130th Maine Legislature Report to the Joint Standing Committee on

130

Maine Legislature

eport to the Joint Standing Committee on

Innovation, Development, Economic Advancement, and Business

L.D. 1709

Resolve, Directing the Maine State Housing Authority

to Examine and Develop a Program Promoting Home Ownership

by Reducing Education Debt

1. Program Overview

2. Program Design Committee and Process

3. Statement of Need

4. Maine Student Debt Levels

5. Proposed Program Language

6. Budget Proposal

7. Appendices

a. LD 1709 Text

b. About MaineHousing & FAME

c. Smart Buy Programs In other

States

i. Illinois Smart Buy

ii. Maryland Smart Buy

Maine Smart Buy 2

1. OVERVIEW – LD 1709 SUMMARY

Over the course of the summer and fall of 2021, representatives of the Maine State Housing

Authority (MaineHousing), in cooperation with representatives from the Finance Authority of

Maine (FAME) and a representative of Senate President Jackson’s office, met as a work group to

address the requirements of LD 1709, a resolve directing MaineHousing to explore and design a

program to promote home ownership in Maine by reducing education debt.

When potential home buyers enter the mortgage market with significant levels of student debt, their

debt-to-income ratios can preclude them from qualifying for mortgages. This program would offer a

path to home ownership, combined with student debt reduction, for buyers who might otherwise be

unable to purchase their first homes. The bill’s sponsor also characterized this sort of program as a

potential tool to both attract younger people to Maine, and to help keep Maine graduates in state.

The program we propose would be called “Maine Smart Buy” and be modeled after similar

programs with the same name that have been successful in Maryland and Illinois. We believe that

using a name similar to other state programs could help build brand awareness for such

programming were it to be expanded to more states. The program would allow qualifying first-time

homebuyers to purchase a home while enjoying forgiveness of up to $40,000 in student debt. A state

appropriation would provide the funds needed to forgive the participants’ student debt.

Participants would be required to maintain the home as their primary residence for a period of five

years. Though the student debt would be forgiven at the time of the home loan closing, the

homebuyer would be obligated by a Promissory Note, equal to the amount of the student debt to be

forgiven. This would require no payments by the home buyer, and would be forgiven at a rate of

20% per year over five years. If, however, the purchaser left or sold the home before the five-year

period was over, they would be liable for the proportional amount of the second loan still owed.

2. PROGRAM DESIGN PROCESS

The work group met on August 24

, September 8

and October 27

to review the program goals

and develop program specifics. In addition these meetings the group conducted research in the

interim and contacted managers of the Smart Buy programs in Maryland and Illinois.

The work group consisted of the following members:

From MaineHousing:

Peter Merrill, Deputy Director

Craig Reynolds, Director of Homeownership, Homeownership Department

Tina Partridge, Mortgage Lending Manager, Homeownership Department

Erik Jorgensen, Senior Director of Government Affairs and Communications

Maine Smart Buy 3

From FAME:

Bill Norbert, Manager of Governmental Affairs and Communications

Martha Johnston, Director of Education

From the Maine Legislature:

Carolyn Russo, Policy and Legal Director, Office of Senate President Troy Jackson

3. NEED: STUDENT LOAN DEBT DRIVES HOME PURCHASE DELAYS

Since 2019, college debt across the United States has increased by $91 billion annually. Student loan

debt now represents the second-largest form of household debt in America behind home mortgages.

The result is that 35% of households with student debt state they have difficulty affording daily

necessities due to their student loans and, without some form of assistance, homeownership is

currently out of reach for them.

A 2019 Federal Reserve Consumer and Community Context

report notes that approximately 400,000 young Americans were prevented from purchasing a home

due to their student loan debt. In Maine alone, two-thirds of the 2019-2020 four-year college

graduates on average graduated with over $32,000 of debt, one of the highest percentages and

average balances in the country.

A June 2021 poll of student loan debt holders performed by the National Association of

REALTORS reflected that 53% of respondents indicated that their school loan debt impacted their

significant life choices, and over half of the non-homeowners in the survey indicated that student

loan debt was preventing them from a home purchase. Almost three-quarters of respondents

estimated a delay of up to eight years until they could afford to purchase a home.

In larger reports from 2016 and 2017 by The National Association of REALTORS and American

Student Assistance, Student Loan Debt and Housing Report, 83% of respondents who were not

homeowners indicated that the primary reason for their delay in their first home purchase was due

to student loan debt. This delay was primarily caused by factors such as inability to save for a down-

payment and not feeling financially secure enough due to their existing debt; however, over 50%

indicated that they could not qualify for a mortgage with their existing debt-to-income ratio.

1 Hanson, Melanie. “Economic Effects of Student Loan Debt” EducationData.org, October 18, 2021,

https://educationdata.org/student-loan-debt-economic-impact

“Student Debt and the Class of 2020 16

Annual Report”, 2021, https://ticas.org/wp-

content/uploads/2021/11/classof2020.pdf

“The Impact of Student Loan Debt September 2021”, 2021, 2021-the-impact-of-student-loan-debt-report-executive-

summary-09-14-2021.pdf

“Student Loan Debt and Housing Report 2017”, 2017, https://file.asa.org/wp-

content/uploads/2019/01/28201122/Student-Loan-Debt-and-Housing-2017.pdf

Maine Smart Buy 4

Source: 2017 Student Loan Debt and Housing Report

The Student Loan Debt and Housing Report also found that when student loan borrowers were asked

what they would do with the extra funds if they weren’t paying on their student debt, 63% indicated

the extra money would go towards the purchase of a home. These findings provide strong evidence

that decreasing the burden of debt on student loan borrowers through a student loan forgiveness

program would be beneficial toward encouraging home ownership.

