Down payment assistance has had an embattled history in the United States. From seller funded down payment assistance programs like Nehemiah and Ameridream being banned by HR 3221 in October 2018 through modern day with HUD issuing Mortgagee letter 06–2019 placing a hold on certain Governmental entity’s ability to provide borrowers with down payment assistance funds.
One Governmental entity that was severely inpacted by this letter was the Cedar Band Mortgage Agency(CBCMA). CBCMA is based out of Cedar Utah and is owened by a federally recognized Indian tribe callled the Paiutes. CBCMA has created a suite of DPA products called the CHENOA fund. These products provide borrowers with 3.5% of the sales price for the borrrowers down payment.
How does the program work?
The Chenoa fund is a suite of 5 products however I will be focusing on 1. This is the Chenoa Non Repayable Forgivable Soft Second. This program is offered in conjunction with an FHA loan. It is a lenders responsibility to make sure that loans made to borrowers in this manner are in compliance with HUDs secondary financing guidelines.
So we will do a quick run down of the guides:
- Min 620 score
- Income less than 115% AMI
- DTI per AUS or manual uw ratios
- O/O only
- FTHB not required
- 1–2 units, condos and sfrs only. No manufactured
- Can be combined with other prohibited assitance
- Non occupant co borrower allowed
- Homeownership course required for borrowers with score 620–640