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What it means for Lenders  …

Loan Processing

bullet Use familiar programs: FHA, USDA-RD, VA, Conventional Fannie Mae MyCommunityMortgage®.
bullet Borrower selects the type of loan he wants to use, then applies and closes when approved.
bullet Lender accepts application, reserves funds, processes and approves loan, as with regular book of business loans.
bullet At closing, lender funds loan and provides the 3% Cash Assistance second mortgage loan funds to the borrower (if used).
bullet After closing, lender submits files to MHDC and Master Servicer.
bullet After approval by both, Master Servicer pays lender 100% of unpaid principal balance, plus SRP.  MHDC reimburses the lender for the Cash Assistance second mortgage loan (if used).

Recapture Tax

Recapture Tax applies in some cases when a home financed with MRB funds is sold. For Recapture Tax to apply, you must meet all of the following conditions:


1)    Sell the home within nine years.


2)    Make a net profit on your home, after adjusting the value of the home for any improvements or repairs you have made, and after deducting all costs of sale, including sales commission, and


3)   Your household income must have increased at least 5% each year (on average). Fear of paying Recapture Tax is not a viable reason for not utilizing the First Place program. If you refinance your home at a later date to obtain a better interest rate, or access the equity you have in your home, Recapture Tax is not triggered.


See Section 5 of the Operations Manual for detailed information concerning the Recapture Tax