4. STUDENT DEBT IN MAINE

While it can be difficult to isolate specific levels of student debt for Maine students, there is no

question that debt in this state mirrors or exceeds the nationwide figures. The data most often cited

nationally and at the State House is reported by The Institute for College Access and Success

(TICAS) through their Project on Student Debt. The latest report is Student Debt and the Class of 2019.

An interactive map at https://ticas.org/interactive-map/

shows that Maine 2019 bachelor degree

graduates held an average of $33,591 in student debt upon graduation.

Educate Maine also publishes average student debt amounts for Maine students. In 2018, this

organization reported an annual average student debt for attending school in Maine to be $7,111,

this presumably being an aggregation of all postsecondary education costs, including community

college associates’ degrees. https://educationindicators.me/#1595011946484-d2db7b66-21f4

This is voluntarily-reported information provided by Maine institutions. Not all colleges and universities participate in

this survey.

85%

74%

52%

47%

18%

UNABLE TO SAVE FOR A DOWNPAYMENT

DON'T FEEL FINANCIALLY SECURE ENOUGH DUE

TO EXISTING STUDENT LOAN DEBT

CAN'T QUALIFY FOR A MORTGAGE DUE TO DEBT-

TO-INCOME RATIO

CAN'T AFFFORD THE PREFERRED HOUSE OR

NEIGHBORHOOD

DON'T HAVE FINANCIAL KNOW-HOW TO

CONFIDENTLY NAVIGATE THE HOUSING MARKET

Stated Reasons for Delay In Buying a Home

Maine Smart Buy 5

5. MAINE SMART BUY PROGRAM PROPOSAL

Program Summary:

The Maine Smart Buy program would assist first-time homebuyers with existing student loan debt to

achieve homeownership in Maine. The program would allow qualifying first-time home buyers to

purchase a home using the MaineHousing First Home Loan Program while enjoying forgiveness of

up to $40,000 in student debt. A state appropriation would provide the funds needed to eliminate

the student debt and the mortgage loans would be provided by an existing network of First Home

Loan lenders.

MaineHousing, in partnership with FAME, would offer Smart Buy to qualified borrowers with an

existing student loan debt balance of at least $5,000. The program would specify a maximum loan

amount to be paid off. For purposes of this analysis, we suggest a maximum level of $40,000, which

is consistent with the amount available in other Smart Buy programs in Illinois and Maryland.

This program is designed to pay off loans in full, and partial payment of a student loan would not be

permitted. The entire student loan must be paid in full because partial payments to a student loan

typically do not result in a reduction of the monthly payment amount. Also, if a debt is paid in full,

the debt will no longer affect the borrower’s debt ratios when determining eligibility for the home

loan. If the debt relief received by a participant is sufficient to pay off more than one loan in full,

that would be allowed.

Participants would be required to maintain the home as their primary residence for a minimum of

five years. Though the student debt would be eliminated at the time of closing, the homebuyer

would be obligated by an unsecured promissory note (a second loan), equal to the amount of the

eliminated student debt. This would require no payments by the home buyer and would be forgiven

at a rate of 20% per year over five years. If, however, the participant leaves or sells the home before

the five-year period is over, they would be liable for a proportional amount of the outstanding

balance on the promissory note

Mortgage Requirements

A. Borrower Eligibility. Borrower must meet MaineHousing’s First-Time Homebuyer Program

requirements, which include, but are not limited to:

1. First-Time Homebuyer requirement: the borrower cannot have owned a home within the

last three years.

2. Principal Residence requirement: the home must be used as the buyer’s principal residence

for the length of time the mortgage is outstanding.

Maine Smart Buy 6

3. Household Income Eligibility requirements: MaineHousing’s Income Limits are

published on its public website: Homebuyer Income & Purchase Limits (mainehousing.org).As

of 11/1/21, the income limits were as follows:

MaineHousing Income Limits

Area

1-2 Person

3 or more

Portland HMFA

Cumberland County:

Cape Elizabeth, Casco, Chebeague Island, Cumberland, Falmouth,

Freeport, Frye Island, Gorham, Gray, Long Island, North Yarmouth,

Portland, Raymond, Scarborough, South Portland, Standish, Westbrook,

Windham, Yarmouth

York County:

Buxton, Hollis, Limington, Old Orchard Beach

$100,300

$115,350

Area

1-2 Person

3 or more

York/Kittery/So. Berwick HMFA

Berwick, Eliot, Kittery, So. Berwick, York

$105,300

$121,100

Cumberland County (excluding HMFA)

$78,820

$90,650

Sagadahoc County

$78,820

$95,340

York County (excluding HMFA)

$82,900

$95,340

All Other Counties

$76,600

$88,090

4. Maximum Debt Ratios; Back-end ratio of up to 45%

5. Minimum Credit Scores: 640

6. Acceptable Credit

B. Property Eligibility. Residences must meet MaineHousing’s First-Time Homebuyer Program

eligible property type requirements.

