AHFA Extends Step Up+ Providing Affordable Financing with PMI Assistance
October 12, 2017
In June, AHFA announced a new, temporary AHFA-administered Step Up+ mortgage enhancement that will pay the upfront split private mortgage insurance premium (up to $1,500) for homebuyers who earn less than 80 percent of the area median income. In turn, homebuyers will pay a lower monthly premium as part of their mortgage payment. Additionally, the interested party contribution has been increased from 3 percent to 4 percent for this program.
The program was designed to run until September 30, 2017, but was recently extended until December 31, 2017.
Information and qualifications:
HFA Preferred conventional loans only
3% down payment assistance available through Step Up
For new or existing homes in Alabama
Homebuyers must have a credit score of 620 or higher
Homebuyers must complete a homeownership education course
Private mortgage insurance will be underwritten by Genworth or ARCH (no delegated options)
Lenders will make Step-Up+ reservations within Lender Online, under the "New Reservation" page.
These funds should be classified as a 'gift' when credit-qualifying but lenders will enter the $1,500 amount (no more/ no less) as a '3rd mortgage' when making the reservation so they can be reimbursed for the split premium to be remitted to the Ml company.
Lenders will close and remit the upfront portion of the PMI premium to Genworth or ARCH. AHFA will, in turn, refund the premium to the originator at loan purchase.
AHFA will enter a special feature code at loan delivery to identify the loan as Step-Up+. There will not be a specific place for lenders to do so.
If the entire $1,500 amount isn't required to pay the upfront split PMI, the borrower can use the remaining funds towards closing costs/prepaids.
If the upfront PMI requirement is more than $1,500, the additional funds can be paid at closing or the upfront percentage can be adjusted as per Genworth/ARCH options.
Lenders will be required to furnish a copy of the rate calculation split PMI quote within the compliance package (Step 2). The transmittal checklist has been updated to add this particular document for Step Up+.
All Step Up+ loans must close by December 31, 2017. No exceptions will be made.