CHFA Home Buying Process

The CHFA Loan Process - Revised

CHFA loans are offered through the Connecticut Housing Finance Authority in the State of Connecticut for first-time home buyers, properties for sale in "targeted" census tracts and for other groups of qualified borrowers such as police, teachers and Section 8 recipients. Its loan origination is unique and the following is a step-by-step process of CHFA loans as well as the estimated times for each step. It includes the new steps as required by the MDIA (Mortgage Disclosure Information Act of 2009), 2010 changes to RESPA (Real Estate Settlement Procedures Act) and FHA's adoption of HVCC in 2010 (Home Valuation Code of Conduct.) The steps are written from the standpoint of a correspondent lender or broker. If you are dealing with a direct lender, the steps may vary slightly.

1. Application. This step is not unique and should be completed prior to a buyer begins to look at homes. There is also a CHFA-specific application and CHFA disclosures to review and sign. At this time, the Loan Originator usually collects all necessary paperwork from the buyer including income and asset statements and may run a credit report to check for credit-worthiness. It is also customary for the loan officer to submit the loan information to an online Automated Underwriting System to verify that the buyer qualifies for the loan for which he or she is applying. (Time involved: 1-3 hours)

2. Reserve Funds with CHFA. Once a home is located and the purchase and sale agreement is signed, an online registration form is completed by the broker that CHFA calls the "Reservation of Funds". It generates a loan number for CHFA and locks the interest rate for 120 days. It is important that the reservation of funds is completed PRIOR to the appraisal being done or it causes a problem later down the road which results in delays in processing. (Time: 5 minutes)

3. Generate a case number through FHA Connection. Brokers and lenders use a website called FHA Connection for FHA-related activities. On FHA Connection, the broker generates an FHA Case Number through an online application. The case number appears on a number of forms, including the appraisal, and it is how FHA tracks the loan. The case number should be generated prior to the appraisal being ordered or it can cause delays later in the process.

Also, the broker checks that the buyers, sellers, real estate agents, mortgage broker, loan officer and closing attorney are not on lists that preclude any of the above from using or facilitating the use of an FHA loan. If the property is a condo, the broker verifies whether or not it is part of a HUD-approved complex. (Time: 15-60 minutes)

4. Generate the Lender's TIL (Truth-in-Lending form) and GFE (Good Faith Estimate). The application, itemization of fees and a Mortgage Broker Fee Agreement is sent to the lender with a registration form. The lender generates a Truth-in-Lending form and a Good Faith Estimate based upon this paperwork. If the buyer chooses to receive this information by email, this step ends upon receipt of the email from the lender. If the buyer opts to receive this information by regular mail, the buyer is assumed to have received the forms after 3 days. Before receiving the TIL, the borrower is NOT ALLOWED to pay for anything aside from a credit report fee. (Time: 24-48 hours, then 3 days)

5. Order the appraisal and title work. The broker orders a title commitment from the buyer's closing attorney. The appraisal can be ordered once Step 4 is completed. Due to HVCC, the appraisal is ordered through the lender via an appraisal management company. Since the appraisal is now paid for at the time of the order, the most common way of paying for the appraisal is by the buyer using a credit card. The buyer can also forward the appraisal fee to the broker who can pay via credit card at the time the order is placed. The appraiser inspects the home and generates a report and a statement of estimated value. The report is sent to the lender via the appraisal management company and is available to the broker to download. (Time: 3-10 days)

6. The loan packages are compiled and one package is sent to the lender. Once the appraisal and title are received, two files are put together: one for the lender and one for CHFA. There is overlap between the two files because both are looking for some of the same information but these are two different files. In this step, one is submitted electronically, by overnight mailing or via fax to the lender. (Time: up to 2 days)

7. Lender Underwriting. When the file is received by the lender, it is time-stamped, reviewed for completeness and placed in a queue where it waits to be underwritten. Underwriting is a process by where a person called an underwriter reviews the documentation in the file and checks it against the information that was uploaded into the Automated Underwriting System. In some cases, the underwriter reviews the credit of the buyer and other facets of the loan including gift documentation. This is the step that usually takes the longest during the process. (Time: 3-15 business days depending on how busy the lender is.)

8. CHFA Underwriting. Once the loan has been underwritten by the lender, a Conditional Approval is issued by the lender. This approval, along with other paperwork, is added to the second file and it is sent to CHFA for underwriting. CHFA underwrites the file to verify that the buyer qualifies for the CHFA program and/or the DAP (Downpayment Assistance Program.) (Time: 2-7 business days depending on volume)

9. Clearing CHFA conditions. If the file submitted to CHFA is in need of further documentation as required by the CHFA underwriter, a "Missing Exhibits" letter is sent to the broker requesting this documentation. The broker submits the requested paperwork and CHFA issues its commitment to lend. (Time: 1-7 days)

10. Clearing lender conditions. Upon receipt of the CHFA commitment, it and other documentation necessary to satisfy the lender's conditions, if applicable, are sent to the lender for review to clear conditions. If the documentation provided to the lender is not enough to satisfy the underwriter, more paperwork may need to be provided to the lender, which could result in delays. (Time: 24-72 hours to review the conditions once submitted)

11. Clear to Close. If the documentation sent to the lender is sufficient to clear all of the lender's conditions, the file is "cleared to close" and the closing can be scheduled through the attorney's office. Typically, the closing would take place at least 48 hours AFTER the file is cleared to close but this can be delayed if the closing is to take place at the end of the month. (Time: 48-72 hours.)

12. Closing. This is the fun part. At the closing, the buyer signs the loan closing paperwork and receives the deed to the property and THE KEYS! (Time: 1-2 hours)

Now, you may have noticed that there are a few extra steps involved when using a CHFA loan. These should be anticipated when specifying a timeframe for mortgage commitment when completing a purchase and sale agreement. Although I have been able to help buyers purchase with a CHFA loan in 30 days, I am advising the Real Estate agents with whom I work to use a 6-8 week timeframe if the buyer is using a CHFA loan. These steps should NOT be looked at as a deterrent from using the CHFA loan program because the rewards are worth the wait, especially if you don't have sufficient funds to purchase a home but have the ability to afford the monthly payment.

If you are a Real Estate Professional working in Connecticut, you should be aware of these time frames as well. CHFA and the lenders can vary several days or even a week in the underwriting times that are mentioned above depending upon the volume of loans that they have been receiving.

When dealing with CHFA, you want to make sure that you are working with someone who understands the program and the time element involved. I have made it a point to be well-versed in this loan program as it is essential if I am to be an expert in no-money down and Government financing programs.

Please contact me with any questions regarding CHFA or other no-money down mortgage loan programs at eric@righttracfg.com or call me at our home office in Manchester, CT, at 860-647-7701 x13. I will be happy to answer any of your questions.

When it comes to No Money Down Financing, we are the Experts!

Eric Boucher
Government Loan Specialist
Right Trac Financial Group
860-647-7701 x13 Office
860-324-3324 Cell
eric@righttracfg.com

Right Trac is licensed in 8 states: CT, NH, RI, MA, ME, VT, NY and FL