1. Eligible property types:

a. Existing Homes, 1 to 4 units;

b. Mobile Homes not older than 20 years which will be located on land owned by the

applicant;

c. Mobile homes not older than 20 years which will be located in an approved mobile

home park or on other land leased by the borrower for the same term as the

Mortgage Loan;

d. Modular Homes;

e. Condominium Units;

f. New Homes; (permanent financing only); and

g. Purchase of existing home with improvements.

Maine Smart Buy 7

2. Acquisition Cost limits: MaineHousing’s Purchase Price Limits are published on its public

website. Homebuyer Income & Purchase Limits (mainehousing.org) (hyperlink) The

Purchase Price Limits as of 11/1/21 are as follows:

MaineHousing Purchase Price Limits

Area

1-Unit

2-Unit

3-Unit

4-Unit

Portland HMFA

Cumberland County:

Cape Elizabeth, Casco,

Chebeague Island,

Cumberland, Falmouth,

Freeport, Frye Island,

Gorham, Gray, Long

Island, North Yarmouth,

Portland, Raymond,

Scarborough, South

Portland,

Standish, Westbrook,

Windham, Yarmouth

York County:

Buxton, Hollis, Limington,

Old Orchard Beach

$353,370

$452,390

$546,810

$679,570

York/Kittery/So. Berwick

HMFA

Berwick, Eliot, Kittery, So.

Berwick, York

$353,370

$452,390

$546,810

$679,570

Cumberland County

(excluding HMFA)

$353,370

$452,390

$546,810

$679,570

Sagadahoc County

$353,370

$452,390

$546,810

$679,570

York County (excluding

HMFA)

$353,370

$452,390

$546,810

$679,570

All Other Counties

$311,970

$399,440

$482,810

$600,030

C. Mortgage Loan Terms. Each mortgage loan shall be permanent financing with a level month

debt service payment based on a 30-year amortization. Mobile Home terms are based upon the

age of the mobile home, as outlined below.

Age of Mobile Home

Term must be equal to:

0 – 10 years

30 years

11 – 15 years

25 years

16 – 20 years

20 years

Maine Smart Buy 8

D. Mortgage Interest Rate

. Mortgage loans must bear the interest rate in effect on the date of

the mortgage loan is reserved with MaineHousing. MaineHousing will display the interest rate on

the rate sheet, which is available on MaineHousing’s public website: Current Interest Rates

(mainehousing.org)

The interest rate in effect on 12/1/21 was as follows:

30 Year Fixed Rate

APR*

2.875%

3.490%

*Annual Percentage Rate (APR) is the cost of credit stated as a yearly rate. The APR calculation is based on a $100,000 loan for a 30-year term and

includes points and mortgage insurance fees collected on a Rural Development loan. The actual APR may be higher depending on additional mortgage

loan fees the MaineHousing lender charges the borrower.

E. Mortgage Insurance and Government Guaranty. Unless otherwise approved by

MaineHousing, a mortgage loan-to-value rate that exceeds 80% of the lesser of the appraised

value of the residence or the cost of acquiring the residence, the mortgage loan must be insured

by an eligible private mortgage insurance company or FHA; or guaranteed by VA or RD (should

spell out these acronyms for readers).

F. Down-Payment Requirements. The amount of down-payment depends on the mortgage

insurer a borrower chooses. The down payment requirements by mortgage insurer are as

follows:

Mortgage Insurer

Down Payment

Rural Development (RD)

Department of Veteran Affairs (VA)

Federal Housing Administration

(FHA)

3.5%

Private Mortgage Insurance (ARCH)

G. Points. There are no points charged on a MaineHousing loan.

SmartBuy Program Requirements:

H. Student Loan Debt Requirements.

1. Minimum remaining student loan debt of at least $5,000, up to a maximum of $40,000.

2. The student loan must be in the name of the borrower(s) and for the borrower’s education.

Interest rates, purchase price limits and other program specifics are subject to change.

Maine Smart Buy 9

3. A monthly statement or verification from the student loan lender/servicer verifying the

amount of the indebtedness must be provided by borrower to the lender.

4. The student loan statement provided must be easily identifiable as a student loan.

5. The full student loan debt for at least one borrower must be paid in full at the time of

closing on the home purchase. The entire student loan payment is required to be paid in full

so that the debt will no longer need to be considered in the borrower’s debt ratios when

determining eligibility for the home loan.

6. If the debt relief received is sufficient to pay off the student loan debt of both borrowers in

full, it will be allowed; however, partial loan repayment is not allowed.

7. The full outstanding balance of the student loan debt of one or both borrowers must be paid

off at the time of closing of the home purchase by the closing lender or title company/agent.

I. Unsecured Second Note.

The homebuyer(s) will be obligated by an unsecured promissory note equal to the amount of

student debt paid off at closing. Payment of principal shall be deferred until the first to occur of

the following: (i) the sale or other transfer of borrower’s home or any interest therein; (ii) the

failure to occupy the home as their principal residence for the first five (5) years they own the

home; or (iii) a default under the note, the mortgage securing the note or any other document

executed by the borrower in connection with the loan. At that time, the principal balance that

has not been forgiven will be due.

