ADFA ARKANSAS DEVELOPMENT FINANCE AUTHORITY SINGLE FAMILY PROGRAMS

ADFA ARKANSAS DEVELOPMENT FINANCE AUTHORITY SINGLE FAMILY PROGRAMS MASTER SERVICER: Servi. Solutions

ADFA. ARKANSAS. GOV FAMILY 2 » FORMS » SINGLE

WHO IS ADFA? 1985 Established State Agency NO State General Revenue ADFA’s enabling legislation authorizes it to borrow money and issue bonds for affordable housing, various business & economic development projects, and capital improvements for state agencies. 3 ADFA

WHO IS ADFA? BONDS 4 ADFA

ADFA PROGRAMS ADFA ADDI or MCC DPA 5 MOVE-UP

MOVE-UP PROGRAM FEATURES

MOVE-UP PROGRAM GENERAL GUIDELINES ADFA First Lien - 30 Year Fixed Mortgage Program: VA, RD, FHA, or HFA Conventional 95% or 97% - Conforming Loan Limits ($424, 100) - Non Occupant Co-Borrowers Allowed – Follow Guidelines Reservations made from 9: 00 am to 7: 00 pm Working business days only Rate is set daily and sent to all participating lenders Follow Product Guidelines from each program: Looking for APPROVE / ELEGIBLE only!! 7

MOVE-UP PROGRAM GENERAL GUIDELINES ADFA No 1 st time homebuyer requirement $ No Income Limits; except when matched with MCC or ADDI Primary residence only Manufactured Housing allowed for government-backed loans only NEW Reduced Loan Funding Fee ($200) & Reduced Tax NEW Reduced Servicing Fee ($75) BOTH: netted at purchase by Master Servicer. 8 SRP = 1. 75% ; VA= 1. 25%; Origination Fee (optional)= 1. 00%

MOVE-UP PROGRAM GENERAL GUIDELINES “MOVEUP” ADFA ARKANSAS DEVELOPMENT FINANCE AUTHORITY FHA VA CONVENTIONAL RD 1 st MORTGAGE CREDIT SCORE DEBT-TOINCOME UNDERWRITING LIMITS BENEFITS CASH BACK 9 660 640 45% DU, GUS or LP ** No Manual Underwriting permitted** Purchase Price Limit—Follow Product Guidelines for Co-Signers ADDI has Income Limits No Income Limits—DPA can be added DPA: POC Items + $100 available at Closing ADDI: POC Items

HOMEBUYER EDUCATION CLASS FOR ADFA PROGRAMS ADFA ANY LOAN + ADDI * CONVENTIONAL + DPA REQUIRED FOR ONE HOMEBUYER BOTH BUYERS NO CLASS REQUIRED *Only if both are 1 st THB FHA + DPA VA + DPA RD + DPA 10 ADFA *Follow each programs specific guidelines to meet compliance.

MOVE-UP PROGRAM FEATURES

MOVE UP ADFA HFA PREFERRED CONVENTIONAL CREDIT SCORE DEBT-TO-INCOME 95% 97% 640 Maximum is 45% UNDERWRITING DU (No Manual Underwriting permitted) REQUIREMENT Education Course* RESTRICTIONS MI COVERAGE 12 ARKANSAS DEVELOPMENT FINANCE AUTHORITY No Income Limits Sales Price Conforming Loan Limit Primary Residence Only 90. 01% to 95% = 16% 85. 01% to 90% = 12% 18% 80. 01% to 85% = 6% *If both borrower(s) are 1 st time homebuyers.

MORTGAGE INSURANCE COVERAGE: FHA & HFA COMPARISON LTV Standard Home. Ready HFA Preferred 95. 01 - 97. 00% 35% 25% 18% 90. 01 – 95. 00% 30% 25% 16% 85. 01 – 90. 00% 25% 12% 80. 01 – 85. 00% 12% 6% 30 -year fixed-rate scenario FHA mortgage HFA Preferred mortgage Purchase Price: $126 Note Rate: 4. 875% | LTV: 96. 50% Note Rate: 5. 25% | LTV: 97% Base First Mortgage $121, 590 $122, 220 Down Payment $4, 410 $3, 780 Upfront MIP Rate (%) 1. 75% 0. 00% MI Premium (Annual %) 0. 85% 0. 98% Financed MI $2, 128 $0 $123, 718 $122, 220 $86 $100 Total Monthly Payment $1, 056 $1, 090 13 When Loan is 80% LTV $1, 056 $990 Total First Mortgage Monthly MI 13 ADFA Based on ADFA Move-up program as of 5/8/18. Restrictions apply. See, Fannie Mae Selling Guide, B 3— 4. 1— 03, B 7— 1— 02, and B— 8. 1— 04. HFA Preferred™ Benefits $630 Lower down payment No upfront MI premium No need to finance MI $1, 498 in additional equity Ability to cancel MI* Long Term Savings (no MI)

