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Information on Partnering with MHDC


> Loan Processing & Recapture Tax


Loan Processing

bullet Uses familiar programs: FHA, RD (FmHA),VA, Conventional (Fannie Mae)
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 Payment to the borrower, if that program is used
bullet After closing, lender submits files to MHDC and Master Servicer

Recapture Tax

Recapture Tax applies in some cases when a home financed with Mortgage Revenue Bond funds is sold. For Recapture Tax to apply, the seller 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 should not cause you to forego use of the First Place program.  If you refinance your home at a later date to obtain a better interest rate, or to use the equity you have in your home, Recapture Tax provision  is not triggered.


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


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