J. Forgiveness and Repayment.

In the absence of an event of default, the outstanding balance of the loan shall decline by twenty

percent (20%) per annum beginning on the first (1

) anniversary of the date of the note and

upon each of the successive four (4) anniversaries for each full year borrower occupied the

property as their principal residence, until the outstanding balance owed under this promissory

note reaches zero ($0) dollars.

K. Taxable Revenue at Federal and State Level.

1. Program participants should be aware that the student debt forgiven or repaid on their

behalf may be considered income by state and federal taxation authorities and taxed as such.

It is recommended that the loan repayments or forgiveness achieved on behalf of the

program participants under the program not be taxed as imputed income at the state level.

Maine Smart Buy 10

This is a matter for legislators to decide, however, and of course it would require an act of

Congress to do the same at the federal level.

2. The promissory note equal to the amount of the student debt paid off will be forgiven at

20% each year, for a total of five years.

L. Early Payoffs.

If the borrower stops using the home as their principal residence, the non-forgiven portion of the

loan will be re-written with a loan through FAME.

6. BUDGET PROPOSAL

This program would be supported by a state budget appropriation, and program impact would be

directly proportional to the amount of funding available. MaineHousing has broad authority to

develop and operate programs so there is no need for specific authorizing legislation to create this

proposed program.

A key challenge for a program like this will be cost. More first-time homebuyers would be served

with a larger appropriation; fewer would be served with a smaller one. By necessity, the program

would require a substantial fiscal note to provide debt relief at any sort of scale.

If 300 purchasers entered the program with debt to be eliminated as part of their home purchase

transactions, providing student loan debt relief for about that many homebuyers would quickly add

up. Assuming an average debt payoff of $35,000 (with a maximum of $40,000), the program would

cost approximately $10,500,000 per year.

We recommend that the Legislature consider appropriating $1-2 million to the program initially to

serve as a pilot. This pilot could be managed through a limited subset of the Maine banks that serve

as First Home Loan lenders. The chart below reflects how many participants could be served

through different levels of pilot funding:

Average Debt Payoff

Legislative Allocation

Potential Number Served

$35,000

$1,050,000

$35,000

$1,575,000

$35,000

$2,100,000

Page 1 - 130LR1223(03)

STATE OF MAINE

_____

IN THE YEAR OF OUR LORD

TWO THOUSAND TWENTY-ONE

_____

S.P. 562 - L.D. 1709

Resolve, Directing the Maine State Housing Authority To Examine and

Develop a Program Promoting Home Ownership by Reducing Education

Debt

Sec. 1. Maine State Housing Authority to examine and develop a program

for home ownership by reducing education debt. Resolved: That the Maine State

Housing Authority, in consultation with the Finance Authority of Maine, shall examine

programs that promote home ownership by reducing borrowers' education debt and shall

develop such a program, including statutory language and budgetary requirements, for

implementation in the State. In examining such programs, the Maine State Housing

Authority, in consultation with the Finance Authority of Maine, shall consider, but is not

limited to considering:

1. The total amount of student loan debt that could be reduced and the average amount

of individuals' student loan debt in relation to the average purchase price of a home;

2. The minimum amount of student loan debt an individual must have to qualify to

participate in such programs;

3. Whether a program participant is required to pay off any remaining student loan

debt;

4. The financial process for reducing student loan debt through the purchase of a home;

5. Whether a program participant is required to remain in the home for a certain period

of time;

6. A program participant's credit score;

7. The requirements a program participant must meet for assistance in making a down

payment; and

8. Any other requirements necessary for a program participant to qualify for assistance

with a home mortgage through such programs.

Sec.

2. Report. Resolved: That

the Maine State Housing Authority shall submit a

report, including suggested legislation with statutory language and budgetary requirements,

with the authority's proposal for a program promoting home ownership by reducing

APPROVED

JUNE 15, 2021

BY GOVERNOR

CHAPTER

RESOLVES

Maine Smart Buy

______________________________________________________________________________

APPENDIX A

Page 2 - 130LR1223(03)

education debt to the joint standing committee of the Legislature having jurisdiction over

innovation, development, economic advancement and business matters by December 1,

2021. The joint standing committee may report out a bill based on the report to the Second

Regular Session of the 130th Legislature.

Maine Smart Buy

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APPENDIX B

The Maine State Housing Authority (MaineHousing) is an independent authority created by the

Maine State Legislature in 1969 to address problems of unsafe, unsuitable, overcrowded, and

unaffordable housing. At its core, the agency couples the efficiencies of the private financial markets

with public purpose goals to provide affordable home ownership and rental housing opportunities

for Maine people.

Since inception, the agency has been asked to handle additional responsibilities on behalf of the

state. As a result, MaineHousing administers a number of federal housing-related programs,

including the Low Income Housing Tax Credit Program, the Section 8 Rental Assistance programs,

the Emergency Solutions Grant Program, the Weatherization Program, the Low Income Home

Energy Assistance Program, and others. Such programs reduce the costs associated with housing for

Maine people.

The Finance Authority of Maine (FAME) is a quasi-independent state agency that provides

innovative financial solutions to help Maine citizens pursue business and educational opportunities.