ADDI PROGRAM FEATURES

ADDI PROGRAM GENERAL GUIDELINES 1 NEW! 10% of purchase prices, up to $10, 000 NEW! 2 15 5 -Year term forgivable, soft 2 nd mortgage loan 3 Can be used for Down Payment, Closing Cost, and POCs. 4 Income Restricted: 80% of area Median Income or below 5 6 ADFA No 1 st time homebuyer requirement Primary Residence only Requires Homebuyers Education class for borrower (s), due prior closing

ADDI PROGRAM GENERAL GUIDELINES ADFA Household Income Limits at 80% of Median Income is based on the number of household residents. 16

ADDI PROGRAM GENERAL GUIDELINES ADFA U. S. Department of Housing & Urban Development requirement New! You pick your inspector New! ADFA pays initial & final inspection ($125 + 42¢ / Mile) ADFA must dispatch inspectors in order to pay them 20 -30 minute inspection maximum Tech-Savvy inspector (Scan Docs & Email) ADDI Funds cannot be use for repairs or to pay down debt. Only available with ADFA Move-Up (No Stand-Alone) 17

ADDI PROGRAM GENERAL GUIDELINES E S A E O PL T P U W O L L S A Y A D G 45 N I S O L C R O F 18 ADFA

PROGRAMS CLASS 19 » ADDI » PRE-PURCHASE HOMEBUYER EDUCATON Homebuyer Education Course 50% OFF

DPA PROGRAM FEATURES

DPA PROGRAM GENERAL GUIDELINES ADFA DPA Assumes the lending guidelines of “ADFA MOVE-UP” Interest rate matches 1 st Mortgage (Move-Up) Only available with ADFA Move-Up (no stand-alone) Borrower does not have to be a 1 st time homebuyer Cannot be used for repairs or to pay debt to qualify Borrowers may increase Down Payment thus reducing First Mortgage amount Borrower can receive POC items back at closing, plus additional $100 21

DPA PROGRAM GENERAL GUIDELINES 1 From $1, 000 up to $10, 000 2 3 Rate: Same as 1 st Mortgage 4 No Additional Inspections Requirements by ADFA 5 No Household Income Limit 6 722 22 10 -year Amortization Term, 2 nd Mortgage No Purchase Price Restriction (no jumbo) Can be used for Down Payment, Closing Cost, and POCs. ADFA

DPA & ADDI COMPARISON AND OVERVIEW

ADDI & DPA ADFA DPA ADDI $1, 000 to $10, 000 Community 2 nd Mortgage TERM 10 -Year Amortization, 2 nd Mortgage 10% of purchase price, up to $10, 000 Community 2 nd Mortgage 5 -Year Forgivable, Soft 2 nd Mortgage* RATE Matches 1 st Mortgage N/A Move-Up Program Guidelines Move-Up Requires Pre-Purchase Homebuyer Education Class No Limits 80% Area Median Income or Below No Inspection HQS Inspection Required** NONE AMOUNT ADFA PROGRAM 1 st TIME HOMEBUYER CLASS HOUSEHOLD INCOME LIMIT INSPECTION FEES * No monthly payments. Pro-Rated over 60 -months. ** ADDI: Income verification needs to be approved before ordering HQS Inspection. 24

RESERVATIONS MOVE-UP, ADDI, DPA, & MCC ADFA 70 -day purchase timeline remains in effect from date loan is reserved or ‘locked’ in our Reservation System. If ADFA has not received a closing package within 70 days of the reservation date, the reservation will automatically be cancelled unless notified by the lender that an extension is needed. If ADFA has received a closing package then the 30 day extension will automatically go into effect and the $375 extension fee will be netted out at purchase. If ADFA is notified that an extension is needed and the loan ends up cancelling after 70 days the extension fee will still be collected by ADFA. 25

MORTGAGE CREDIT CERTIFICATE PROGRAM FEATURES

MORTGAGE CREDIT CERTIFICATE ADFA We are not Tax Professionals and cannot give tax advice. We will provide examples of how the MCC works. We recommend that borrowers seek the advice of a qualified tax professional when deciding whether or not to take advantage of an MCC. 27

MORTGAGE CREDIT CERTIFICATE Dollar-for-Dollar Federal Tax Credit ADFA BORROWER MUST BE – 1 st time homebuyer (No Primary Residence ownership within last 3 years), purchasing home in a targeted county, a Veteran or spouse of a Veteran IRS Restrictions by County & Household Income Limits Federal Tax Credit 50% of Mortgage Interest up to $2, 000 per year Purchase Price Limit is $270, 000 FREE with ADFA Mortgage products (OPTIONAL: $150 Lender Fee) -1/2% Issuance Fee, for Stand-Alone MCC. Homebuyer can adjust federal withholdings to increase take home pay by $166 per month. (Should check with tax professional first) 28 28

