Chapter 33 — Further Reading

Grouped by the book's three citation tiers. Everything in Tier 2 changes on somebody else's schedule — treat every figure you find there as perishable and verify it at the source before you quote it to a borrower.

If you read only one thing

Your own state housing finance agency's lender guide and current program matrix.

Not a book, not a regulation — the actual PDF your state's HFA publishes for participating lenders. It will tell you, in ten to forty pages, exactly which products the agency offers, what the current income and purchase price limits are by county and household size, which assistance structures are available, what the education requirement is, what the reservation process and its deadlines are, and what the agency's compliance review will check after closing. It is free, it is authoritative for that state, and it is more useful to your first-time buyer pipeline than any general reference in this list.

Read it once end to end. Then find the equivalent document for the two or three county and city programs in your market. That afternoon is the whole competitive advantage described in Case Study 1.

Tier 1 — Verified canonical

These are institutions, statutes, and published guides we can stand behind. Every one is free and publicly accessible.

  • HUD Handbook 4000.1, the Single Family Housing Policy Handbook. The authority for everything FHA: the minimum required investment, acceptable sources of funds, secondary financing and combined loan-to-value rules, identity-of-interest restrictions and their exceptions, gifts and gifts of equity, the TOTAL Scorecard, and the manual underwriting framework and its compensating factors. Chapter 16 works it in depth. For this chapter, read the sections on the borrower's minimum required investment and on secondary financing side by side — the interaction between them is the whole of §33.5.

  • The Fannie Mae Selling Guide and the Freddie Mac Seller/Servicer Guide. The conventional rulebooks. Relevant here for the affordable products, their first-time buyer and income requirements, mortgage insurance coverage levels, and the definitions of qualifying subordinate financing — Fannie's Community Seconds and Freddie's Affordable Seconds — including the maximum combined loan-to-value each permits. Both guides are updated continuously and both are free.

  • The U.S. Department of Housing and Urban Development. Publishes area median income data by metropolitan area and county, adjusted for household size, revised annually; administers the HOME Investment Partnerships Program and the Community Development Block Grant program that fund a large share of local down payment assistance; and maintains the directory of HUD-approved housing counseling agencies. The counseling directory is the single most useful local research tool named in this chapter.

  • The Internal Revenue Code provisions governing mortgage revenue bonds and mortgage credit certificates. The federal framework — first-time buyer requirement, income and purchase price limits, and the federal recapture provision — that constrains every bond-financed HFA program and every MCC. The Tax Reform Act of 1986 authorized agencies to trade bond volume cap for certificate authority, which is why an agency's own bond-financed first mortgage frequently cannot be combined with its own MCC.

  • The Housing and Economic Recovery Act of 2008. Among many other things, the statute that prohibited seller-funded down payment assistance for FHA-insured loans. Case Study 2, Part 3.

  • The Federal Home Loan Banks and the Affordable Housing Program. Established by federal law in 1989; each district bank sets aside earnings for affordable housing and delivers homebuyer products through its member institutions. Find your district and find out whether your employer is a member.

  • The Equal Credit Opportunity Act and Regulation B, and the Fair Housing Act. Chapter 25 owns fair lending. They belong on this list because assistance files are where unequal effort becomes an observable pattern.

  • Your state's housing finance agency, by name. Every state has one, along with the District of Columbia and the territories. Their trade association is the National Council of State Housing Agencies.

Tier 2 — Attributed, specifics unverified

Real practice and real figures whose current values we have not pinned down. Ranges and structures only; verify before quoting.

  • Current minimum investment percentages, credit score thresholds, and mortgage insurance factors for FHA and the conventional affordable products. These are revised on their own schedules and the score thresholds inside them move more often than the headline percentages. Verify at HUD and in the Selling Guides; verify mortgage insurance pricing on the current rate cards of the mortgage insurers your lender uses.

  • Any specific county or city down payment assistance program. Amounts, structures, forgiveness schedules, income and purchase price limits, geographic boundaries, and available funding all change, and programs open and close mid-year. Everything in this chapter's Figure 33.1 is constructed. The administering agency is the only authority.

  • MCC credit rates and annual caps. Set by the issuing agency and stated on the certificate itself. The 25% rate and \$2,000 cap in §33.6 are constructed for illustration.

  • Homebuyer education requirements — acceptable providers, formats, certificate validity periods, and above all the required timing relative to reservation. Program-specific, and the timing is the one that kills files.

  • Searchable down payment assistance directories maintained by trade associations, private companies, and nonprofits. Useful for discovery, unreliable for terms. Use them to find the program's name and the administrator's phone number, then verify everything with the administrator.

  • Research on pre-purchase homebuyer education and counseling outcomes. A real literature exists, produced by HUD, the GSEs, Federal Reserve Banks, and university housing centers, and it generally reports associations with better borrower outcomes. No figure from it is quoted in this chapter, because none was verified here. If you want to cite a number, go to the study.

  • Lender participation requirements with your state HFA — the master agreement, delivery contract, training, per-loan fees, and the post-closing compliance review. Ask your secondary marketing or capital markets group, not the internet.

Tier 3 — Illustrative and constructed

Everything in this chapter that carries a dollar sign and is not attached to a real published source.

  • The Harlow Street file — a constructed teaching file. \$215,000 purchase, FHA 203(b), a \$10,000 forgivable county second, ratios of 41.48% front and 51.00% back, CLTV 101.15%. The arithmetic is exact; the borrower does not exist.

  • The Linden Street file — the book's progressive project, referenced here for the assistance eligibility check that was never run and for the \$10,000 family gift.

  • Figure 33.1, the County Homebuyer Assistance Program term sheet, and Figure 33.2, the settlement statement showing a gift of equity. Both constructed.

  • The \$148,000 manual-benchmark reconstruction in §33.10, the sale-at-month-thirty table, the cash-to-close illustration with \$5,800 of assumed closing costs, and the three-structure comparison in §33.4.

  • Composite Files A and B in Case Study 2, and the seller-funded DPA arithmetic in Part 3. All labeled composites built from documented patterns; no real borrower's file appears.

Where to go next in this book

  • Chapter 16 — FHA in depth. The minimum required investment, UFMIP, annual MIP and its duration, the TOTAL Scorecard, manual underwriting, and compensating factors. This chapter assumes all of it.
  • Chapter 20 — the purchase contract. Seller concessions, interested-party contribution limits, and the contingencies that protect a borrower whose financing depends on a program.
  • Chapter 12 — assets. Gift funds, gift letters, donor eligibility, and sourcing. A gift of equity is a gift, and Chapter 12 owns the documentation.
  • Chapter 25 — fair lending. Unequal effort, steering, and why the extra hours an assistance file requires have to be given consistently.
  • Chapter 4 — the arithmetic. LTV, CLTV, and the lesser-of rule that makes §33.8's gift-of-equity structuring work.
  • Chapter 29 — how a rate is made. Loan-level price adjustments, which are why a 641 score at 97% loan-to-value prices the way it does.
  • Chapter 8 — pre-qualification and expectation-setting. Where the Harlow Street borrower's affordability conversation began, and where payment shock lives.