FAME helps to lead the creation of good paying jobs for Maine citizens by working at the nexus

between economic and workforce development. To learn more about FAME, please visit

www.FAMEmaine.com

Maine Smart Buy

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Student Loan Debt Relief

URPOSE

To assist homebuyers affected by increasing student loan debt with purchasing a home in

Illinois. The Illinois Housing Development Authority (IHDA), IHDA Mortgage, offers

SmartBuy. This down payment assistance (DPA) is offered as a 2

mortgage in conjunction

with a promissory note for 15% of the purchase price (up to $40,000) for student debt relief

for qualified borrowers.

ATE

Reservations for IHDA Mortgage – SmartBuy will open in Fall 2020 and run until IHDA has

exhausted funds and closed the program for reservations in TPO Connect.

SAGE

The student loan debt relief funds provided are in the form of a promissory note and deed

restriction for an owner-occupied, primary residence purchase. The DPA 2

can be used

for closing cost and/or down payment. All assistance must be used with an IHDA 30-year

fixed rate 1

mortgage. Please note: with all IHDA Mortgage programs, cash back at closing

for borrowers may not exceed $250 + plus any amount over their required minimum

investment (any additional should be principal reduction).

OWN

AYMENT

SSISTANCE

The DPA or “assistance” amount shall be recorded as a 2nd mortgage and can be used to

cover down payment and/or closing costs. Assistance is limited to $5,000. The 2

mortgage term shall be 30 years. The full principal balance of $5,000, less any optional

payments, is due upon the sooner of the maturity date or repayment of the 1

mortgage.

The 2

mortgage may be pre-paid at any time without penalty. The 2

mortgage may not

be re-subordinated.

TUDENT

OAN

EBT

ELIEF

The funds will be in the form of a promissory note of up to 15% of the purchase price, not

to exceed $40,000. This will be used to completely pay off a borrower’s outstanding

student debt balance at the time of home purchase. It will be forgiven at a rate of 1/36

In addition, a deed restriction will require that the borrower sell to a household that

qualifies under IHDA income and purchase price limits if sold within the first three years.

AYMENTS

•

The 2

mortgage will have no monthly payment. Full repayment of the 2

will be due

upon the sooner of the maturity date or repayment of the 1

mortgage (including

refinance or sale of the property), or other qualifying repayment events. (Review

Mortgage and Note for full terms.)

• The promissory note will have no monthly payment and is forgiven at 1/36

(remainder

due upon sale or refinance if the event takes place within the first 3 years from the

settlement of the first mortgage).

I NTEREST R ATE

( SET BY IHDA)

Daily IHDA rates apply on the 1

mortgage. The 2

mortgage carries 0% interest.

INIMUM

ORROWER

NVESTMENT

The greater of 1% or $1,000 of the purchase price. (The borrower may not use the tax

proration toward the borrower's contribution of 1% or $1,000.00 (whichever is greater) into

the transaction, those funds must be from the borrower’s own funds or from gift funds (if

allowable per Fannie Mae guidelines.) Please defer to the IHDA Mortgage

Program Matrix

and Procedural Guide for details.

EPAYMENT AND

ECAPTURE

The funds will be forgiven pro rata on a monthly basis over a 3-year forgiveness period

(1/36

) in the form of a promissory note. A deed restriction for three years will require

the borrower to sell to a household that qualifies under IHDA income and purchase price

limits if sold within the first three years.

The 2

mortgage DPA funds will be 0% deferred. The DPA 2

is required to be used in

conjunction with an IHDA 30-year fixed rate 1

mortgage.

The 1

mortgage will carry a 30-year term and must carry Private Mortgage Insurance as

may be required for FNMA HFA Preferred.

All may be subject to repayment or recapture depending on terms of legal documents.

NCOME

EQUIREMENTS

Borrower’s income must be at or below the limits of the county in which the property

is located. The lenders must calculate income using the calculator posted on

The

Document Library to qualify for IHDA Mortgage DPA.

Maine Smart Buy

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APPENDIX Ci

Student Loan Debt Relief

ORROWER

LIGIBILITY

• May be a first time or non-first-time homebuyer purchasing a primary residence

in Illinois

• Minimum credit score – 640

• Maximum total debt-to-income (back end) ratio of 45.00% for all loan types

• IHDA income and property purchase price limits apply

• Must meet the student loan debt requirements below

• FNMA HFA Preferred only

• DACA recipients may be eligible as permitted by agency.

• Property must be a qualified single-

family dwelling (this includes condos,

townhomes, and 2-units as allowed by Agency)

• Pre-purchase homeownership education meeting standards defined by HUD or

the National Industry Standards for Homeownership Education and Counseling is

required for each borrower - PRIOR TO CLOSE (PTC) - or the loan is unsaleable

• No manufactured homes

Borrowers must meet all eligibility requirement

s established for the IHDA Mortgage

programs, U.S. Bank overlays, and Fannie Mae guidelines.

TUDENT

OAN

EBT

EQUIREMENTS

• Minimum remaining student loan debt balance of $1,000 and up to a maximum

of 15% of the purchase price or $40,000, whichever is lower.

• The student loan must be in the name of the borrower for the borrower’s

education.

• The loan included in the statement must be easily identifiable as a student loan

• The debt must be from an eligible educational institution is an accredited public,

nonprofit, or proprietary (privately owned profit-

making) college, university,

vocational school, or other postsecondary educational institution. Also, the

institution must be eligible to participate in a student aid program administered

by the U.S. Department of Education. (Most accredited postsecondary institutions

meet this definition.)