MORTGAGE CREDIT CERTIFICATE Dollar-for-Dollar Federal Tax Credit ADFA Borrower claims Tax Credit when they file their Form 1040 annually, and must use Form 8396 to claim the credit. A first-time homebuyer is an eligible borrower who has NOT had a present ownership interest in a principal residence at any time during the three year period prior to the date of closing. This ruling applies to a non-borrower spouse or any co-occupant. A Targeted County is a qualified census tract or an area of chronic economic distress as designated by the IRS. Each county has an Income Limit that the household cannot exceed based on the size of the household. ADDI funds may be used for MCC fees ADDI MCC 29

MORTGAGE CREDIT CERTIFICATE DOLLAR PER DOLLAR TAXCREDIT ADFA EXAMPLE: $7, 000 MORTGAGE INTEREST SUBTRACT $2, 000 FROM FEDERAL INCOME TAX OWED 50% MCC allows you to deduct 50% of the mortgage interest owed up to a maximum of $2, 000. 30 50% YOU CAN STILL DEDUCT THE OTHER $3, 500

WITHOUT MCC example: GROSS INCOME $50, 000 MORTGAGE INTEREST $7, 000 ADFA DEDUCTION 31 TAXABLE INCOME $43, 000 FEDERAL INCOME TAX $6, 450 This example is use for ADFA MCC Education purposes only and shall not be use as a guide or tax advice for the MCC or any other of our programs, and shall not represent the ADFA nor any of its employees. Please consult with a professional to see what best benefits your situation.

WITH MCC example: ADFA GROSS INCOME $50, 000 50% $3, 500 MORTGAGE INTEREST $7, 000 DEDUCTION $46, 500 TAXABLE INCOME $43, 000 “TAXED AT 15%” $6, 975 FEDERAL INCOME TAX $6, 450 MAX MCC CREDIT $2, 000 TOTAL DUE $4, 975 SAVED $1, 475 This example is use for ADFA MCC Education purposes only and shall not be use as a guide or tax advice 32 for the MCC or any other of our programs, and shall not represent the ADFA nor any of its employees. Please consult with a professional to see what best benefits your situation.

MORTGAGE CREDIT CERTIFICATE FOR RECAPTURE TAX TO APPLY… ALL I. MUST BE II. MET III. ADFA Your home is sold or disposed of within 9 years of being purchased, for reasons other than death; and There is a capital gain on the sale of your home, and Your household income for the year in which you sell your home exceeds federal recapture tax limits We estimate that 97% of the borrowers will not be subject to the Recapture Tax. For more information regarding this provision, please contact the IRS or a tax professional. MCC CAN’T REDUCE YOUR FEDERAL INCOME TAX IF YOU DON’T OWE ANY TAXES! 33

HOMEOWNERSHIP CONFERRENCE ADFA GOVERNOR: ASA HUTCHINSON TUESDAY, FEBRUARY 5 TH, 2019 FOUR POINTS BY SHERATON 925 S UNIVERSITY AVE LITTLE ROCK, AR 72204 34

Servi. Solutions CONTACT INFORMATION A D F A HOURS OF OPERATION: BY EMAIL: 8 AM to 5 PM, Central Time Monday through Friday inquiries@servsol. com BY TELEPHONE: TO ADDRESS A MORTGAGEE CLAUSE: Servi. Solutions, a division of the If you only want to make a payment by phone Alabama Housing Finance Authority and do not need to speak to a customer ISAOA ATIMA service representative, select OPTION 1 from P. O. Box 242967 the phone menu. Please have your account Montgomery, AL 36124 -2967 information ready. If you have any questions, email insurance@servsol. com. 334. 244. 4350 866. 339. 2432 (Toll free) ALL OTHER INQUIRIES: 855. 819. 8081 P. O. Box 242967 (Toll free for Washington customers) Montgomery, AL 36124 -2967 BY FAX: FOR DELIVERIES AND PAYOFFS: Please ensure your loan number is listed on your 7460 Halcyon Pointe Drive, Suite 200 fax request. Montgomery, AL 36117 Customer Service: 334. 271. 3104 35

ADFA CONTACT INFORMATION OUTREACH TEAM COMPLIANCE TEAM Tim Wooldridge Director of Outreach (870) 926 -8758 Tim. wooldridge@adfa. arkansas. gov Denise Wells Single Family Assistant Manager (501) 682 -5466 Denise. wells@adfa. arkansas. gov Kyle Putman Outreach Specialist-Northwest (501) 551 -1276 Kyle. putman@adfa. arkansas. gov Dean Norman Single Family Compliance (501) 682 -5935 Dean. norman@adfa. arkansas. gov Issac Morales Outreach Specialist-Central (501) 765 -6543 issac. morales@adfa. arkansas. gov Virginia Wright Single Family Compliance (501) 682 -5923 Virginia. wright@adfa. arkansas. gov Derrick Rose Public Information Officer (501) 682 -5904 Derrick. rose@adfa. arkansas. gov Leslie Quisenberry Single Family Compliance (501) 682 -5930 Leslie. quisenberry@adfa. arkansas. gov 36 ADFA