experts!
Eric Boucher
Right Trac Financial Group
860-647-7701 x13 Office
860-324-3324 Cell
eric@righttracfg.com
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