•

A monthly statement or verification from the student loan lender/servicer

(personal loans from private individuals do not qualify) verifying the amount of

the indebtedness, must be in the loan file. (The lender is the organization that

made the loan initially; the lender could be the borrower's school; a bank, credit

union, or other lending institution; or the U.S. Department of Education.)

• The full student debt for at least one borrower must be entirely paid off at the time

of the home purchase.

• If the full student debt for both borrowers can be paid off, that is permitted, but

partial loan repayment will not be available under this program; either a borrower’s

loans are fully paid off, or not at all.

• The full outstanding balance of the student debt of the borrower (which shall not

exceed 15% of the purchase price or $40,000, whichever is lower) must be paid off

as part of closing. This will be done by the title agency that closes the loan and

immediately upon payment.

ISCLOSURE OF

UNDS

The 1

& 2

mortgages require TRID (TILA-RESPA-INTEGRATED DISCLOSURE). On the 2

mortgage, only recording fees are allowed. The student loan debt relief that is being

covered in the SmartBuy transaction would be input into DU as “unsecured, no payment,

forgivable personal loan”.

DISCLAIMER

The terms and conditions are subject to change until the lender locks the loan in TPO Connect. A potential borrower should contact an approved lender

for further loan information. In connection with the IHDA Down Payment Assistance programs, IHDA makes no promises, representations, or warranties

to any party, including any borrower, about the actual benefit an IHDA loan might provide in specific situations. Each borrower’s situation is different, and

potential borrowers should seek the advice of a financial advisor, attorney or housing counselor before entering into any loan

Maine Smart Buy

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Alivio de deuda estudiantil

P ROPÓSITO

Asistir compradores de casa que son afectados por préstamos estudiantiles que desean

comprar una casa en Illinois. La Autoridad de Desarrollo de Vivienda de Illinois (IHDA),

IHDA Mortgage, les ofrece SmartBuy. Esta asistencia de cota inicial (DPA) sería en forma

de una hipoteca segundaria en conjunto con un contrato de promesa de pago, les ofrece

el 15% del precio de compra (hasta $40,000)

para asistirles en el alivio de deuda

estudiantiles para compradores calificados.

F ECHA

Reservaciones para IHDA Mortgage-SmartBuy empezará en el otoño de 2020 y continuará

hasta todos los fondos sean agotados y/o el programa se cierra in TPO Connect.

A PLICACIÓN

Los fondos del alivio de deuda estudiantiles son proporcionados en forma de un contrato

de promesa de pago y una restricción de escritura para prestamistas que ocupan su

residencia principal. La asistencia de cota inicial (DPA) puede ser utilizada para costos de

cierre y/o cota inicial. Toda la asistencia debe ser utilizada con una primera (1) hipoteca de

IHDA de plazo de 30 años e interés fijo. Tenga en cuenta: con todos los programas

hipotecarios de IHDA, los compradores no pueden recibir una devolución de dinero que

excede $250 + más su inversión mínima (algo adicional debe ser utilizado como reducción

principal).

A SISTENCIA DE

COTA INICIAL

La DPA o monto de asistencia será registrada como hipoteca segundaria y puede ser

utilizada para su cota inicial y/o costos de cierre. La asistencia será limitada a $5,000. La

hipoteca segundaria tendría un plazo de 30 años. El saldo de los $5,000, menos pagos

opcionales, vence en la fecha de vencimiento o la terminación de las cotas de la primera

hipoteca, lo que ocurra más temprano. La hipoteca segundaria puede ser prepagada sin

multa. La hipoteca segundaria no puede ser re subordinada.

A LIVIO DE

DEUDA DE

PRÉSTAMOS

ESTUDIANTILES

Los fondos serán garantizados por el contrato de promesa de pago, el 15% del precio de

compa hasta el máximo de $40,000 cualquiera sea menor. Los fondos serían utilizados para

pagar completamente los préstamos estudiantiles del comprador. El monto pagado será

perdonado a un ritmo de 1/36. Adicionalmente, una restricción de escritura requerirá que,

si el hipotecario venda su casa, lo tendrá que vender a otro comprador que sea calificado

bajo de los requisitos de IHDA de ingresos y límite de precio de compra durante los

primeros 3 años.

P AGOS

• La hipoteca segundaria no tendrá pagos mensuales. Reembolso total de la hipoteca

vence el día de vencimiento o el reembolso de la primera hipotecario (incluyendo

refinanciamiento o venta de la propiedad) lo que ocurra más temprano. (Favor revisar

los términos de la hipoteca y el contrato de pago (la nota))

• E

l contrato de promesa de pago no tendrá pagos mensuales y sería perdonado a un

ritmo de 1/36 mensualmente (el saldo sería reembolsado si la casa se vende o sea

refinanciada durante los primeros 3 años.)

ORCENTAJE DE

I NTERÉS

(

DETERMINADO

POR IHDA)

Interés diario de IHDA sería aplicable en la primera hipoteca. La segunda hipoteca tendría

una taza de 0% de interés.

I NVERSIÓN

MÍNIMA DEL

P RESTAMISTA

Lo mayor del 1% o $1,000 del precio de compra. El prestamista no puede utilizar el

prorrateo de impuestos de propiedad como su contribución del 1% o $1,000 (cual sea

mayor) para la transacción, estos fondos son obligatorio que sean del prestamista o fondos

de regalo (si es permitido por reglamentos de Fannie Mae.) Favor difiere se a IHDA

Mortgage Program Matrix and Procedural Guide para los detalles.

R EQUISITO DE

I NGRESO

El ingreso del comprador no debe sobre pasar los límites del condado donde la

vivienda este localizada. Los prestamistas deben calcular el ingreso utilizando la

calculadora en la biblioteca de documentos de IHDA Mortgage DPA.

R EPAGO Y

R ECUPERACIÓN

Los fondos serán perdonados a un ritmo de (1/36) mensualmente basado en un periodo

de 3 años en forma del contrato de promesa de pago. La restricción de escritura requerirá

que, si el hipotecario venda su casa, lo tendrá que vender a otro comprador que sea

calificado bajo de los requisitos de IHDA de ingresos y límite de precio de compra durante

los primeros 3 años.

Maine Smart Buy

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Los fondos de la hipoteca secundaria con una taza de 0% interés será diferido. Los fondos

de la DPA son obligados para ser utilizado con una primera hipoteca de IHDA con un plazo

de 30 años.

La primera hipoteca tendrá un plazo de 30 años y debiese llevar un seguro de hipoteca

privado o como requerido por FNMA HFA preferido.

Todo puede ser recuperado bajo los términos de pago o dependiendo de los documentos

legales.

E LEGIBILIDAD

DEL

P RESTAMISTA

• Puede ser un comprador de vivienda por primera vez o comprador que haiga

comprado anteriormente (posterior de tres años) que está comprando su vivienda

principal localizada en Illinois.

• Puntaje de crédito mínimo – 640

• Proporción máxima de deuda total a ingresos para todos los tipos de préstamos

no debe sobre pasar el 45%.

• Límites de ingreso y precio de compra de IHDA son aplicables.

• Debe cumplir con los requisitos de deuda de préstamos estudiantiles.

• FNMA HFA Preferred solamente

• Los beneficiaros de DACA pueden ser elegibles según lo permita la agencia.

• La propiedad debe ser una vivienda unifamiliar calificada (esto incluye

condominios, casas adosadas y 2 unidades según lo permita la agencia)

• Se requiere asesoramiento educacional de vivienda que sea definido al estándar

de HUD o el estándar nacional de industria previo de la compra de vivienda para

cada prestatario antes del cierre o el préstamo no se puede vender.

• Casas manufacturado no son eligibles

Los prestatarios deben cumplir con todos los requisitos de elegibilidad para los programas

de hipotecarios de IHDA, las superposiciones de Fannie Mae, y las pautas de US Bank.

R EQUISITOS DE

DEUDA DE

PRÉSTAMOS

ESTUDIANTILES

• Saldo mínimo restante del préstamo estudiantil de $1,000 y hasta un máximo del

15% del precio de compra o $40,000, lo que sea menor.

• El préstamo estudiantil debe estar en el nombre del prestatario para la

educación del prestatario.

• El préstamo incluido en el estado de cuenta debe ser fácilmente identificabl

omo un préstamo para estudiantes y debe ser parte de los prestamos

enumerados en el informe de crédito del prestatario.

• La deuda debe ser de una institución educativa elegible que sea un colegio,

universidad, escuela vocacional u otra institución educativa postsecundaria

publica acreditada, sin fines de lucro o propiedad privada (con fines de lucro).

Además, la institución debe ser elegible para participar en un programa de ayuda

estudiantil administrado por el Departamento de Educación de los Estados Unidos.

(La mayoría de las instituciones postsecundarias acreditadas cumplen con esta

definición.)

• Un estado de cuenta mensual o verificación del prestamista/administrador de

préstamos para estudiantes (los préstamos personales de individuos privados no

califican) que verifique el monto de la deuda debe estar en el archivo del préstamo.

(El prestami

sta es la organización que otorgo el préstamo inicialmente; el

prestamista podría ser la escuela del prestatario; un banco, cooperativa de crédito

u otra institución crediticia; o el Departamento de Educación.)

• La deuda total del préstamo estudiantil de al menos un prestatario debe pagarse

or completo en el momento de la compra de la vivienda.

• Si la deuda estudiantil de ambos prestatarios se puede pagar, eso está permitido,

pero el reembolso parcial del préstamo no estará disponible bajo este programa;

o el préstamo de un prestatario se cancela en su totalidad o no se paga.

• El saldo total pendiente de la deuda estudiantil del prestatario (que no excederá

el 15% del precio de compra o $40,000, lo que sea menor) debe liquidarse como

parte del cie

rre. Esto lo hará la agencia de títulos que cierra el préstamo e

inmediatamente después del pago,

D IVULGACIÓN

DE FONDOS

Las hipotecas primera y secundaria requieren divulgación integradas de TRID-RESPA. En la

segunda hipoteca, solo se permiten tarifas de registro. El alivio de la deuda de préstamos

estudiantiles debe divulgarse en DU como “préstamo(s) que no sea asegurado, que no

tenga pago mensual, y que sea un préstamo perdonado”.

D ESCARGO DE R ESPONSABILIDAD

Los términos y condiciones están sujetos a cambios hasta que el prestamista bloquee el préstamo en TPO Connect.

Un prestatario potencial debe

comunicarse con un prestamista aprobado para obtener más información sobre el préstamo. En relación con los programas de asistencia para el pago

inicial de IHDA, IHDA no hace promesas, represalias ni garantías a ninguna de la

s partes, incluido cualquier prestatario, sobre el beneficio real que un

préstamo de IHDA podría proporcionar en situaciones específicas. La situación de cada prestatario es diferente y los prestatarios potenciales deben buscar

el consejo de un asesor financiero, abogado o consejero de vivienda antes de entrar cualquier préstamo.

Maine Smart Buy

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Kenneth C. Holt, Secretary

Tony Reed, Deputy Secretary

Maryland Department of Housing

and Community Development

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Kenneth C. Holt, Secretary

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Maryland Mortgage Program

financing for homebuyers with

student debt

Maine Smart Buy

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APPENDIX Cii

Kenneth C. Holt,

Secretary

PURPOSE

• Designed to assist eligible homebuyers with

student debt to purchase homes and to manage

overall housing expenses.

•

Interest rate for the first mortgage is the same as

the conventional insured mortgage interest rate

offered under the Maryland Mortgage Program.

The SmartBuy rate is posted on our rate sheet

online:

https://mmp.maryland.gov/Lenders/Pages/Interest-Rates.aspx

Maine Smart Buy

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Kenneth C. Holt,

Secretary

● Any MMP-eligible property statewide

● Cap of $30,000 on student debt payoff

● Lender funds all loans and gets reimbursed

for both the unsecured second loan and the

optional DPA loan the same way as regular

MMP DPA loans

SMARTBUY 3.0 OVERVIEW

Maine Smart Buy

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Kenneth C. Holt,

Secretary

PRODUCT STRUCTURE

• 1

Loan: A conventional amortizing mortgage of

95% of the sales price. This is a normal MMP

loan.

• 2

Loan: A forgivable loan up to 15% of the

purchase price, which will be used to pay off the

student debt. This is a 0% deferred loan with no

payments, forgivable over 5 years at 20% per

year. The balance becomes due upon sale or

refinance. This is an unsecured loan with a

Promissory Note to the Community Development

Administration (CDA).

--Two Loans (one secured, one unsecured)

Maine Smart Buy

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Kenneth C. Holt,

Secretary

OPTIONAL 3

LOAN (SECURED)

FOR CLOSING COSTS OR DOWNPAYMENT

• $5,000 in Down Payment Assistance (DPA) in a

zero percent deferred mortgage, second lien

position

• Borrower must bring a minimum of 5% of the

sales price to closing as down payment. The DPA

loan can be used for this purpose.

Maine Smart Buy

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Kenneth C. Holt,

Secretary

GENERAL PROGRAM ELIGIBILITY

• Borrowers may be single or married. If married,

both spouses are not required to apply, but will

be included in the household income calculation.

If separated, a Separation Affidavit must be

completed.

• Must intend to occupy the property as the

principal residence within 60 days of closing.

• Cannot own any other real property ANYWHERE

at the time of closing.

Maine Smart Buy

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Kenneth C. Holt,

Secretary

GENERAL PROGRAM ELIGIBILITY

• Must be a first-time homebuyer or qualify for an

exception by:

– Not having owned a residence for three years;

– Purchasing in a targeted area; OR

– Being a veteran using their exemption for the first

time.

• All customary underwriting standards and

requirements related to student debt apply and

will be used to qualify the homebuyers. All usual

MMP standards must be met, i.e. credit score,

income and purchase price limits, asset limits,

etc.

Maine Smart Buy

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Kenneth C. Holt,

Secretary

SMARTBUY 3.0 ELIGIBILITY

• Maximum Combined Loan-to-Value is 105%

(normal conventional loan)

• 720 Middle Credit Score, max 45% DTI for loans

with LTV ≥75%

• All overlays of servicers and insurers not

specifically addressed in the fact sheet apply.

Maine Smart Buy

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Kenneth C. Holt,

Secretary

BORROWER STUDENT DEBT ELIGIBILITY

• Eligible borrower student debt must be greater

than $1,000 and up to 15% of the home

purchase price

• Outstanding balance of all existing student loans

for at least one borrower must be paid off fully at

closing (no partial loan payments—all or nothing)

• If it can be done within the maximum loan

amount, the full debt for both borrowers can be

paid off.

• A borrower may pay down their student debt to

reach an eligible amount

Maine Smart Buy

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Kenneth C. Holt,

Secretary

ELIGIBLE STUDENT DEBT LOANS

• Student debt loan must be documented in a

monthly statement or verification from the

student loan lender/servicer (no personal loans)

who initially made the loan: school, bank, credit

union, or other banking institution in the United

States, or the U.S. Department of Education

•

Loan must be in the name of the borrower for the

borrower’s education (not borrower’s children,

family etc.)

• Loan must be current; it may be in repayment or

deferred status

Maine Smart Buy

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Kenneth C. Holt,

Secretary

ELIGIBLE EDUCATIONAL INSTITUTIONS

• Borrower student debt must be for an eligible

educational institution (any accredited public,

nonprofit, or proprietary college, university,

vocational school, or other postsecondary

educational institution) in the United States that

is eligible to participate in a student aid program

administered by the U.S. Department of

Education

Maine Smart Buy

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